The franchise arrangement between McDonald€™s and its franchisees is summarized in the following note from McDonald€™s 2007 annual report.
Individual franchise arrangements generally include a lease and a license and provide for payment of initial fees, as well as continuing rent and royalties to the Company based upon a percent of sales with minimum rent payments that parallel the Company€™s underlying leases and escalations (on properties that are leased). McDonald€™s franchisees are granted the right to operate a restaurant using the McDonald€™s System and, in most cases, the use of a restaurant facility, generally for a period of 20 years. Franchisees pay related occupancy costs including property taxes, insurance and maintenance. In addition, in certain markets outside the United States, franchisees pay a refundable, noninterest-bearing security deposit. Foreign affiliates and developmental licensees pay a royalty to the Company based upon a percent of sales, as well as initial fees.
The results of operations of restaurant businesses purchased and sold in transactions with franchisees, affiliates and others were not material to the consolidated financial statements for periods prior to purchase and sale. Revenues from franchised and affiliated restaurants consisted of:

Future minimum rent payments due to the Company under existing franchise arrangements are:

Instructions:
From this information, answer the following questions.
1. McDonald€™s arrangement with its franchisees is that the franchisees agree to pay a minimum rent plus additional amounts if sales are above a certain level. Compare the minimum amount to be received from rent payments in 2008 with the total amount received from franchised and affiliated restaurants in 2007. How significant are these additional amounts?
2. As indicated in the franchise note, McDonald€™s owns some of its sites and leases others. An important comparison is the relationship between future minimum lease payments McDonald€™s must make and future minimum payments to be received from franchisees. The future payments (in millions of dollars) McDonald€™s must make on its leased restaurant sites are summarized as follows.
In millions Restaurant
2008 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $989.7
2009 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 918.2
2010 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 853.9
2011 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 786.8
2012 . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . . . . . . . . . . . . . . . . . . . 729.6
Comparing the payments to be made for leased sites and the minimum payments (plus percent rent) to be collected from franchisees for leased sites, it looks as if McDonald€™s is almost guaranteed to make money every year on its leased sites. What would have to happen for McDonald€™s to lose money on these leasedsites?

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(In millions) 2007 2006 2005 Rents and royalties $6,118.3 $5.441.3 $5,061.4 38.0 57.3 Revenues from franchised and affiliated restaurants...$6.175.6 51.2 $5.492.8 $5.099.4 Owned Leased (In millions) Sites Sites Total 2008 2009 2010. 2011 2012 Thereafter s 1.120.1 1,084.3 1,045.2 995.6 959.3 7,117.7 $12,322.2 $933.4 905.8 874.5 838.2 809.0 5,414.8 $9.775.7 2,053.5 1 ,990. I 1919.7 833.8 1.768.3 12,532.5 2 Total minimum payments $22.097.9