Net lease glossary
Franchisee Guarantee
A lease backed by a franchise operator and sometimes its owners, rather than by the franchise brand's corporate parent.
A franchisee guarantee means the tenant is a franchise operator, such as a company running dozens of quick-service restaurants, rather than the franchisor. The credit depends on the operator's size, financial strength, store-level performance, and any personal or affiliate guarantees. Large multi-unit operators can be strong credits, but they are usually unrated and require review of financial statements, unit counts, and rent coverage. These leases usually trade at higher cap rates than corporate deals.