Top 10 Retail Franchises for Triple-Net (NNN) Lease Investors

05/29/2025

Industry Insights

Triple-net lease investments have long been favored by investors seeking stable, passive income. In a triple-net (NNN) lease, the tenant handles property taxes, insurance, and maintenance, leaving the landlord with minimal responsibilities. Among these opportunities, retail franchise investments stand out for their reliability and strong brand appeal. Well-known franchise tenants often provide “mailbox money” – consistent rent checks backed by established businesses. This article explores the top 10 retail franchise brands that serve as stable NNN lease tenants, explaining why they excel and what investors should consider when evaluating each opportunity.

Why Retail Franchises Are Ideal for NNN Investments

Investing in NNN properties leased to retail franchises offers several advantages. First, major franchise tenants bring nationwide brand recognition and loyal customer bases, driving steady foot traffic to their locations. These companies tend to be in sectors that are “Amazon-proof” or resistant to online disruption – for example, quick-service restaurants and convenience stores fulfill immediate needs that e-commerce can’t replace (you can’t download a hot meal or fill your gas tank online). This makes their cash flows more resilient against digital competition. Second, franchise tenants often have recession-resistant business models. During economic downturns, consumers still need affordable food, medications, and everyday goods, so top franchises in fast food, pharmacy, and discount retail often continue to perform well. Many even see sales growth when customers trade down from upscale options to value-oriented franchises.

Another key appeal is the structure of the leases. Franchise-operated properties usually come with long-term NNN leases (often 10 to 20 years plus options) that are frequently backed by corporate guarantees. In practice, this means a strong corporation – sometimes with investment-grade credit – stands behind the rent payments. The landlord can depend on timely rent even if a particular store’s performance fluctuates. Finally, retail franchises typically invest heavily in each location (buildings, drive-thru installations, specialized equipment), so they are committed to the sites for the long term. For NNN investors, this combination of creditworthy tenants, long lease terms, and minimal management duties makes franchise-leased properties an ideal formula for reliable income.

Key Factors to Consider in Selecting NNN Franchise Tenants

Not all franchise tenants are created equal. When analyzing potential NNN lease franchises, investors should conduct thorough due diligence. Important factors include:

Tenant Credit & Guarantees: Investigate the financial strength of the tenant. Is the lease guaranteed by the corporate franchisor (e.g. Starbucks Corporation or Walgreens Boots Alliance) or by a local franchisee entity? A corporate-backed lease with an investment-grade rating offers more security than a small franchisee with limited assets.
Lease Term & Rent Escalations: Review how long the primary lease term runs and what renewal options exist. Most top franchises sign long initial terms (10–20 years) with extension options. Also, check the schedule of rent increases. Some older leases have flat rent for decades, while newer deals might include rent bumps (e.g. 5–10% every 5 years) to help offset inflation.
Location Quality: Even a great tenant can underperform in a poor location. Evaluate the real estate fundamentals – is the property on a high-traffic corner with good visibility and demographics that match the franchise’s customer base? Hard-corner sites with strong surrounding population and income tend to hold their value and are easier to re-lease if the tenant ever leaves.
Store Performance: If available, look at sales figures or rent-to-sales ratios. A location with healthy store sales provides confidence that the tenant will remain profitable and committed to the lease. Publicly traded franchise companies often disclose average unit volumes, which can help benchmark a site (for example, Chick-fil-A generates industry-leading sales per unit in the fast-food sector).
Franchise vs. Corporate Operation: Determine whether the unit is corporate-operated or run by a franchisee. Many top brands (Starbucks, Dollar General, AutoZone, etc.) operate corporately, while others (Taco Bell, Dunkin’) are franchised. A large multi-unit franchisee with hundreds of locations may be very reliable, but a smaller franchisee could pose more risk. In some cases, franchisee leases may come with a secondary guaranty from the franchisor – a factor worth noting.
Landlord Responsibilities: Confirm that the lease is truly NNN. Absolute NNN leases make the tenant responsible for all maintenance (including roof, structure, and parking lot). Some “NNN” leases are actually double-net, requiring the landlord to handle roof and structure. Understanding these nuances will affect your expense exposure and insurance needs.

Top 10 Retail Franchises for NNN Lease Investors

Below is a list of ten leading franchise brands that are highly sought after by NNN lease investors. These companies span quick-service food, convenience retail, and essential services. Each combines strong financials, extensive footprints, and tenant-friendly lease structures that make them attractive, stable NNN lease tenants.

1. Starbucks

Overview: Starbucks is the dominant coffeehouse chain worldwide, with over 40,000 locations globally (including roughly 17,000 in the U.S.) ( Ground News ). As an NNN tenant, Starbucks offers a powerful combination of brand ubiquity and customer loyalty – millions of people make Starbucks a daily habit. The company’s stores range from drive-thru standalones to inline café locations, often positioned in prime retail corridors.

Lease Terms: Starbucks typically signs 10-year initial leases for free-standing locations, often with multiple 5-year renewal options. Most leases are absolute NNN and come with corporate guarantees from Starbucks Corporation (NASDAQ: SBUX, an investment-grade rated company). It is common to see rent escalations of around 10% every five years (Brevitas ). Because Starbucks prefers long commitments, many newer deals have six options (for a potential 40-year total term). This provides investors long-term stability. The tenant handles all property upkeep, and even new construction sites are delivered turn-key by the tenant, as Starbucks often builds to its own prototype.

Why It’s Attractive: Starbucks is considered a “blue chip” NNN tenant. The corporate credit is strong, and the business is highly adaptable – Starbucks has embraced mobile ordering, drive-thru innovation, and menu expansions to keep sales growing. As an “everyday necessity” for coffee drinkers, its stores drive consistent foot traffic morning, afternoon, and evening. During the COVID-19 pandemic and beyond, Starbucks proved resilient by shifting to drive-thru and digital orders. For investors, a Starbucks lease means dependable rent checks from the world’s top coffee brand. Explore Starbucks NNN properties on Brevitas to see current offerings featuring this premium tenant.

2. Chick-fil-A

Overview: Chick-fil-A is a fast-food phenomenon, specializing in chicken sandwiches and known for exceptional customer service. It is a privately held company with more than 3,000 restaurants across 48 U.S. states ( Chick-fil-A ). Despite being closed on Sundays, Chick-fil-A generates the highest average sales per restaurant in the industry. Its cult-like following and efficient drive-thru operations translate into very robust unit economics. The company carefully selects sites in busy suburban trade areas, often near other popular retailers.

Lease Terms: Most Chick-fil-A locations are ground-leased from the landowner. Chick-fil-A, Inc. (the corporate entity) typically signs a long 15 to 20-year absolute NNN ground lease for each new restaurant. A common structure is a 20-year base term with rent escalations of 10% every 5 years, plus multiple 5-year extension options( Brevitas ) . Because the tenant is corporate, investors benefit from a full corporate guarantee (though Chick-fil-A is not rated publicly, its financial strength and growth record are excellent). As ground leases, the tenant is responsible for all development and maintenance of the building and site. Landlords enjoy truly passive income with zero responsibilities.

Why It’s Attractive: Chick-fil-A is often viewed as a “trophy” NNN asset due to its top-tier performance. The brand regularly ranks highest in customer satisfaction and has extremely loyal customers. Its average unit volumes (well above $7 million annually per store) are the envy of the restaurant industry. This high sales productivity, combined with conservative expansion (Chick-fil-A opens fewer new stores per year than many peers, focusing on quality), makes vacancies very unlikely. Investors also value the company’s practice of corporate-operated stores – unlike most franchisors, Chick-fil-A retains control of each location’s operations, ensuring consistency. Long-term ground leases to Chick-fil-A in prime locations often trade at very low cap rates (sometimes in the 3%–4% range), reflecting the market’s confidence in this tenant. For a passive investor seeking stable growth, Chick-fil-A is a gold-standard tenant in the NNN world.

3. Walgreens

Overview: Walgreens (Walgreens Boots Alliance, NASDAQ: WBA) is one of the two largest pharmacy chains in the U.S., operating approximately 8,500 stores nationwide ( Walgreens Boots Alliance ). Walgreens stores are ubiquitous in cities and suburbs, often occupying high-traffic corners (“Main & Main” locations) with drive-thru prescription windows. They sell prescription medications alongside convenience retail items like over-the-counter drugs, personal care, snacks, and household goods. This essential retail role has made Walgreens a pillar of net lease investing for decades.

Lease Terms: Walgreens is known for very long lease structures. Historically, many Walgreens leases had initial terms of 20–25 years with no rent increases during the primary term ( Brevitas ). Some older ground leases even extended up to 50–75 years (including options) ( Brevitas ). Modern Walgreens deals still favor long terms but may incorporate modest rent bumps (for example, 5% every 5–10 years in extensions). The leases are typically absolute NNN – Walgreens handles maintenance, insurance, and taxes, often including roof and structure. Nearly all Walgreens leases are backed by the corporate entity, which carries investment-grade credit (around BBB). This means investors get the security of a large, publicly traded company guaranteeing rent. With many leases, especially older ones, having flat rent, investors should consider the effects of inflation over time, but the trade-off is an extremely high certainty of payment.

Why It’s Attractive: As an essential healthcare retailer, Walgreens offers defensive stability. People need prescription refills and health supplies in all economic climates, so Walgreens enjoys consistent baseline demand. The company’s scale and credit rating provide confidence in its ability to pay rent long-term. From an investor standpoint, a Walgreens on a long NNN lease is about as close to a bond-like income stream as one can find in real estate. The yields (cap rates) on Walgreens NNN properties are usually in the mid-5% to low-6% range for prime locations, reflecting the low risk. Furthermore, if Walgreens ever vacated, the buildings (around 14,000 SF with parking) are generally adaptable to other uses or tenants due to their prime locations. Overall, Walgreens remains a cornerstone of many NNN portfolios. (Its main competitor CVS is equally prominent, as we will discuss below.)

4. 7-Eleven

Overview: 7-Eleven is the world’s largest convenience store chain, famous for its 24/7 stores offering snacks, beverages, and often fuel. In the United States, 7-Eleven (owned by Japan’s Seven & i Holdings) has roughly 12,000–13,000 locations including recent acquisitions ( NACS Magazine ). This includes convenience stores with gasoline stations acquired from Speedway in 2021, making 7-Eleven a dominant player in the U.S. convenience and fuel retail market. A typical 7-Eleven property is a small footprint store (2,500–3,000 SF) on a pad site, frequently combined with gas pumps under a canopy. They thrive on commuter traffic and dense neighborhood customer bases.

Lease Terms: Many 7-Eleven deals are absolute NNN ground leases or standard NNN leases of 15 to 20 years. The corporate entity (7-Eleven, Inc.) usually guarantees leases, and the corporate credit is considered very strong (the chain is privately held, but analysts often view it as investment-grade equivalent). Rent escalations are commonly structured at 5–10% every 5 years or slightly smaller annual increases, depending on the deal ( Net Lease Finder ) . A typical new 7-Eleven ground lease might be 15 years initial with four 5-year options, and 10% bumps each option period . Because many locations include gas stations, leases often explicitly make the tenant responsible for all environmental maintenance and compliance (e.g. underground storage tank liability remains with 7-Eleven). Landlords essentially act as passive ground lessors collecting rent and have no operating responsibilities.

Why It’s Attractive: 7-Eleven combines an everyday-needs tenant (fuel and convenience items) with the backing of a massive global company. Convenience stores have proven resilient and even saw increased traffic during periods when people traveled more by car. 7-Eleven’s ability to adapt is notable – they continue adding EV charging in some locations and expanding fresh food offerings to stay relevant as the fuel landscape evolves. For investors, a 7-Eleven NNN asset offers a steady, non-discretionary income source. The risk of disruption is relatively low; even as electric vehicles grow, 7-Eleven is positioning itself to serve those customers (charging stations, etc.) while still selling in-store merchandise. Cap rates for 7-Elevens tend to be in the 5%–6% range, a bit higher than pharmacies, reflecting slightly more perceived long-term risk due to fuel market changes. Still, the corporate guarantee and high traffic locations make this tenant a rock-solid NNN pick. Browse 7-Eleven NNN listings on Brevitas to gauge typical pricing and locations available.

5. Dollar General

Overview: Dollar General (NYSE: DG) is the nation’s largest dollar store chain, with over 19,000 stores in 47 states ( Investor ). The company has expanded aggressively, especially in rural and suburban markets where it often serves as the closest general store for miles around. Dollar General stores are usually about 7,000–10,000 SF, free-standing buildings on secondary roads or at town edges. They sell a mix of general merchandise, groceries, and household necessities at low price points. From an investment perspective, Dollar General properties are appealing due to their low price point (typically under $2 million) and abundance on the market.

Lease Terms: Dollar General’s standard lease is a 15-year NNN term for new build-to-suit stores, with multiple 5-year renewal options. The leases are corporate guaranteed by Dollar General Corp., which is now an investment-grade rated company (S&P BBB as of recent reports)( Boulder Group ) . Many Dollar General leases have flat rent for the initial term, with 10% increases at each option period ( Globe St ). Some newer leases incorporate small periodic bumps during the primary term as well (e.g. 5% after year 10). The tenant is responsible for maintenance, though some leases might be double-net (landlord responsible for roof/structure) – investors should verify each deal. Given the huge number of Dollar General stores, there is variability; but overall, the model is a long-term, low-management lease.

Why It’s Attractive: Dollar General is often described as a “utility-like” tenant ( Brevitas ) – its stores perform reliably by meeting basic needs in communities, much like a utility company. The chain has a strong track record of profitability through recessions and expansions alike, serving cost-conscious shoppers. For NNN investors, Dollar General provides a way to get a corporate tenant with thousands of locations and steady earnings at a relatively accessible price. These properties usually trade at higher cap rates (often 6.5%–7.5% in many markets) because of the secondary locations and slightly lower credit rating than, say, Walgreens. However, the risk is mitigated by the sheer ubiquity and success of the brand – Dollar General almost never closes stores (in fact, it continues to open 1,000+ new stores annually). This growth and corporate strength give investors confidence that a Dollar General lease will be paid in full and likely renewed. It’s a staple of many income-focused real estate portfolios.

6. AutoZone

Overview: AutoZone (NYSE: AZO) is the leading retailer of aftermarket automotive parts and accessories in the U.S., with a footprint of about 6,500+ stores domestically (over 7,100 including Mexico, Brazil and other markets) ( Wikipedia ). AutoZone stores are generally in the 6,000–8,000 SF range, located in retail corridors or standalone sites with good access and parking. The business is considered “essential” because when vehicles need a battery, engine part or urgent repair, customers often need it immediately – something that online retailers struggle to fulfill with the same immediacy. This dynamic has helped AutoZone (and peers like O’Reilly and Advance Auto) remain resilient against e-commerce.

Lease Terms: AutoZone prefers long-term leases and usually signs 15-year NNN deals on new stores. The leases are corporately guaranteed by AutoZone, Inc., which boasts investment-grade credit ratings. Typically, AutoZone leases include renewal options (e.g. four 5-year options extending the term to 35 years total). Rent escalation clauses vary – some older leases have fixed rent throughout the base term, with increases in the option periods, while newer leases might have modest bumps in the primary term (such as 5% every 5 years). As an NNN lease, AutoZone takes on taxes, insurance, and maintenance; many are absolute NNN with even roof and structure obligations on the tenant. AutoZone often favors sites that it owns and then does sale-leaseback transactions with investors, meaning the leases are structured to be very landlord-friendly to attract buyers (no landlord duties, etc.).

Why It’s Attractive: AutoZone is prized by net lease investors for its dependable, counter-cyclical nature. Car parts retail tends to do well in both good times and bad – when the economy is strong, people maintain and upgrade their vehicles, and in downturns, they keep older cars running (which requires more parts). AutoZone’s financial performance and credit strength reflect this stability. An AutoZone NNN property typically offers a mid-range cap rate (often around 5.5%–6.5% depending on the lease term remaining and location quality), providing a bit more yield than drugstores or fast food, but still with a top-tier tenant. Furthermore, the buildings are generally easy to re-lease to other auto parts chains or similar uses if AutoZone ever left, as the format is standardized. Investors looking for a “cash cow” tenant with minimal hassle often include auto parts stores in their portfolio. AutoZone and its peers have proven to be long-term, low-default tenants. Search AutoZone NNN listings on Brevitas to see typical deal terms currently in the market.

7. McDonald’s

Overview: McDonald’s (NYSE: MCD) is the world’s largest fast-food chain, with over 38,000 restaurants worldwide ( McDonald's Corporate ) ( Nation's Restaurant News ) and about 13,500+ in the United States. The golden arches are one of the most recognized logos on the planet. McDonald’s menu of burgers, fries, and breakfast items has broad demographic appeal, and the company continually adapts (adding healthier options, modernizing stores, embracing digital ordering) to maintain its leadership. From a real estate perspective, McDonald’s is unique: the corporation often owns or controls the land under its restaurants and collects rent from its franchisees. Many McDonald’s locations are on ground leases where McDonald’s is the tenant to a landowner.

Lease Terms: A typical McDonald’s NNN investment is an absolute NNN ground lease. In such cases, an investor owns the land and McDonald’s leases it for 20 years or more, having built the restaurant at its own expense. These ground leases usually have rent escalations (e.g. 10% every 5 years or periodic CPI-based increases) and multiple extension options, often totaling 50+ years of potential tenure. McDonald’s Corp. or its real estate entity typically guarantees the lease. Importantly, McDonald’s carries an AA- credit rating, one of the highest in the restaurant industry ( Brevitas ). For investors, that means the rental income is extremely secure. Some McDonald’s deals also include percentage rent clauses (where the landlord can get a percentage of sales over a certain threshold), though this is less common on newer leases. Because McDonald’s insists on control, the leases give the tenant full responsibility for taxes, insurance, maintenance, and even rebuilding the store if needed (for example, when McDonald’s updates to a new prototype building).

Why It’s Attractive: McDonald’s is often considered the gold standard of NNN tenants. The combination of a huge, globally diversified company, investment-grade guarantee, and essential business model (reasonably priced food with broad appeal) makes for a low-risk investment. Even in recessions, McDonald’s tends to perform well as consumers seek value. The company’s commitment to drive-thru service and real estate quality (they choose prime spots and invest heavily in each location) means their restaurants are rarely closed. Investors also like that many McDonald’s ground leases are “absolute” NNN – truly hands-off. On the rare occasion a McDonald’s does leave a site, the land can often be re-leased to another drive-thru tenant at a strong rent because of the quality location. Cap rates for McDonald’s ground leases are among the lowest in the net lease market (often 3.5%–5% depending on term), reflecting that ultra-safe, bond-like income. For those seeking a set-and-forget asset, McDonald’s fits the bill. It’s no surprise that when a McDonald’s NNN property hits the market, it’s snapped up quickly by 1031 exchange buyers and yield-hungry investors alike.

8. CVS Pharmacy

Overview: CVS Health (NYSE: CVS) operates nearly 10,000 CVS Pharmacy locations across the U.S. ( Fierce Healthcare ) , making it the largest pharmacy chain. CVS stores are very similar to Walgreens in format: free-standing or strip center corner sites around 12,000–15,000 SF, with drive-thru pharmacies and a mix of retail goods focused on health and convenience. In addition, CVS has integrated healthcare services into some stores (MinuteClinic walk-in clinics). For NNN investors, CVS and Walgreens are often viewed interchangeably as top-tier tenants in the drugstore space.

Lease Terms: CVS typically enters into 20 to 25-year NNN leases on new store locations ( Brevitas ). Older CVS leases, similar to Walgreens, often had flat rents for the entire initial term. Many CVS leases in the 2000s were 25-year terms with options extending 20–50 more years, and no rent increases until the option periods (where a 5–10% bump might occur). In recent years, CVS has sometimes negotiated modest escalations during the primary term or added percentage rent clauses tied to store sales . The leases are almost always corporate guaranteed by CVS Health (rated BBB+), giving landlords assurance of the parent company’s backing ( Brevitas ). Responsibilities are generally absolute NNN – CVS handles maintenance and repairs. One nuance: some CVS leases are technically double-net, in that roof and structural maintenance may be a landlord duty (though often reimbursable). It’s important to read each lease, but the majority function as no-management NNN deals.

Why It’s Attractive: CVS enjoys the same “essential retailer” status as Walgreens. The pharmacy sector is bolstered by an aging population and the need for convenient healthcare access. CVS’s strategy of adding health services (clinics, COVID testing/vaccination, etc.) has further cemented its relevance in communities. For investors, a CVS lease provides a long-term income stream from a company with massive scale and reliable cash flow. The risk of default is very low. One consideration is store closures: CVS announced plans to gradually close roughly 9% of its stores to optimize its footprint ( CNBC ) ( Drug Channels ) . Investors should stay abreast of corporate announcements and prefer locations that are in the top-performing tier (e.g. high prescription volume stores), but even if a store were closed, the parent’s obligation to pay rent typically remains unless the lease is near expiration. Overall, CVS properties trade at cap rates similar to Walgreens – mid-5% to 6% for long-term leases in prime areas, higher for shorter terms or lesser locations. They remain a cornerstone of net lease investing due to the combination of credit, term, and necessity-based business model. Both CVS and Walgreens also often feature in 1031 exchanges as replacement properties for investors seeking passive, secure income.

9. Taco Bell (Yum! Brands)

Overview: Taco Bell, part of the Yum! Brands family (NYSE: YUM), is the largest fast-food chain specializing in Mexican-inspired cuisine. Taco Bell operates over 7,000 restaurants in the U.S. and about 1,000 internationally, making a total of roughly 8,000+ locations worldwide ( Yum! Brands ). The brand has a devoted following for its craveable menu items like tacos, burritos, and inventive creations (e.g. Doritos Locos Tacos). Many Taco Bells are open late, capturing late-night business. The franchise is almost entirely operated by franchisees rather than the corporation, though Yum! provides strong brand and marketing support.

Lease Terms: Taco Bell NNN properties are typically structured as 20-year leases with franchisee tenants. A common scenario is a franchisee does a sale-leaseback: they build a new Taco Bell, then sell it to an investor with a freshly signed 20-year NNN lease. These leases often feature attractive rent bumps, such as 7.5%–10% every 5 years, to appeal to investors. Because multiple franchisees operate Taco Bells, lease guarantees can vary – some large franchisees (operating hundreds of units) offer very solid guarantees, sometimes even with a partial Yum! Brands guarantee if negotiated. However, most are stand-alone franchisee obligations. The good news is Yum! requires franchisees to have strong financials and the Taco Bell brand is high-performing, so defaults have been rare. Properties are usually freestanding with drive-thrus, around 2,000–2,500 SF, on 0.5–1 acre parcels.

Why It’s Attractive: Taco Bell hits a sweet spot for NNN investors: it’s a top-5 fast-food brand with a unique market position (affordable, quick Tex-Mex), backed by a large public company (Yum!), yet individual sites often trade at slightly higher cap rates than McDonald’s or Chick-fil-A because the leases are franchisee-backed. This means investors can often get a bit more yield (cap rates for Taco Bells might range ~4.75% to 5.5% for new 20-year leases, which is higher than the 4%–5% on comparable McDonald’s) without taking on much additional risk. Taco Bell has shown impressive sales growth and resilience – it quickly rebounded from pandemic impacts and continues to innovate (e.g. digital ordering, new menu items). In fact, demand for Taco Bell NNN properties is strong; in some markets, new Taco Bell deals have sold at record prices, reflecting their stability ( Brevitas ). For an investor, a Taco Bell offers long-term income with built-in growth (rent bumps) and a brand that consistently pulls in customers, especially younger demographics. It is a quintessential NNN lease franchise opportunity that balances risk and reward effectively.

10. Dunkin’

Overview: Dunkin’ (formerly Dunkin’ Donuts) is a leading coffee and breakfast quick-service chain, now part of Inspire Brands (a private parent company). Dunkin’ has over 9,000 locations in the United States ( Dunkin’ Newsroom ) and several thousand more abroad, particularly under the Baskin-Robbins combo banner. The brand is an East Coast staple – especially concentrated in New England and Mid-Atlantic states – but has been expanding nationwide. Dunkin’ is known for its coffee, donuts, and breakfast sandwiches served fast and at reasonable prices. The typical Dunkin’ store is smaller (1,500–2,500 SF) and often located in multi-tenant plazas or as outparcels, though new standalone Dunkin’ shops with drive-thrus have become common as well.

Lease Terms: Most Dunkin’ stores are franchised, so NNN leases are with the franchise operators. A standard Dunkin’ lease might be 10 or 15 years initial term, absolute NNN, with the franchisee responsible for all expenses. Corporate Dunkin’ (Inspire Brands) generally does not guarantee individual store leases, but many franchisees are large multi-unit operators. It’s not unusual to see regional franchisees operating 50+ Dunkin’ locations, which can lend some financial stability. Leases for new drive-thru Dunkin’ locations often include 2% annual rent bumps or ~10% increases every 5 years. Because the buildings are smaller, rents are lower, so these deals often trade in the $1–2 million range – accessible for many 1031 exchange buyers. The landlord has no responsibilities in most cases (roof and structure included as tenant duties if it’s a true absolute NNN lease). Additionally, some Dunkin’ are on ground leases (especially those co-branded with gas stations or on pads), which would mean Dunkin’ built the improvements and just pays ground rent.

Why It’s Attractive: Dunkin’ provides a unique combination of a daily necessity business (morning coffee) with franchisee diversification. The customer loyalty to Dunkin’ in its core markets is extremely strong – it’s not uncommon for commuters to visit every single day for their caffeine fix. This repeat business model yields reliable store sales and longevity. From an investor’s view, Dunkin’ NNN properties are appealing because they often come at slightly higher cap rates compared to Starbucks. One reason is the franchisee factor; however, the risk is mitigated by Dunkin’s overall success and the backing of Inspire Brands (which also owns Arby’s, Sonic, etc. – a large restaurant conglomerate). The properties are also relatively easy to re-tenant if needed – a small drive-thru building can be repurposed to other coffee chains, sandwich shops, or even a Starbucks if the location warrants. Dunkin’s expansion, particularly into new regions, means many new construction NNN opportunities are coming to market. These typically offer 5.0%–6.0% cap rates depending on location, providing a nice yield bump over some other top-tenants while still delivering a fundamentally stable asset. For those building a diversified NNN portfolio, Dunkin’ adds a strong breakfast-focused tenant to the mix, anchored by Americans’ enduring love of coffee.

Risks Associated with NNN Franchise Investments

No investment is without risk, even with top franchise tenants. NNN lease investors should be mindful of several potential risks:

Tenant Financial Health: While many franchises are large and stable, a few have encountered difficulties. For instance, Rite Aid (a pharmacy chain outside our top 10) went through bankruptcy and closed many stores, highlighting that even “essential” retailers can falter. It’s crucial to monitor the financial news of your tenant (credit rating changes, earnings reports). If a franchisor or major franchisee faces financial trouble, lease payments and store viability could be at risk.
Franchisee Risk: In cases where the lease is with a franchisee, the performance and balance sheet of that specific operator matter. A smaller franchisee could default even if the brand as a whole is doing well. If that happens, you might not have recourse to the parent company. Diversified or larger franchisees mitigate this risk. It can be wise to vet how many units the franchisee runs and their reputation (some investors request financial statements of franchisees during due diligence).
Real Estate Re-Leasing: If your tenant decides not to renew at lease expiration (or worse, leaves early, though there are usually penalties for that), you will need to re-lease or sell a vacant property. Specialized buildings – like a fast-food restaurant with a unique facade or a pharmacy with a drive-thru – might require finding a similar use tenant. Sometimes dark stores can stay vacant for extended periods, especially if located in a weak market. Investors should ask: “If this tenant left in 15 years, who else could use this property?” Choosing properties with flexible layouts or prime locations helps reduce re-leasing risk.
Flat Rent / Inflation: A number of franchise leases (especially older ones from Walgreens, CVS, etc.) have flat rent for decades. While this guarantees the same income, inflation erodes the real value of that income over time. If you have a 20-year flat lease, the purchasing power of that rent could be much lower at the end. Leases with periodic rent bumps alleviate this, but those bumps are often modest. It’s a trade-off between absolute stability and growth. Investors may mitigate inflation risk by refinancing or by diversifying with some properties that have rent escalations.
Industry Changes: Broader industry trends can pose risks. For example, the rise of online pharmacies and mail-order prescriptions is a potential headwind for drugstore chains in the long run (though so far CVS and Walgreens have adapted by expanding clinical services). Similarly, the advent of electric vehicles raises questions for gas station-centric tenants like 7-Eleven (fuel sales may decline over decades, though convenience sales remain). Restaurant tastes can change as well – today’s popular chain could fall out of favor if it doesn’t continue to innovate. Investors should keep an eye on whether the franchise concept is keeping up with consumer preferences and technology.
Lease Structure Details: Not all “NNN” leases are absolute. If the lease is double-net, unexpected capital expenditures (like a roof replacement or HVAC system failure) could fall on the landlord, impacting returns. Additionally, some leases have co-tenancy clauses or sales kick-out clauses (more common in retail strips than standalone NNN, but worth checking) that could allow a tenant to leave or demand rent reductions under certain conditions. Understanding the fine print of the lease is important to avoid surprises.

Best Practices for Evaluating Franchise Tenants

Given the above risks and factors, here are some best practices for evaluating and managing NNN franchise investments:

Do Your Homework on the Tenant: Go beyond the offering memorandum. Check recent news, earnings, and credit reports for the tenant company. If it’s a public company, read analyst reports or SEC filings for insight. For franchisees, don’t hesitate to ask for financial information or references. A quick web search can reveal if a franchisee has been involved in any lawsuits or has a shaky history.
Examine the Lease Document: Always review the actual lease (and have a real estate attorney review it). Confirm who is responsible for what (maintenance obligations, who handles casualty events, etc.), the schedule of rent increases, and any unusual clauses. Verify that the lease has a solid guarantor. If it’s a franchisee, is there a personal guarantee or corporate guarantee from a larger entity? Small details like noticing requirements or options conditions should be understood as well – these can affect your rights later.
Consider Unit-Level Economics: If you can obtain store sales data (sometimes provided in marketing packages or tenant disclosures), compare the rent to the store’s revenue. A rent coverage ratio (store sales divided by annual rent) above 2x or 3x is generally a good sign of a healthy location. Even without exact figures, you can infer some performance: a parking lot consistently full of cars or a drive-thru line wrapping around the building suggests strong sales. High-performing locations are more likely to be kept open and renewed.
Location, Location, Location: This age-old real estate mantra applies to NNN properties too. A great tenant on a poorly located property can still be a challenge if the tenant ever leaves. Prioritize franchises in growing or stable areas with good traffic counts and visibility. Look at the surrounding anchors – is there a grocery store, school, or hospital nearby driving traffic? Also check if any major road changes or construction could impact access in the future (for example, a planned highway bypass might reduce traffic to a convenience store).
Portfolio Diversification: Avoid putting all your capital into one tenant or sector. Even within NNN franchises, diversify across different industries. For instance, one might invest in a mix of a pharmacy, a fast-food restaurant, a auto parts store, etc. This way, if a specific sector hits a downturn (say, new pharmacy reimbursement laws squeezing drugstores, or a fad diet temporarily hurting fast-food sales), your overall income stream is buffered by other sectors. Diversifying also includes geographic spread – owning properties in different regions can hedge against local economic slumps or natural disasters.
Plan an Exit Strategy: While NNN leases are long-term, consider your exit options. If you needed liquidity, is the property something that could be easily sold to another investor? Generally, well-located, long-term leased franchise properties are highly liquid in the investment market. Properties with fewer than 5 years remaining on the lease might be harder to sell or finance, so you may need to line up renewal or be prepared to sell at a discount. Knowing the timeline of your hold and the lease term remaining is key. Many investors try to sell or exchange into a fresh property once a lease gets within 5–7 years of expiry if renewal hasn’t been nailed down.
Use Professional Resources: Leverage platforms and professionals. Commercial brokers specializing in net lease can provide comps and market insight for specific tenants. Online marketplaces like Brevitas allow you to filter listings by tenant, cap rate, and location, making it easier to find the exact type of franchise NNN deal you want. Setting up search alerts on Brevitas for specific tenants (e.g., “Chick-fil-A ground lease” or “NNN pharmacy in California”) can give you a first-mover advantage when new opportunities hit the market. Additionally, networking with other NNN investors (through real estate investment groups or forums) can yield valuable anecdotes and tips – learning from others’ experiences helps inform your own strategy.

How Brevitas Supports NNN Investors

Brevitas is a commercial real estate marketplace designed to make finding and closing NNN investments more efficient. For investors specifically interested in triple-net lease franchises, Brevitas offers several useful features:

Robust Search & Filtering: Brevitas’s property search allows you to filter listings by keywords, location, property type, cap rate, lease term, and more. For example, you can search for “NNN lease franchises” or a specific tenant name to pull up relevant opportunities. Dedicated filters for Triple Net Lease properties help you zero in on true NNN deals. This saves time compared to scouring multiple brokerage listings scattered across the web.
Curated Listings of Top Brands: Many listings on Brevitas feature the very franchises discussed in this article. It’s common to find offerings for Starbucks, McDonald’s, Walgreens, CVS, and others on the platform at any given time. Each listing provides details on the lease terms, tenant, rent, and sometimes even tenant financials or sales, giving you the data needed to evaluate the deal. Brevitas often has exclusive or off-market postings as well, expanding the inventory beyond what you might find on public sites.
Transaction Tools: Beyond discovery, Brevitas provides tools to help in the transaction process. You can sign confidentiality agreements and download due diligence documents (leases, tenant reports, site plans) directly through the platform’s Deal Room feature. This streamlines the evaluation stage. If you decide to move forward, Brevitas enables making offers or contacting brokers securely. Essentially, the platform can handle everything from initial search to LOI submission in one place.
1031 Exchange Support: Brevitas is popular among 1031 exchange buyers who need to identify replacement properties quickly. The ability to set alerts and get instant updates on new NNN listings can be crucial when you’re on a tight identification deadline. Brevitas also has a network of brokers and experts – through the platform you can connect with professionals who understand 1031 requirements and NNN deals, ensuring a smoother exchange process.
Market Insights: The Brevitas platform isn’t just listings – it also offers resources like the Brevitas Bulletin (blog articles and industry research). For NNN investors, this means you can read up on market cap rate trends, tenant news, and investment strategies (much like the insights shared in this article) right on the site. Staying informed helps you make better investment decisions. Brevitas effectively combines a marketplace with an information hub, tailored for real estate investors.

In summary, Brevitas provides a one-stop solution for finding quality NNN franchise properties and executing your investment strategy. Whether you’re looking for that prime triple net lease investment with a Chick-fil-A or planning a diversified portfolio of NNN retail franchises, the platform is built to support your goals. By leveraging Brevitas’s technology and network, investors can save time, reduce friction, and gain access to opportunities nationwide, all while staying educated about the market.

Conclusion

Retail franchise tenants have proven to be pillars of stability in the NNN lease market. The top 10 franchises profiled above – from Starbucks and McDonald’s to Walgreens and Dollar General – exemplify the qualities that make triple-net investments so appealing: essential products and services, strong brand recognition, long-term corporate-backed leases, and locations that draw consistent consumer traffic. When structured correctly, NNN franchise properties can deliver reliable, passive income for many years, functioning almost like high-yield bonds backed by real estate. However, prudent investors will still perform careful analysis, looking at tenant credit, lease details, and location fundamentals, to ensure each asset meets their risk-return criteria.

The good news is that information and opportunities are more accessible than ever. Platforms like Brevitas enable investors to identify stable NNN lease tenants and evaluate offerings with ease, keeping pulse on the latest market listings and data. By combining thorough due diligence with the inherent strengths of franchise-backed real estate, investors can confidently build a portfolio of triple-net lease investments that weathers economic cycles and generates steady cash flow. In a world of market uncertainties, owning a property leased to a top-tier franchise can be a reassuring anchor in an investment strategy. As always, aligning each investment with your long-term objectives and diversification plan is key. With the right approach, NNN leases with retail franchises can be a win-win: hands-off real estate ownership for you, and a thriving location for the tenant. That’s truly the power of a well-chosen NNN franchise investment.