FORM 10-K


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                 --------------

(Mark One)

[X]      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
         SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]

         For the fiscal year ended December 31, 1997

                                       OR

[ ]      TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
         OF THE SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

         For the transition period from ______________ to _______________

Commission File Number 1-13116


                    FRANCHISE FINANCE CORPORATION OF AMERICA
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


        Delaware                                                 86-0736091
------------------------                                     -------------------
(State of incorporation)                                      (I.R.S. Employer
                                                             Identification No.)

The Perimeter Center
17207 North Perimeter Drive
Scottsdale, Arizona                                                85255
---------------------------                                  -------------------
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code:  (602) 585-4500

Securities Registered Pursuant to Section 12(b) of the Act:

         Title of each class           Name of each exchange on which registered
         -------------------           -----------------------------------------
Common Stock, par value $.01 per share          New York Stock Exchange

Securities Registered Pursuant to Section 12(g) of the Act:  None

         Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
Registrant  was required to file such  reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X  No
                                             ---   ---

         Indicate by check mark if disclosure of delinquent  filers  pursuant to
Item 405 of Regulation S-K is not contained  herein,  and will not be contained,
to the best of the  Registrant's  knowledge,  in definitive proxy or information
statements  incorporated  by  reference  in Part  III of this  Form  10-K or any
amendment to this Form 10-K. [X]

         The aggregate  market value of the voting stock held by  non-affiliates
of the Registrant as of March 2, 1998 was $1,124,067,124.

         The number of shares of the Registrant's $.01 par value common stock as
of March 2, 1998 was 44,063,526.

                       DOCUMENTS INCORPORATED BY REFERENCE

         Part III, Items 10, 11, 12 and 13 are  incorporated by reference to the
definitive proxy statement for the  Registrant's  Annual Meeting of Shareholders
to be held on May 13, 1998, to be filed pursuant to Regulation 14A.
<PAGE>
PART I

Item 1.  Business.

Background

         Franchise    Finance    Corporation   of   America    ("FFCA")   is   a
self-administered  real estate investment trust (REIT) which primarily  provides
real  estate  financing  to the  chain  restaurant  industry,  as well as to the
convenience  store  and  automotive  service  and  parts  industries.  FFCA  was
incorporated  in the state of Delaware  in 1993 and is  successor  to  Franchise
Finance Corporation of America I ("FFCA I"), a Delaware corporation,  and eleven
public limited  partnerships  which were merged into FFCA on June 1, 1994. FFCA,
together  with its  predecessors,  has been  engaged in the  financing  of chain
restaurant  real estate since 1980 and began  financing  convenience  stores and
automotive  service and parts stores in 1997.  At December  31,  1997,  FFCA had
interests in approximately  2,500  properties  operated by over 400 operators in
approximately  50 chains  located in 47 states.  The common  stock of FFCA began
trading on the New York Stock Exchange on June 29, 1994 under the symbol "FFA".

         In  1997,  FFCA  completed  numerous  transactions  that  have,  or are
expected  to  have,  an  impact  on its  results  of  operations  and  financial
condition.  During  1997,  FFCA  and its  affiliate  FFCA  Mortgage  Corporation
(Mortgage Corp.) originated $504 million in new sale-leaseback and mortgage loan
investments.  This exceeded FFCA's 1996 investment level by almost 50%. Eighteen
percent of the 1997  investments  ($92 million)  resulted from FFCA's  expansion
into the convenience  store and automotive  service and parts industries  during
the fourth quarter of 1997.

         In June 1997,  FFCA  completed its second  securitization  transaction.
Certain  mortgage  loans  originated  by FFCA and Mortgage  Corp.  totaling $261
million were securitized and Secured Franchise Loan Trust Certificates were sold
to investors.  The servicing  rights on these  mortgage loans and any additional
payments  based upon a  participation  in the gross sales of the  restaurant  or
specified  contractual  increases  were  retained  by FFCA.  FFCA also  retained
certain interests in approximately 11% of the aggregate  mortgage loan principal
balance  through  the  purchase of  subordinated  investment  securities  of the
securitization  trust. During 1997, the loan origination process was transferred
to FFCA's wholly-owned subsidiary, FFCA Acquisition Corporation,  and at the end
of 1997, Mortgage Corp. was dissolved.

         To  continue  the growth  rate  achieved in 1997,  FFCA  increased  its
capital by  completing  various  equity  transactions  and  expanded its line of
credit.  From  September  1997 to February  1998,  FFCA sold  approximately  3.2
million shares of common stock to three separate unit investment trusts with net
proceeds  from the sales  aggregating  approximately  $82 million.  On March 13,
1998,  FFCA sold  approximately  3.8  million  shares  of common  stock for $100
million to a real  estate-related  investment  firm. As an  alternative  capital
source, FFCA's shareholders voted to authorize the issuance of 10 million shares
of preferred  stock at FFCA's annual meeting in May 1997. As of the date of this
report,  FFCA has not yet issued any shares.  In April 1997,  FFCA increased its
acquisition  loan facility to $350 million to  accommodate  its higher  mortgage
loan origination
                                       2
<PAGE>
business  and to increase  its  liquidity.  In  addition,  FFCA  entered  into a
separate  $100 million loan  facility in January 1998  expiring in May 1998,  by
which time it plans to complete a securitization transaction.

         Other  events  occurring  in 1997 include an increase of 4.4% in FFCA's
quarterly  dividend  to $0.47 from $0.45 for the fourth  quarter of 1997 and the
establishment of an  employee stock  purchase  plan  ("ESPP").  Under  the ESPP,
employees can purchase stock through payroll  deductions at a price equal to 85%
of the fair market value of the stock, as defined in the ESPP agreement.

         As of  December  31,  1997,  FFCA  had 103  full-time  employees  and 4
part-time employees.

Factors Affecting Future Operating Results

         The provisions of the Private Securities  Litigation Reform Act of 1995
(the "Act"), became effective in December 1995. The Act provides a "safe harbor"
for  companies  which  make  forward-looking  statements  providing  prospective
information. The "safe harbor" under the Act relates to protection for companies
with  respect  to  litigation  filed  on  the  basis  of  such   forward-looking
statements.

         FFCA wishes to take  advantage of the "safe  harbor"  provisions of the
Act and is therefore  including  this section in its Annual Report on Form 10-K.
The  statements  contained  in  this  Annual  Report,  if  not  historical,  are
forward-looking  statements  and  involve  risks  and  uncertainties  which  are
described  below that could cause actual results to differ  materially  from the
results,  financial  or  otherwise,  or  other  expectations  described  in such
forward-looking  statements.  These  statements  are  identified  with the words
"anticipated,"  "expected,"  "intends," "seeks," or "plans," or words of similar
meaning.  Therefore,  forward-looking  statements should not be relied upon as a
prediction of actual future results or occurrences.

         FFCA's   future   results  may  be   affected  by  certain   risks  and
uncertainties including the following:

         o        Investment in real estate in the chain restaurant  industry as
                  well as the convenience store and automotive service and parts
                  industries is subject to general  economic  market  conditions
                  and conditions unique to each industry.

         o        Industry  risks  include a decrease  in demand  for  products,
                  increased   labor   costs,   increased   number  of  competing
                  properties  offering  similar products and dependence on local
                  management for the profitable operation of the properties. The
                  chain  restaurant  industry is subject to the risk of changing
                  consumer  demand and food  preferences and  contaminated  food
                  products.   The  convenience  store  industry  is  subject  to
                  competition  from  new  retail  facilities   offering  similar
                  products in the immediate  vicinity of each  particular  store
                  and, to the extent applicable,  the margins available from the
                  sale of gasoline and  availability of gasoline  supplies.  The
                  automotive   service   and  parts   industry   is  subject  to
                  technological changes in the
                                       3
<PAGE>
                  production  and   maintenance  of  automobiles   and  changing
                  consumer preferences in transportation options.

         o        FFCA invests  primarily  in chain  restaurant  properties  and
                  convenience   and   automotive   service   and  parts   retail
                  facilities.  FFCA's  success is dependent  upon the success of
                  these industries in general and the specific chains and retail
                  facilities which FFCA finances.

         o        FFCA intends to continue to originate and securitize  mortgage
                  loans and to have responsibility for mortgage servicing.  FFCA
                  may  also own  subordinated  interests  in  these  securitized
                  loans.  To the extent of such  ownership,  FFCA is in a "first
                  loss"  position  with  respect to third  parties who  purchase
                  senior securities in the securitization and has a greater risk
                  with  respect  to  its  investment  in the  nonpayment  of the
                  mortgage loans.

         o        FFCA   invests  in   derivative   financial   securities   and
                  instruments  for the  sole  purpose  of  providing  protection
                  against  fluctuations in interest rates.  These investments do
                  not  protect  FFCA from all  risks  associated  with  changing
                  market  conditions;  therefore,  the financial  performance of
                  FFCA could be adversely affected.

         o        FFCA has issued  senior  notes and medium  term notes that are
                  not   subject  to   amortization   requirements   or  periodic
                  redemption and intends to issue similar debt securities in the
                  future.  FFCA will be  subject to risks  associated  with debt
                  financing and refinancing,  including the ability to sell debt
                  in the future.

         o        FFCA is subject to all of the general  risks  associated  with
                  investment  in real estate such as adverse  changes in general
                  or local economic  conditions,  changes in supply of or demand
                  for similar or  competing  properties  in an area,  changes in
                  interest  rates  and  operating  expenses,  changes  in market
                  rental  rates,   inability  to  lease   properties   upon  the
                  termination or expiration of existing  leases,  the renewal of
                  existing  leases  and  inability  to  collect   payments  from
                  operators.

         o        FFCA  faces  competition  from  banks,   insurance  companies,
                  finance  companies,  leasing  companies  and other real estate
                  investment trusts in the acquisition, financing and leasing of
                  properties, which could adversely affect its growth.

         o        Even  though  the chain  store and retail  facility  operators
                  financed by FFCA are generally required to carry comprehensive
                  liability,   fire,  flood,   extended  coverage  and  business
                  interruption  insurance,  there are  certain  losses  that are
                  uninsurable.

         o        Under various  federal,  state and local  environmental  laws,
                  ordinances,  and  regulations,  FFCA  could be liable  for the
                  costs  of  removal  or   remediation  of  hazardous  or  toxic
                  substances on, under, in or near a chain store property.
                                       4
<PAGE>
         o        FFCA elected to be taxed as a REIT under the Internal  Revenue
                  Code of 1986, which entitles FFCA to a deduction for dividends
                  paid to its shareholders  when calculating its taxable income.
                  Although  FFCA intends to operate so that it will  continue to
                  qualify as a REIT, the complex  nature of the rules  governing
                  REITs, the ongoing  importance of factual  determinations  and
                  the  possibility  of future  changes  in FFCA's  circumstances
                  preclude  any  assurance  that FFCA will  qualify in any given
                  year.

         o        Income tax  treatment of REITs may be modified,  prospectively
                  or retroactively,  by legislative,  judicial or administrative
                  action at any time,  which,  in addition to the direct effects
                  such changes might have, might also affect the ability of FFCA
                  to realize its investment objectives.

         o        There  can be no  assurance  that  FFCA  will be able to raise
                  sufficient capital through borrowings, or the issuance of debt
                  and equity securities, to achieve its investment objectives.

         o        FFCA is  dependent on the efforts of its  directors,  officers
                  and key personnel and has no employment  agreements  with such
                  persons.  There can be no assurance that FFCA would be able to
                  recruit additional personnel with equivalent experience in the
                  event of their resignation.

Business Strategy

         FFCA's  primary  strategy is to provide  real estate  financing  to the
chain  restaurant  industry,  as well as the  convenience  store and  automotive
service and parts  industries,  through various  financial  products,  including
sale-leaseback  transactions,  mortgage loans,  equipment loans and construction
financing.  FFCA seeks to have the  properties  which it  finances  operated  by
experienced   multi-unit  operators  conducting  business  under  nationally  or
regionally  recognized  brand names.  As a result,  FFCA  believes it is able to
achieve a better risk-adjusted return for its shareholders.  Properties financed
by FFCA are generally  operated by multi-unit  operators that include both chain
store franchisors and franchisees.  Over 80% of the properties  financed by FFCA
are fast food restaurants in chains such as Burger King, Hardee's,  Arby's, Jack
in the Box, Wendy's,  Kentucky Fried Chicken, Pizza Hut, Taco Bell, Mrs. Winners
and Whataburger.  Full service  restaurant  chains  comprising over 8% of FFCA's
portfolio include Applebee's,  Black Eyed Pea, Denny's, Chili's and Fuddruckers.
Convenience  store and automotive  service and parts stores account for about 8%
of the portfolio and include E-Z Serve and White Hen Pantry  convenience  stores
and Econo Lube.

         Since 1980,  members of FFCA's  management  group have gained extensive
experience in the development and refinement of systems of operation, management
and  research  which have  enhanced  FFCA's  ability to  identify,  evaluate and
structure new investments. FFCA's experience in the real estate industry results
in  efficient  in-house  performance  of  virtually  every aspect of real estate
acquisition and management and is reflected in FFCA's eight  departments,  which
include
                                       5
<PAGE>
Accounting,  Asset  Management,  Corporate  Communications,  Corporate  Finance,
Information  Systems,  Legal  Services,  Property  Management  and  Research and
Underwriting.

         FFCA's principal business objective is to maximize  shareholder wealth.
FFCA intends to increase  cash flow per share (i) through  continued  investment
activity, (ii) by controlling expenses through greater economies of scale, (iii)
through the receipt of contractual  lease escalations and (iv) by increasing its
use of  internally-generated  cash  flow for  investments.  Management  seeks to
achieve growth in cash flow,  while  maintaining low portfolio  investment risk,
through  diligent  adherence  to its tested  underwriting  criteria,  investment
diversification and conservative capital structure.

         FFCA  intends  to  provide  financing  to large,  multi-unit  operating
companies  principally  through  sale-leaseback  transaction and mortgage loans.
FFCA also provides financing for equipment located at the chain store properties
for which it  provides  real estate  financing.  In  addition,  FFCA may provide
construction  financing for qualified operators.  Consistent with its experience
between June 1994 and December 1997, chain store properties financed by FFCA are
anticipated to be primarily existing locations which are either being refinanced
or financed in connection with  acquisitions by operating  companies.  FFCA also
provides  financing for new  development  which is typically in, or adjacent to,
established markets where the chain brand is recognized.  FFCA, in the course of
its business, from time to time evaluates other investment  opportunities in the
chain restaurant  industry.  FFCA intends to consider appropriate new investment
opportunities in the future.

         FFCA  structures  its  investments to enhance the stability of its cash
flows.  FFCA's  sale-leaseback  transactions are triple-net leases which provide
that the  lessees are  responsible  for the  payment of all  property  operating
expenses,  including property taxes, maintenance and insurance costs. Therefore,
FFCA is generally not required to make significant  capital  expenditures in the
properties   which  it  owns  and  leases  to  chain   operators.   Both  FFCA's
sale-leaseback  and mortgage  financings are generally for twenty-year terms and
mortgage products are generally fully amortizing over the term of the loans. The
sale-leasebacks entered into by FFCA are retained in its portfolio and generally
provide for base rentals plus additional  payments based upon a participation in
the gross sales from the  properties  or  specified  contractual  increases.  In
addition,  FFCA will purchase  existing  properties  which are subject to leases
already in place. The mortgage loans originated by FFCA will generally be pooled
and sold in securitized  offerings,  with FFCA generally  retaining or acquiring
interests  in the pool in the  form of  subordinated  securities,  interest-only
securities and mortgage servicing rights.

         FFCA  continually  monitors and  administers its investments to enhance
the stability of its cash flows.  FFCA's Asset  Management,  Legal  Services and
Property  Management  departments  together  serve to  monitor  all  aspects  of
portfolio performance.  FFCA's properties are regularly inspected by an in-house
appraisal  staff  to  monitor  asset  condition.  Financial  data  is  regularly
collected on the properties  financed by FFCA to determine their  profitability.
Asset  Management  staff monitor payment  receipts,  as well as property tax and
insurance  compliance.  Lease and mortgage  payments are generally  collected by
electronic account debits on the first day of each month. Underperforming
                                       6
<PAGE>
and non-performing  leases and loans are administered by Property Management and
Legal  Services  personnel  who also  supervise the in-house  administration  of
property dispositions and tenant  substitutions.  FFCA has an established record
of resolving  underperforming and non-performing  leased assets, with an average
time of approximately six months to relet such properties.

         FFCA's investments are diversified by geographic region,  operators and
chain.  FFCA's  future  investments  are  anticipated  to be  funded  through  a
combination  of debt and  equity  issuances,  internally-generated  cash and the
securitization of mortgage loans.

Information Systems

         To enhance its investment evaluation and origination, FFCA has invested
extensively  in information  systems which are specific to the chain  restaurant
industry.  FFCA's databases include specific chain restaurant  location data for
over  105,000  locations  in the United  States,  and  demographic  information,
traffic  volumes  and  information   regarding   surrounding  retail  and  other
commercial development that generate customer traffic. FFCA is in the process of
negotiating  for  competitive  databases  (similar  to the  restaurant  industry
database) for the  convenience  store  industry and the  automotive  service and
parts  industry.  FFCA also  maintains a database of  approximately  7,000 chain
restaurant  industry  participants,  as well as  databases  of  restaurant-level
financial performance for existing and prospective clients. FFCA has the ability
to integrate the information in its locations, participants and restaurant-level
financial   databases  in  a  geographic   information   system  which  contains
demographic,  retail  space,  traffic  count and  street  information  for every
significant market in the United States.  FFCA has also collected extensive data
regarding management practices within the chain restaurant industry,  franchisor
practices and industry trends.

         The information collected by FFCA is actively used to assess investment
opportunities,   measure   prospective   investment  risk,   evaluate  portfolio
performance and manage underperforming and non-performing assets. FFCA publishes
research  on the  chain  restaurant  industry  which  includes  observations  of
industry  issues  and  trends,  areas  of  growth,  and the  economics  of chain
restaurant operation.  It is also in the process of creating similar reports for
the convenience store industry and the automotive  service and parts industries.
FFCA has employed  its client and  collections  data from over fifteen  years to
develop statistical models which aid in the evaluation of potential investments.
FFCA intends to continually  develop,  improve and use its real estate  industry
knowledge through research and broader application of information  technology to
lower portfolio risk, improve performance and improve its competitive advantage.

         FFCA has internally  developed  portfolio  management systems suited to
its  specialized  focus on the  financing  of chain  stores.  As a result of the
development by FFCA of its automated systems technology,  FFCA can monitor large
diversified portfolios by exception,  including lease and mortgage payments made
through  automated  bank account  debits,  property  taxes,  property  insurance
coverage and property financial performance.
                                       7
<PAGE>
         During  1997,  FFCA  completed  the  design of its new  accounting  and
servicing  information  system  that was  begun in 1996 and was  implemented  on
January 1, 1998. The design of FFCA's new property  management system is nearing
completion  and FFCA plans to deploy this new system during 1998. The design and
implementation  of these new  systems,  including  related  upgrades in computer
hardware,  was necessary to develop a more efficient  portfolio servicing system
that would permit a high level of growth in the FFCA portfolio while  containing
operating costs. The new systems are also "Year 2000" compliant which means that
the  systems  will know how to handle any dates that refer to the 21st  century.
With the planned installation of the new property management system in 1998, all
of FFCA's significant information systems will be "Year 2000" compliant. FFCA is
in the process of assessing the key  suppliers  that it relies upon, in addition
to the other  systems  that are  sensitive to dates (such as the  telephone  and
power systems, elevators, security systems, and so on), and has developed a plan
for any such systems that are found to be noncompliant.

         A  five-phase  process to address the issues  associated  with the Year
2000  includes:  (1) an inventory and  assessment of the systems and  electronic
devices that may be at risk; (2) the identification of potential solutions;  (3)
the  implementation  of upgrades or replacements to affected systems or devices;
(4) the verification of compliance and testing of the revised  systems;  and (5)
the  training  of users on the new  systems.  To date,  FFCA has  completed  the
inventory and assessment phase of all critical computer hardware, as well as the
operating  system and database  software,  and has received  statements of "Year
2000"  compliance  from the related  vendors.  The  verification  of "Year 2000"
compliance  through  testing of these  systems  and  training of users is nearly
complete.

Investment Criteria

         Real estate investment  opportunities  undergo an underwriting  process
designed to maintain a conservative  investment profile.  The process includes a
review of the following factors:

     o   Chain  Store  Profitability.  FFCA seeks to invest in chain store real
         estate where the unit level economics from operations  provide adequate
         cash flow to support lease or mortgage payments related to the site.

     o   Chain Store Investment  Amount.  FFCA seeks to invest in properties for
         amounts which are not in excess of their fair market value.

     o   Site Considerations. FFCA seeks to invest in high profile, high traffic
         real  estate  which  it  believes   exhibits   strong  retail  property
         fundamentals.

     o   Market   Considerations.   FFCA  seeks  to  emphasize   investments  in
         properties used by chains having significant area market penetration.

     o   Operating Experience.  FFCA seeks to invest in properties of multi-unit
         chain store operators with strong operating and industry backgrounds.
                                       8
<PAGE>
     o   Credit Considerations. FFCA's investments generally have full tenant or
         borrower  recourse.  Many of  FFCA's  leases  and  mortgages  also have
         recourse to  guarantors  who are owners or  affiliates of the tenant or
         borrower.   FFCA  reviews  tenant,  borrower  and  guarantor  financial
         strength to assess the availability of alternate  sources of payment in
         the  event  that cash flow from  operations  might be  insufficient  to
         provide lease or mortgage payments.

     o   Physical  Condition.  FFCA seeks to invest in well-maintained  existing
         properties  or in  newly  constructed  properties.  FFCA has a staff of
         appraisal  professionals  who conduct physical site inspections of each
         property financed by FFCA.

     o   Chain Store Suitability.  FFCA seeks to primarily invest in real estate
         used by large  national and regional  chain store systems having annual
         system-wide sales of more than $250 million.

     o   Environmental  Considerations.  For each  property in which it invests,
         FFCA either obtains a Phase I environmental  assessment (and a Phase II
         environmental  assessment or other environmental  tests, if recommended
         by the related  Phase I) or an  environmental  insurance  policy from a
         third-party insurance carrier.

Chain Store Properties

         Although an individual  chain  store's  sales may vary by season,  FFCA
does not believe  that any aspect of its business is  significantly  seasonal in
nature. FFCA's portfolio is generally diversified by concept;  however, FFCA may
be  dependent  to a  certain  extent  upon  one or  more of the  franchisors  or
operating concepts since a failure of any of the franchisors or chain systems to
support  their  franchisees  or  chain  properties  could  result  in  financial
difficulty  for such  franchisees  and affect the ability of the  franchisees to
make payments to FFCA.  FFCA is not  affiliated  with any of the  franchisors or
franchisees.

         The  following   table  sets  forth  the  interests  held  by  FFCA  in
restaurant,  convenience  store and automotive  service and parts concepts as of
December  31,  1997.  The chain  distribution  shown  below  does not  represent
concentration  of specific  operators  under lease or mortgage loan  agreements.
These  agreements  are  with  the  operators,  not the  chains,  and  there  are
approximately 420 operators represented within FFCA's investment portfolio.
                                       9
<PAGE>
       Chain Distribution by Number of Properties as of December 31, 1997

                                                                      Percentage
                                                Securitized               of
         Chain                           FFCA    Interests    Total     Total
                                                    (1)
--------------------------------------------------------------------------------

Burger King                               260       116         376      15%
Hardee's                                  148       226         374      15%
Arby's                                    210       110         320      13%
Jack in the Box                           169         1         170       7%
Wendy's                                   150         5         155       6%
EZ Serve (2)                              149        --         149       6%
KFC                                        78        29         107       4%
Pizza Hut                                 107        --         107       4%
Taco Bell                                  80         7          87       4%
Mrs. Winner's                              10        66          76       3%
Applebee's                                 28        13          41       2%
Lee's Chicken                              38        --          38       2%
Black-eyed Pea                             34        --          34       1%
Perkins                                    23         5          28       1%
Fuddruckers                                26        --          26       1%
White Hen Pantry (2)                       26        --          26       1%
Whataburger                                24         1          25       1%
Fazoli's                                   24        --          24       1%
Chili's                                    21         2          23       1%
Popeye's                                   22        --          22       1%
Denny's                                    13         7          20       1%
Ryan's Family Steakhouse                   --        17          17       1%
Bojangles                                  15        --          15       1%
Non-chain properties                        8        --           8       0%
All other concepts                        192        21         213       8%
                                                            
                                      ------------------------------------------
                    Totals              1,855       626       2,481     100%
                                      ==========================================
----------
(1) Represents   securitized   mortgage  loans  in  which  FFCA  holds  residual
    interests.
(2) Convenience store property.

         One restaurant operator,  Foodmaker,  Inc.  ("Foodmaker"),  contributed
9.6% of FFCA's total rental and mortgage loan interest revenues  (generated from
its investment  portfolio) during 1997.  Foodmaker accounted for 10.9% and 12.5%
of FFCA's total rental and mortgage loan interest revenues during 1996 and 1995,
respectively. Foodmaker operates and franchises Jack in the Box 
                                       10
<PAGE>
restaurants.  The relative  decrease in the  percentage  of FFCA's  revenue from
Foodmaker  between  1995 and 1997 is due to the fact that  FFCA's  portfolio  is
growing and, as a result,  Foodmaker is becoming a relatively smaller portion of
the entire portfolio. This decrease is expected to continue.

Competitive Conditions

         The  financing  of chain store real estate for  multi-unit  chain store
operating  companies is both competitive and fragmented.  Competition  exists in
every geographic  market in which FFCA seeks to invest.  Competing  participants
include banks,  insurance  companies,  finance companies,  leasing companies and
other  real  estate  investment  trusts.  FFCA  believes  that  it  has  several
competitive  advantages  that enable it to be selective with respect to its real
estate investments.  The large market  capitalization of FFCA permits it to make
both large and small real estate investments and to obtain capital from numerous
sources at competitive  rates.  FFCA's real estate  investments are comprised of
properties that are  diversified by chain store  operator,  chain and geographic
location.  Diversification  reduces risk and has a favorable  impact upon FFCA's
access to, and cost of, capital.  FFCA's  "Preferred Client Program" is designed
to offer forward financing  commitments and a streamlined  financing process for
leading  chain  store  operators  in  order  to  build  on  long-term   business
relationships instead of the historic industry practice of financing real estate
on an  inefficient,  transaction-by-transaction  basis.  FFCA believes it offers
superior client service resulting from continuity of its management and industry
specialization   and  knowledge.   FFCA,   with  the  ability  to  provide  both
sale-leaseback  financing and mortgage  loans  (including a  variable-rate  loan
product  introduced  in 1996),  improves  the chain store  operators'  financing
flexibility and provides a competitive  advantage to FFCA in providing financing
opportunities.

The Food Service Industry

         The  food  service  industry,  as  defined  by the U.S.  Department  of
Commerce,  is one of the largest sectors of the nation's  economy.  During 1997,
the industry  generated an estimated $321 billion of revenue,  representing over
4% of the Gross Domestic Product ("GDP") of the United States.  The food service
industry  grew at an estimated  inflation-adjusted  rate of 1.7% during 1997, as
compared to a 2.5%  increase in the GDP for the same year.  This year marked the
sixth consecutive year of real sales growth rates for the industry.

         FFCA's management  anticipates that slowing new restaurant  development
will have a minimal impact on its ability to generate new investments. In recent
years, investments in newly-constructed restaurants have been a small percentage
of new  business  for  FFCA.  In 1997 and 1996,  the  percentage  of FFCA's  new
business  related  to  existing  restaurants  (as  compared  to  new  restaurant
construction)  was 93% and  85%,  respectively.  Although  the  number  of total
restaurants in the U.S. may not expand significantly, the dynamics at each chain
are  different.  While one chain may close many  restaurants,  other  chains may
expand significantly.  For new property investments, FFCA plans to target chains
which are expanding,  and plans to limit its  investments in property for chains
which are decreasing in size or experiencing low growth rates.
                                       11
<PAGE>
         The food  service  industry is  composed of three major food  segments:
commercial,  institutional  and military.  The  commercial  food service  sector
includes full service and fast food restaurants,  cafeterias/buffet restaurants,
social  caterers  and ice  cream/yogurt  retail  stores.  Within the  restaurant
industry,  the  fast  food  group is  typically  defined  as  those  restaurants
perceived  by consumers as fast food or take-out  establishments  without  table
service, specializing in pizza, chicken, hamburgers and similar food items. Full
service  includes  those  restaurants  in the  family,  steak and casual  dining
sections that do not meet the criteria for fast food.  Although  these  segments
can be further  differentiated by price, it is consumer  perception,  as well as
average  meal  ticket,  that  influence  how  individual  restaurant  chains are
categorized.   Research   indicates  that  an  average  fast  food  meal  ticket
approximates  $5, while the median full service meal ticket averages  between $7
and $15.

         Restaurant  industry  growth has exceeded  total food service  industry
growth during the past ten years,  as the  percentage of food consumed away from
home, as compared to total food consumption, has increased significantly.  Sales
in the  restaurant  industry have  increased by $59 billion  during the past ten
years, while total expenditures on food and beverages  everywhere have increased
only $55 billion.  This means that full service and fast food  restaurants  have
actually  taken business away from grocery and other retail  outlets,  which saw
revenues  from  food as a percent  of total  revenues  decrease  in the past ten
years.

         FFCA believes that the restaurant  industry will continue to experience
consolidation, as the largest chains become increasingly dominant in an industry
where cost control and economies of scale are critical.  During the past decade,
restaurant  chains have increased  market  position in comparison to independent
restaurant  companies by achieving  economies of scale and by developing  strong
brand equity.  In comparison to the restaurant  industry as a whole, the top 100
chains have shown an increase in their  percentage  of  restaurants  since 1980,
from 25% to 32% of total  U.S.  restaurants  in 1996,  and their  revenues  have
increased from 40% to 48% of total U.S. revenues during the same period. Much of
the  chains'  market  share  gains in the past,  came at the  expense  of small,
independent  operators,  who tended to be less sophisticated and less focused on
new restaurant development.  The top chains may face greater  chain-versus-chain
competition, however, rather than chain-versus-independent competition.

         The fast food group  generated an  estimated  31% of total food service
industry revenues,  and 47% of total restaurant industry revenues,  during 1997.
Successful  fast food operators have developed a low-cost  structure,  through a
focus on efficient meal preparation  processes and a strong retail  distribution
network that provides convenient, quality meals at affordable prices. Successful
fast food operators have relatively simple operations, which contribute to their
success as low-cost providers.  Fast food operators can differentiate themselves
from the  competition  through  marketing  efforts,  increasing  productivity by
training employees and upgrading technology, and simplifying in-store processes.

         Over 80% of FFCA's  portfolio is represented  by fast food  restaurants
which include,  but are not limited to, Burger King,  Hardee's,  Arby's, Jack in
the Box, Wendy's, KFC, Pizza Hut, Taco
                                       12
<PAGE>
Bell,  Mrs.  Winners and  Whataburger.  Full service  restaurant  chains,  which
comprise  over 8% of  FFCA's  portfolio,  include  Applebee's,  Black-eyed  Pea,
Denny's, Chili's and Fuddruckers.

Restaurant Chains

         In  addition  to  the  concentration  on  real  estate  for  fast  food
restaurants,  FFCA's investment focus has been on real estate,  which is used by
the national  and  regional  restaurant  chains.  According  to NPD  Recount,  a
national  consulting  group  which  specializes  in  the  restaurant   industry,
restaurant  chains having three or more properties  accounted for  approximately
47% of all  restaurants  in the United  States in 1997.  The  majority  of these
properties are fast food restaurants,  with others generally in the full service
segment.  Of the  210,000  chain  restaurants  having an  identified  restaurant
concept as of  December  31,  1997,  approximately  117,500  were within the 100
largest  restaurant  chains.  Each of these restaurant chains had 1997 projected
total system-wide sales exceeding $174 million.

         FFCA believes that the largest national  restaurant chains,  along with
prominent regional chains, are best positioned to compete effectively and retain
or increase market share in the food service industry.  These chains have strong
regional or national  presence,  which provide them with a "brand  equity" which
translates   into  resilience   within  a  mature  and   competitive   industry.
Accordingly,   FFCA  believes  that  a  diversified  portfolio  of  real  estate
investments  primarily centered in major restaurant chains will lower investment
risk.   Restaurant  chains  with  numerous  corporate  locations  and  extensive
franchisee  networks  have  effectively  become  significant  food  distribution
systems  with  distinct  competitive  advantages  over  smaller  chains and many
independent  restaurant  operators.  The establishment of such food distribution
networks  requires   significant  time  and  effort  which  results  in  certain
restaurant  chains  having   longer-term  track  records  and  more  predictable
performance patterns.  This has resulted in the larger restaurant chains gaining
greater dominance in the industry and growth in market share. However, the chain
restaurant  industry  is a  regional-market  type  of  business  and  nationally
prominent restaurant chains often have definitive regional areas of strength and
weakness.  Therefore,  FFCA's  investment  policy  emphasizes  strong restaurant
operators who can successfully  manage known restaurant  chains in their markets
and also takes into account the strength of specific restaurant chains.

The Convenience and Retail Petroleum Industry

         The convenience and retail petroleum  industry is a subset of two major
industries:  the food  industry and the oil and gas  industry.  The  convenience
store  portion of the  sector  evolved  primarily  out of  neighborhood  grocery
stores, while the retail gas portion is a relatively small part of the large oil
and gas industry, which also includes exploration and production of both oil and
gas, refining, and transportation as well as retail sales.

         Convenience  store sales have  increased  every year since the National
Association  of  Convenience  Stores  started  tracking  industry sales in 1971.
Industry sales in 1996 were $151.9 billion, 46.5% in merchandise sales and 53.5%
in gasoline  sales.  Convenience  store industry  average gross profit margin in
1996 was 20.2% of sales, with merchandise at 31.2% and gasoline
                                       13
<PAGE>
at 10.7% of sales.  Because of the volatility of gasoline margins and the threat
of pending  tobacco  legislation,  many  petroleum  marketers have or are adding
convenience stores and other ancillary services such as car washes,  lube shops,
and  fast  food  to  contribute  more  consistent  margins.   However,   average
convenience  store margins  decreased .5% between 1995 and 1996,  20.8% to 20.3%
respectively,  because of increasing  competition and labor costs. The number of
convenience  stores  increased  1.1% in 1996 to  94,200,  while  the  number  of
gasoline stations declined 1.2% between mid-1996 and mid-1997.

         Gasoline  prices have  decreased in recent  months,  increasing  retail
margins. Retail prices move slower than wholesale prices, causing retail margins
to increase when prices fall and tighten when prices rise, until  equilibrium is
reached.  The winter  1997/1998  price  decrease is attributed to a warm winter,
lower demand in Asia,  and  increased  production  from OPEC as well as non-OPEC
entities.  Along with lower prices has been an increase in gasoline demand.  The
Energy Information Agency forecasts a 3% increase in gasoline demand in 1998 and
that retail prices should remain depressed as well.

         Increased  competition,  margin  volatility,  and the increased cost of
doing business are expected to fuel further  consolidation  in the industry.  To
improve refining,  transportation and marketing  (downstream)  margins,  several
major oil companies have merged downstream operations. In addition,  mergers and
acquisitions are occurring among traditional  convenience store chains.  Many of
the smaller chains are closing  unprofitable  locations and  re-focusing on core
markets, divesting locations outside their core area. The largest North American
convenience  store  chains are adding more units,  with the top 10 adding  1,641
convenience  stores  over 1996 and the top 50  operating  2,060  units more than
1996. Nine of the top 10 chains are petroleum marketers, which also dominate the
top 50, operating 60% of all outlets held by the top 50 companies.

Automotive Aftermarket Industry

         The automotive  aftermarket industry refers to companies engaged in the
service, repair, maintenance and sale of products for motor vehicles after their
initial  sale to the public.  Basic  categories  in the  automotive  aftermarket
include  parts and service.  The parts sector is  comprised of  accessories  and
replacement parts, while service includes fluids, under the car, under the hood,
tires, autobody, and various combinations of these services.  Competitors in the
automotive  aftermarket  include  automotive  dealerships,  parts  stores,  full
service gasoline stations, general repair garages, tire outlets, discounters and
mass  merchandisers,  and specialty shops  (mufflers,  tune-ups,  transmissions,
paint and bodywork,  fast lube oil changes and auto glass). While some companies
adopt a single  service/product line approach,  others have expanded to multiple
lines.

         The 1996 automotive aftermarket reached $132.4 billion in sales, a 3.5%
increase over 1995 according to the Lang Marketing  Resources,  an  acknowledged
industry expert.  Purchased services, i.e. all labor costs (not including parts)
paid  by  end  users,   totaled  $34.6  billion,  or  26.1%  of  the  automotive
aftermarket,  a 4.5% increase over 1995. Car products  accounted for 31.6%, down
from 1995;  truck products  exceeded car products for the first year at 34.4% of
the
                                       14
<PAGE>
automotive  aftermarket and other products  accounted for 7.8% of the automotive
aftermarket.  Products  do  not  include  autobody  parts,  crash  parts,  audio
equipment,  sound  accessories,  fuel, tires,  wheels,  and other  miscellaneous
accessories.  Do-it-yourselfers  (DIY)  purchased $19.2 billion in car and truck
aftermarket  products  in  1996,  a 1%  increase  over  1995.  Sales  have  been
relatively  flat since 1994, and only increased  15.7% between 1986 and 1996. On
the contrary,  purchased services has increased 75.6% between 1986 and 1996. The
implications are that purchased services is a growth area and DIY products sales
(sold at auto parts stores) is mature.

         The  growth in the  Do-it-for-me  sector is  attributed  to  two-income
families with increased time  pressures,  a general  increase in consumer demand
for convenience,  increased  foreign vehicles,  emissions testing  requirements,
increased  vehicle  sophistication,   decreasing  blue  collar  jobs,  and  most
important aging baby boomers with disposable  income. The last trend, aging baby
boomers,  is expected  to continue to drive  growth in this sector into the next
century. In recent years, specialty shops began to franchise and rapidly expand,
which is expected to continue.  Many of these chains are growing by  acquisition
of smaller, independent operators. Lube chains have been pursuing franchisees of
other brands to join with them. The industry  growth rate for fast lube services
was 7.5% between 1996 and 1997. The top 10 fast lube chains account for over 34%
of all fast lube outlets and an  estimated  12.7% of all stores that change oil.
The anticipated 1998 growth rate for the top 10 lube chains is 18.0%.

         Specialty  repair shop share of the car and light truck service  market
grew from 12.6% in 1986 to 19.2% in 1996.  Between 1991 and 1996,  product sales
growth for  specialty  repair  shops was 49.2%.  SRSs  captured  an 18% share of
service bays in 1996,  increasing  their  number of bays 18.3%  between 1986 and
1996,  while the number of bays  operated  by service  stations  and garages and
vehicle dealers decreased  significantly,  20.1% and 12.7% respectively,  during
the same period.  Service bays are handling  more  vehicles,  approximately  155
vehicles  per service bay in 1996 (up from 118 in 1986),  and are  estimated  to
grow to 171 by the year 2001.

         Auto parts retail chains,  servicing the DIY customer, have experienced
rapid  consolidation  as small regional  chains sell stores to larger chains.  A
positive  factor  for  this  sector  is that  the  average  age of  vehicles  is
increasing,  while new car prices continue to climb. Aiding the overall industry
is an increase in the average  number of miles driven  annually,  an increase in
the number of drivers, and closure of full service gas stations.  However,  with
the  advent  of  vehicles  that can drive  100,000  miles  before a tune-up  and
generally  improved product  quality,  product sales are not likely to see major
increases  in the next few  years.  Retail  auto  parts  stores  sell 38% of DIY
customer  purchased  products.  The number of retail auto parts stores increased
18.5% between 1990 and 1994, and is expected to increase to 15,120 stores by the
year 2000,  a 17.3%  increase  over the 1996 count.  The top 10 parts  retailers
accounted for over 14% of the total outlets selling auto parts and experienced a
13.5% increase in outlets between early 1997 and year-end 1997.

Regulation

         FFCA, through its ownership and financing of real estate, is subject to
a  variety  of  environmental,  health,  land-use,  fire and  safety,  and other
regulation by federal, state and local
                                       15
<PAGE>
governments   that  affects  the  development  and  regulation  of  chain  store
properties.  FFCA's leases and mortgage loans impose the primary  obligation for
regulatory compliance on the operators of the chain store properties. Subject to
the  environmental  discussion  below,  in most  instances,  FFCA  does not have
primary  responsibility  for  regulatory  compliance  and any obligation of FFCA
would be  based  upon the  failure  of chain  store  operators  to  comply  with
applicable laws and regulations.

         Under  various   federal,   state  and  local  laws,   ordinances   and
regulations,  an owner or operator of real  property  may become  liable for the
costs of removal or remediation of certain hazardous  substances  released on or
within its property. Such liability may be imposed without regard to whether the
owner or operator knew of, or caused the release of the hazardous substances. In
addition to liability for cleanup costs, the presence of hazardous substances on
a property could result in the owner or operator incurring liability as a result
of a claim by an employee or another person for personal injury or a claim by an
adjacent property owner for property damage.

         FFCA has performed environmental  assessments or obtained environmental
insurance on each property  acquired or financed by FFCA since 1994.  Properties
acquired from FFCA's  predecessors did not have  environmental  audits performed
either at the time FFCA acquired the properties  from its  predecessors  or when
such  properties  were  acquired  by  such  predecessor  entities.  FFCA  is not
currently a party to any litigation or administrative proceeding with respect to
any property's compliance with environmental standards. Furthermore, FFCA is not
aware of nor does it  anticipate  any such action,  or the need to expend any of
its  funds in the  foreseeable  future  in  connection  with its  operations  or
ownership of existing properties which would have a material adverse effect upon
FFCA.

         No portion of FFCA's business is subject to renegotiation of profits or
termination  of contracts or  subcontracts  at the election of the United States
Government.  FFCA does not  manufacture  any  products  and  therefore  does not
require any raw materials in order to conduct its business.

Recent Legislation

         FFCA,  as the owner or lender with  respect to chain store real estate,
was not materially or directly affected by recent legislation in 1997;  however,
chain store  operators under lease and loan agreements with FFCA may be affected
by recent legislation.  This legislation  includes the Minimum Wage Increase Act
of 1996, which increased the federal minimum wage to $4.75 per hour from October
1996 through August 1997, and to $5.15 per hour in September 1997. To the extent
that chain store operators are unable to increase prices to reflect higher labor
costs or to more efficiently use existing labor, the profitability and cash flow
of a chain store may  decrease.  The effect of the increase in minimum wages may
be minimal for those chain store  operators who are required to pay higher wages
because of market conditions.

         Expensive  equipment upgrades required by the Underground  Storage Tank
regulation  set forth by the  Environmental  Protection  Agency could force some
smaller  convenience  store  operators out of business,  forcing them to sell to
larger, better capitalized companies. The date
                                       16
<PAGE>
for underground  storage tank  compliance is December 31, 1998.  Pending tobacco
regulations  could  change the way  convenience  stores sell  tobacco  products.
Convenience  store  operators  would be forced to create a special  area to sell
tobacco  products that is inaccessible to minors,  or stock all tobacco products
behind the counter and remove all related  promotional  displays  out of site of
minors.  Convenience  store  operators are seeking to provide other  services to
customers to decrease tobacco's  percentage of merchandise sales, as well as the
best methods to comply with the  regulations  (should  they become  enacted) and
maintain margins.

Item 2.  Properties.

         FFCA and its affiliates have provided financing to the chain restaurant
industry  as well as the  convenience  store and  automotive  service  and parts
industries   primarily  through   sale-leaseback  and  mortgage  loan  financing
transactions.  At December 31,  1997,  FFCA had  interests  in 2,481  properties
consisting  of  investments  in 2,275 chain  restaurants,  198  convenience  and
automotive stores and 8 other retail properties. FFCA's portfolio included 1,855
properties  represented  by  investments  in  real  estate  and  mortgage  loans
receivable and 626 properties represented by securitized mortgage loans in which
FFCA holds a  residual  interest.  Of the 1,855  properties  included  in FFCA's
investment  portfolio at December 31,  1997,  FFCA has an ownership  interest in
1,477 properties on a fee-simple basis in which FFCA holds title to the property
(the  "owned"   properties).   FFCA  also  holds  title  to  the   equipment  on
approximately  one-eighth  of these  properties.  The real estate  owned by FFCA
consists of the land and buildings  comprising each chain  property,  except for
approximately  23  properties  at December 31, 1997 on which FFCA holds title to
the land only and made  mortgage  loans for the related  buildings  (the "hybrid
mortgages").   The  remaining   properties  represent  mortgage  loan  financing
transactions  in which FFCA  holds a first  mortgage  on the land and  buildings
comprising the properties (the "financed  properties").  The properties owned by
FFCA and the land  related  to the  hybrid  mortgages  are  leased  to the chain
operators under long-term net leases.

         FFCA also owns its  corporate  headquarters  located  at The  Perimeter
Center in Scottsdale, Arizona, consisting of approximately 60,000 square feet of
building on approximately  five acres of land. The land and building  comprising
FFCA's corporate  headquarters  serve as collateral on the related mortgage note
payable.

         FFCA's  chain store  properties  are  typically  located on  commercial
corridors with  significant  automobile  traffic and are  characterized  by high
visibility and easy access  required for retail  property.  Locations  generally
fall into five categories,  including  shopping center and mall pad or outparcel
sites,  interstate  highway  locations,  central  business  district  locations,
residential neighborhood locations and retail and commercial corridor locations.
A chain  store is located on each of the  properties  except  eight,  which were
converted to other uses, such as a bank and an optical retail outlet.

         Generally,  all properties owned or financed by FFCA are  free-standing
and  surrounded  by paved parking  areas.  The land size for a typical fast food
restaurant  generally  ranges from 30,000 to 40,000  square feet,  with original
acquisition costs generally ranging from $200,000 to $400,000.
                                       17
<PAGE>
Full service  restaurant  land averages  range from 40,000 to 80,000 square feet
and from  $500,000 to $900,000 in land  acquisition  costs.  The  buildings  are
principally of the current design of the restaurant  concept and are rectangular
buildings  constructed from various  combinations of stucco,  steel, wood, brick
and tile.  Fast food  restaurant  buildings  generally range from 1,500 to 4,000
square feet in size,  with the larger stores having a greater  seating  capacity
and equipment area. Site preparation varies depending upon the area in which the
fast  food  restaurant  is  located  and on the size of the  building  and site.
Building and site  preparation  costs  generally range from $250,000 to $700,000
for each property. Full service restaurant building averages range from 5,000 to
9,000  square  feet and from  $750,000 to $1.2  million in building  acquisition
costs.

         Convenience  store  sizes  range from 800 square feet for a gas station
with a store  that  sells  only the fast  moving  items  found in a  traditional
convenience  store  (tobacco,  beverages  and snacks) to 5,000 square feet for a
store that has a bakery, a sit down restaurant area or a pharmacy (many of these
locations also sell gasoline). The typical convenience stores generally range in
size from 2,000 to 3,000 square feet. In 1996,  the original  investment per new
store averaged  $950,000 for a rural  convenience  store (24% land, 35% building
and 41%  equipment) and $1.2 million for an urban  convenience  store (35% land,
33% building 32% equipment).

         Automotive  chain stores range in size  depending on the type of store.
Automotive parts store buildings generally range from 6,000 to 9,000 square feet
with total  original  acquisition  costs  ranging from $800,000 to $1.8 million.
Quick lube buildings are typically 2,500 square feet and are on 17,000 to 25,000
square feet of land.  Most are located  within  shopping  centers and have 2 - 6
bays,  with total  acquisition  costs  ranging  between  $500,000 and  $700,000.
Combination  specialty  stores  (offering  brakes,  mufflers,  lube,  etc.)  are
typically free standing,  drive through  buildings  generally ranging from 2,200
and 3,400 square feet on a lot or shopping center pad of approximately 15,000 to
25,000 square feet. Total acquisition costs range from $550,000 to $900,000.

         Management  believes  that its chain  store  properties  are covered by
adequate  comprehensive  liability,  fire,  flood and  extended  loss  insurance
provided by reputable  companies,  with  commercially  reasonable  and customary
deductibles  and limits.  Certain types and amounts of insurance are required to
be carried by each chain store  operator  under the  financing  agreements  with
FFCA.  There  are,  however,  certain  types of  losses  (such  as from  wars or
earthquakes)  that may be either  uninsurable or not  economically  insurable in
some or all locations.  In certain  circumstances  FFCA may permit a chain store
operator to  self-insure  for certain types of losses.  An uninsured  loss could
result in a loss to FFCA of both its capital investment and anticipated  revenue
from the affected property.

         FFCA's lease and mortgage loan financing  documents  require each chain
store operator to make any expenditure  necessary to comply with applicable laws
and as may be required under any applicable franchise agreement; therefore, FFCA
is generally not required to make significant capital expenditures in connection
with any property it financed.  Capital  expenditures  amounted to approximately
$16,000 in 1996 and  $40,000 in 1995.  There  were no  capital  expenditures  on
properties in 1997.
                                       18
<PAGE>
         As of March 2,  1998,  FFCA and its  affiliates  owned or had  financed
2,640 properties in 47 states and all but 26 of the properties were being leased
or were  performing  under a mortgage  loan  agreement.  Of these  nonperforming
properties,  15 are being actively remarketed and 11 are currently held for sale
after extensive  efforts to remarket these  properties did not produce  suitable
lessees.  Vacant  properties  held for sale  represent  less than one percent of
FFCA's total real estate investment portfolio.

         FFCA invests in chain store real estate  throughout  the United States.
No  one  property  is a  principal  property  of  FFCA,  because  each  property
represents  less than one percent of FFCA's total  assets.  Reference is made to
the Schedule of Real Estate and  Accumulated  Depreciation  (Schedule III) filed
with this Report for a summary of the  geographic  diversity  of the  properties
owned by FFCA as of December 31, 1997. In addition,  FFCA has financed,  through
mortgage loans,  certain chain store  properties  located  throughout the United
States.  Reference  is made to the  Schedule  of  Mortgage  Loans on Real Estate
(Schedule  IV) filed  with this  Report  for a summary  of  properties  financed
through  mortgages  in FFCA's held to  maturity  portfolio.  In 1997,  FFCA also
financed  mortgage  loans held for sale which total $252 million at December 31,
1997.   Generally,   these  loans  are  first  mortgage  loans  for  restaurant,
convenience store or automotive  service and parts store land,  buildings and/or
equipment.   The   properties   financed   through  these   mortgage  loans  are
geographically  diverse ranging from 5% located in the West North Central region
of the United States to 23% located in the Southeast region.

         During 1997,  approximately  75% of FFCA's  revenues  were derived from
real estate  investments  leased to restaurant  operators.  The leases have been
originated by FFCA and its predecessors  since 1981. The leases are generally 20
years in length  with two or four  five-year  renewal  options.  The  expiration
schedule of the initial  term of FFCA's  leases  extends  through  2017,  with a
weighted term of such investments of 11.7 years as of December 31, 1997.  During
1997, 17% of FFCA's lease revenues were derived from leases that expire in 2005.
FFCA's lease  revenues  derived from leases which expire in 2015 were 11%,  with
10% in 2016 and 10% in 2007.  In all other  years,  the lease  revenues are less
than 10% of total lease revenues.  With expected continued  investment activity,
FFCA anticipates that its exposure to annual lease  expirations will become more
diversified.

Item 3.  Legal Proceedings.

         FFCA is not presently  involved in any material  litigation nor, to its
knowledge, is any material litigation threatened against FFCA or its properties,
other than routine litigation arising in the ordinary course of business.

Item 4.  Submission of Matters to a Vote of Security Holders.

         No matters were submitted to a vote of FFCA's  security  holders during
the fourth quarter ended December 31, 1997.
                                       19
<PAGE>
                                     PART II

Item 5.  Market for Registrant's Common Equity and Related Stockholder Matters.

Market Information

         FFCA's common stock is currently  traded on the New York Stock Exchange
("NYSE")  under the symbol FFA. FFCA began trading on the NYSE on June 29, 1994.
The following table sets forth the high and low sales prices per share as quoted
by the NYSE for the following quarters of the fiscal years indicated:

                                          Sales Prices        Dividends
                                          ------------        ---------
           Fiscal 1997                  High         Low      Declared
           -----------                  ----         ---      --------
           Fourth Quarter              $27.87      $24.25      $  .47
           Third Quarter                27.56       24.18         .45
           Second Quarter               27.00       22.75         .45
           First Quarter                27.50       23.75         .45
                                                               ------
                                                               $ 1.82
                                                               ======
           Fiscal 1996             
           -----------
           Fourth Quarter               27.81       22.50      $  .45
           Third Quarter                24.50       22.25         .45
           Second Quarter               23.12       18.75         .45
           First Quarter               $23.50      $19.25         .45
                                                               ------
                                                               $ 1.80
                                                               ======
                            
         Future  distributions will be dependent upon cash flow from operations,
financial position and cash requirements of FFCA. Management of FFCA anticipates
that  cash  generated  from  operations  will be  sufficient  to meet  operating
requirements  and provide  the level of  shareholder  distributions  required to
maintain its status as a REIT.

Holders

         There were 18,430 holders of record of FFCA's shares of common stock as
of March 2, 1998;  however,  FFCA believes the total number of  shareholders  of
FFCA to be in excess of 70,000 since certain shares are held by nominees.

Sales of Unregistered Securities

         Pursuant to a purchase  agreement  dated February 13, 1998,  Colony SB,
LLC ("Colony"),  a Delaware limited liability company and an affiliate of Colony
Capital,  Inc.,  acquired on March 13, 1998,  3,792,112  shares of the Company's
common  stock and a warrant to purchase an  additional  1,476,908  shares of the
Company's  common  stock.  The  warrant  is  immediately  exercisable  as to all
1,476,908  shares and the warrant expires on March 13, 2005,  except that if the
Company or any subsidiary has not completed, on or before September 13, 1999, an
investment  by the  Company  or any  subsidiary  in a  transaction  or series of
related  transactions  with the amount financed  (together with any indebtedness
assumed) of at least $125,000,000, then the warrant expires as to 738,454 shares
on September  13, 2001 and expires as to the remaining  738,454  shares on March
13, 2005. The aggregate offering price was $100,000,000.  In connection with the
sale,  the shares  purchased  by Colony are  entitled  to  customary  demand and
piggyback  registration  rights,  subject to a general six-month  restriction on
sales of its shares  without board  approval.  The sale of such  securities  was
exempt from  registration  under Section 4(2) of the  Securities Act of 1933, as
amended (the "Securities Act").

         Pursuant to a purchase  agreement  dated February 12, 1998, on February
18, 1998,  the Company  sold 961,610  shares of its common stock to Smith Barney
Inc. ("SB"), a Delaware  corporation,  which thereafter  deposited them with the
Trustee  of the  Equity  Focus  Trusts  - REIT  Portfolio  Series,  1998-A  (the
"Trust"),  a regulated unit investment trust under the Investment Company Act of
1940,  to which SB acts as sponsor and  depositor,  in exchange for units in the
Trust.  The  aggregate  offering  price  was  $25,693,017.19.  The  sale of such
securities  was exempt from  registration  under Section 4(2) of the  Securities
Act.

Dividend Reinvestment Plan

         FFCA  has a  dividend  reinvestment  plan  (the  "Plan")  which  allows
shareholders to acquire  additional shares of FFCA common stock by automatically
reinvesting dividends. Shares are acquired pursuant to the Plan at a price equal
to 98% of the market price of such shares on the dividend payment date,  without
payment of any brokerage  commission or service charge.  Shareholders who do not
participate in the Plan continue to receive dividends,  as declared. As of March
2, 1998,  shareholders  owning  approximately  7.25% of the  outstanding  shares
participate in the Plan.
                                       20
<PAGE>
Item 6.  Selected Financial Data.

         The selected  financial  data  presented in the table below  summarizes
certain  consolidated   financial  information  of  FFCA  and  its  wholly-owned
subsidiaries,  as well as that of its predecessor companies,  for the five years
in the period ended December 31, 1997. The merger of FFCA with its  predecessors
occurred on June 1, 1994 and was accounted for as a reorganization of affiliated
companies  under common  control in a manner  similar to a pooling of interests.
Under this method, the assets and liabilities of the public limited partnerships
and  FFCA I were  carried  over  at  their  historical  book  values  and  their
operations have been recorded on a combined historical basis.

                             SELECTED FINANCIAL DATA

         Operations  data  presented  below  for  periods  prior to June 1, 1994
represent  the  operations  of the  predecessor  companies.  This  data has been
restated on a combined basis to provide  comparative  information;  however,  it
does not necessarily represent results of operations as they would have been had
FFCA operated as a REIT for all periods  presented.  The  predecessor  companies
were primarily public real estate limited  partnerships  with a declining number
of properties  in their  investment  portfolios  and no  opportunity  for growth
through acquisitions; therefore, the investment objectives of FFCA are different
than the objectives of its predecessor companies.

<TABLE>
<CAPTION>
  In thousands, except per share data                         1997         1996         1995         1994            1993
                                                                                                (restated on a combined basis)
------------------------------------------------------------------------------------------------------------------------------
<S>                                                        <C>          <C>          <C>          <C>             <C>       
  Operations Data (a)
     Total revenues                                        $  134,988   $  121,166   $  102,583   $   91,062      $   93,789
     Income before gain (loss) on sale of property and
           other                                               65,707       60,036       52,816       51,319          53,867
     Gain (loss) on sale of property (c)                        5,471        9,899          977        2,784            (156)
     Income before extraordinary item (d)                      72,897       68,539       53,793       25,905(b)       53,711
     Net income (b)                                            72,897       68,539       51,329       25,905(b)       53,711
     Dividends/Distributions declared                          75,004       72,846       72,471       75,913          75,200
     Earnings Per share, assuming dilution:
           Income before gain (loss) on sale of property
              and other costs                              $     1.59   $     1.48   $     1.31   $     1.27      $     1.34
           Income before extraordinary item (d)            $     1.76   $     1.69   $     1.33   $     0.64      $     1.33
           Net income                                      $     1.76   $     1.69   $     1.27   $     0.64      $     1.33
           Dividends/Distributions declared                $     1.82   $     1.80   $     1.80   $     1.82      $     1.86
     Weighted average common and common
           equivalent shares outstanding                       41,333       40,603       40,294       40,251          40,251

------------------------------------------------------------------------------------------------------------------------------
  Balance Sheet Data (a)
     Real estate owned, at cost                            $  951,305   $  868,215   $  794,580   $  681,126      $  661,576
     Mortgage loans receivable                                 35,184       57,808      199,486       65,980          38,091
     Mortgage loans held for sale                             251,622         --           --           --              --
     Note receivable from affiliate (e)                          --        147,616         --           --              --
     Other investments                                         55,185       37,836         --           --              --
     Total assets                                           1,179,198      988,776      843,504      612,228         619,443
     Notes payable                                            309,360      298,956      198,702         --              --
     Borrowings under line of credit                          302,000      150,500      110,000       59,000            --
     Other debt                                                 8,500        8,500        8,500        8,500          10,942
     Shareholders' equity                                  $  522,996   $  495,370   $  493,817   $  514,107      $  576,775
</TABLE>

---------------  
(a) The  information  for  periods  prior  to June 1,  1994  is,  in  effect,  a
restatement of the historical operating results of FFCA I and the public limited
partnerships  as if they had been  consolidated  since January 1, 1993.  The per
share amounts for the same periods were computed as if 40.251  million shares of
FFCA stock were outstanding each year. 
                                       21
<PAGE>
(b) Net  income  for the year  ended  December  31,  1994 was  impacted  by REIT
transaction  costs  recognized  upon  consummation of the merger of FFCA and its
predecessor entities.
(c) Results of operations may be largely impacted by gains or losses on the sale
of properties  or as a result of  securitization  transactions.  Of the 1997 and
1996 gain on the sale of  property,  $430,000  and $7.1  million,  respectively,
relates to the securitization transaction completed in that year.
(d) Income before  extraordinary  item excludes debt  extinguishment  charges of
$2.5 million in 1995.
(e)  Note  receivable  from  FFCA's   affiliate,   FFCA  Mortgage   Corporation,
representing mortgage loans held for sale by the affiliate.

Item 7.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations.

General

         Franchise    Finance    Corporation   of   America    ("FFCA")   is   a
self-administered real estate investment trust ("REIT") which primarily provides
real  estate  financing  to  the  chain  restaurant  industry,  as  well  as the
convenience store and automotive  service and parts industries,  through various
financial  products,  including  sale-leaseback  transactions,  mortgage  loans,
equipment  loans and  construction  financing.  At December 31,  1997,  FFCA had
interests  in  2,481  properties   consisting  of  investments  in  2,275  chain
restaurants,   198  convenience  and  automotive   stores  and  8  other  retail
properties.  FFCA's portfolio included 1,855 chain store properties  represented
by investments in real estate and mortgage loans and 626 properties  represented
by securitized mortgage loans in which FFCA holds a residual interest.

Liquidity and Capital Resources

         During  1997,  FFCA  and  its  affiliate,  FFCA  Mortgage  Corporation,
originated  $504 million in new  sale-leaseback  and mortgage loan  investments.
This surpassed FFCA's 1996 investment level of $340 million by nearly 50%, while
the 1996  investment  level  represented an increase over 1995's  investments of
$278 million.  FFCA's rate of investment growth has increased beginning with the
introduction of its mortgage loan financing  products in 1995 and 1996. In 1997,
mortgage loans had grown to represent over 70% of new investments as compared to
48% in 1995.  Investment  growth is also attributable to FFCA's recent expansion
into the  convenience  store and automotive  service and parts  industries  that
accounted for over $90 million in investments during the fourth quarter of 1997.
These industries meet FFCA's existing  investment  criteria and are a complement
to FFCA's chain restaurant  investments  because the real estate they require is
similar in many respects to the locations  chosen by chain  restaurants.  FFCA's
portfolio  represents nearly 2,500 locations  throughout the United States, over
700 of  which  were  financed  during  1997.  In  addition  to  this  geographic
diversification,  the portfolio is also  represented  by more than 400 different
operators in approximately 50 retail chains.

         FFCA's  investments in chain store  properties are funded  initially by
cash generated from operations and draws on FFCA's  revolving  credit  facility.
Net draws on this facility totaled $151 million in 1997, $39 million in 1996 and
$44 million in 1995.  The loan  facility is used as a  warehousing  line until a
sufficiently  large and diverse pool of mortgage loans is accumulated to warrant
the sale of loans through a  securitization  transaction.  This loan facility is
also used as a
                                       22
<PAGE>
warehousing  line for  properties  pending the  issuance of  additional  debt or
equity securities.  Net proceeds from  securitization  transactions  amounted to
$104  million in 1997 and $152  million in 1996,  and net  proceeds of unsecured
notes issued by FFCA  amounted to $10.15  million in 1997,  $100 million in 1996
and $200  million  in  1995.  Cash  proceeds  from  the  sale of  property,  the
collection of mortgage loan principal  payments and the receipt of mortgage loan
payoffs,  approximating $61 million in 1997, $51 million in 1996 and $18 million
in 1995, were also used to partially fund new investments.

         FFCA hedges against  fluctuations  in interest rates through the use of
derivative  financial  instruments  from the time mortgage  loans are originated
until the time they are sold through a securitization  transaction.  At December
31, 1997, FFCA had outstanding  interest rate swap contracts  aggregating $152.6
million in notional amount. The notional amount serves solely as a basis for the
calculation of payments to be exchanged and are not a measure of the exposure of
FFCA through its use of derivatives. Under the interest rate swap contracts, two
parties  agree to swap  payments  over a specified  period.  FFCA agrees to make
payments at a specified fixed rate and the other party to the contract agrees to
make payments based on a variable  market index rate.  FFCA intends to terminate
the interest rate  agreements  upon  securitization  of the fixed-rate  mortgage
loans in  mid-1998,  at which time FFCA would  generally  expect to receive  (if
rates rise) or pay (if rates fall) an amount  equal to the present  value of the
difference between the fixed rate set at the beginning of the interest rate swap
contract and the variable market index rate. At that time, both the gain or loss
on the  securitization of the fixed-rate  mortgage loans and the gain or loss on
the  termination  of the  interest  rate swap  agreements  will be measured  and
recognized in the statement of operations.

         FFCA's primary source of interim funding for new investments  continues
to be its $350 million unsecured  acquisition loan facility.  This loan facility
bears interest at a spread above the one-month LIBOR rate for a weighted average
interest rate of 6.63% in 1997 as compared to a weighted  average  interest rate
of 7.12% in 1996 and 7.79% in 1995. The loan facility  expires in December 2000,
with the possibility of annual  extensions.  In January 1998, FFCA increased its
capacity for growth by entering  into a separate $100 million  acquisition  loan
facility with a bank on substantially  the same terms and conditions as the $350
million  acquisition loan facility.  The $100 million  acquisition loan facility
expires no later than May 30, 1998, as described in the credit agreement.

         At  December  31,  1997,  FFCA had cash  and cash  equivalents  of $7.1
million and had $48  million  available  on its $350  million  revolving  credit
facility.   FFCA's  anticipated   investments   include   commitments   totaling
approximately  $500 million at December 31, 1997. These commitments were made to
several large  operators  who operated  chain  restaurants  such as Burger King,
Wendy's and Arby's, and to operators of convenience store and automotive service
and parts businesses such as White Hen Pantry, Circle K, 7-11 and Valvoline,  to
acquire  or  finance  (subject  to  FFCA's  customary  underwriting  procedures)
approximately  575 restaurant  properties over the next year.  FFCA  anticipates
funding  these  specific  commitments,  and  other  investments  in chain  store
properties,  through  amounts  available  on its  revolving  credit  facilities,
issuance of additional  unsecured debt,  issuance of mortgage-backed  securities
through securitization or issuance of additional equity securities of FFCA.
                                       23
<PAGE>
         To  continue  the growth  rate  achieved in 1997,  FFCA  increased  its
capital by entering into various equity  transactions.  In September  1997, FFCA
sold 956,160 shares of common stock to the trustee of a unit  investment  trust.
Net proceeds to FFCA from this sale were $23.3 million. In addition, FFCA raised
a total of $59 million through the sale of 2.2 million shares of common stock to
two separate unit  investment  trusts in February  1998.  Also in February 1998,
FFCA signed an  agreement  to sell  approximately  3.8 million  shares of common
stock to an affiliate of Colony Capital, Inc. (Colony), a Los Angeles based real
estate-related  investment firm. In the transaction,  Colony made a $100 million
equity investment in newly-issued  shares of FFCA common stock,  representing an
eight  percent  interest in the  outstanding  common stock of FFCA. In addition,
Colony has warrants to purchase an additional  1,476,908 shares of FFCA's common
stock and has the right to designate for  nomination a member to FFCA's Board of
Directors. This equity issuance which closed on March 13, 1998, makes Colony the
largest  shareholder  of FFCA  and  adds to  FFCA's  financial  flexibility  and
capabilities.

         FFCA has a  dividend  reinvestment  plan that  allows  shareholders  to
acquire  additional  shares of FFCA  stock by  automatically  reinvesting  their
quarterly  dividends.  As of March 2, 1998,  shareholders  owning  approximately
7.25% of the outstanding shares of FFCA common stock participate in the dividend
reinvestment  plan and dividends  reinvested during 1997 totaled $5.8 million as
compared to $4.9 million in 1996 and $852,000 in 1995.  For the fourth  quarter,
the Board of Directors  approved raising FFCA's quarterly dividend to $0.47 from
$0.45,  an increase of 4.4%.  This  dividend is payable on February  20, 1998 to
shareholders of record on February 10, 1998.  Management  anticipates  that cash
generated from operations will be sufficient to meet operating  requirements and
provide the level of shareholder dividends required to maintain FFCA's status as
a REIT.

         During  1997,  FFCA  completed  the  design of its new  accounting  and
servicing  information  system  that  was  begun in 1996.  This new  system  was
implemented  successfully  on January 1, 1998. The design of FFCA's new property
management system is nearing completion and FFCA plans to deploy this new system
during  1998.  The design and  implementation  of these new  systems,  including
related upgrades in computer hardware, was necessary to develop a more efficient
portfolio  servicing system that would permit a high level of growth in the FFCA
portfolio  while  containing  operating  costs.  FFCA has invested  $1.6 million
during 1997 and $70,000 during 1996 towards the development and  installation of
these systems.  The new systems are also "Year 2000"  compliant which means that
the  systems  will know how to handle any dates that refer to the 21st  century.
This issue has received much  publicity in recent  months  because many computer
systems  built over the last 30 years  contain  two digits to express  the year,
assuming  that all dates refer to the 20th century.  Such computer  systems will
fail after  December  31, 1999 because the systems will not know how to handle a
year  expressed  as "00".  With the  planned  installation  of the new  property
management system in 1998, all of FFCA's significant information systems will be
"Year 2000"  compliant;  however,  FFCA is also addressing the other support and
maintenance systems that are sensitive to dates, such as the telephone and power
systems, elevators, security systems, and so on.
                                       24
<PAGE>
         FFCA is  taking  a  proactive  approach  in  dealing  with  the  issues
associated with the Year 2000 and a five-phase process to address this challenge
has been approved by FFCA's computer steering committee. This plan includes: (1)
an inventory and assessment of the systems and electronic devices that may be at
risk; (2) the identification of potential  solutions;  (3) the implementation of
upgrades or replacements to affected systems or devices; (4) the verification of
compliance and testing of the revised systems;  and (5) the training of users on
the new systems.  To date, FFCA has completed the inventory and assessment phase
of all critical computer hardware,  as well as the operating system and database
software, and has received statements of "Year 2000" compliance from the related
vendors.  The  verification of "Year 2000"  compliance  through testing of these
systems  is  nearly  complete.  FFCA  is in the  process  of  assessing  the key
suppliers  that it  relies  upon,  in  addition  to the other  systems  that are
sensitive to dates (such as the telephone and power systems, elevators, security
systems,  and so on),  and has  developed a plan for any such  systems  that are
found to be noncompliant.  Based on current  estimates and plans,  FFCA believes
the cost of  addressing  the Year  2000  issue  will not be  material  to FFCA's
operations or financial condition.

Results of Operations

Year ended December 31, 1997 compared to year ended December 31, 1996 and 1995

         FFCA had net  income  of  $72.9  million  ($1.76  per  share,  assuming
dilution)  in 1997 as  compared to $68.5  million  ($1.69 per share) in 1996 and
income before an  extraordinary  loss on the retirement of debt of $53.8 million
($1.33  per share) in 1995.  Due to the  continued  growth in FFCA's  portfolio,
revenues rose to $135 million in 1997 from $121 million in 1996 and $103 million
in 1995.

         FFCA's  primary  source of  revenues  continues  to be rental  revenues
generated  by its  portfolio  of  restaurant  properties  leased  to  restaurant
operators on a triple-net  basis.  Half of the increase in total revenues during
1996 and 1997 related to increases  in rental  revenues due to new  investments.
New investments in property  subject to operating  leases totaled $140.2 million
in 1997, $128.7 million in 1996 and $143.3 million in 1995. Generally,  property
purchases occur throughout the year,  resulting in weighted average balances for
these new  investments  of $43  million in 1997 and $60 million in both 1996 and
1995. Weighted average base lease rates on the new investments were 9.3% in 1997
as  compared to 10.5% in 1996 and 10.9% in 1995.  While the  average  base lease
rates were down in 1997 from prior  years,  FFCA's cost of  borrowings  was also
lower.   Partially  offsetting  the  revenue  increases  generated  by  the  new
investments were decreases in rent related to properties sold and the expiration
of original equipment leases.

         Generally,  the leases in FFCA's  portfolio also provide for contingent
rentals  based on a  percentage  of the gross sales of the related  restaurants.
Such  contingent  rentals totaled $6.4 million in 1997 as compared to $5 million
in 1996 and $4 million in 1995. The increases  relate  primarily to increases in
individual  restaurant-level  sales  volumes and to lessees  whose sales  levels
have, for the first time,  exceeded the threshold where  contingent  rentals are
due. FFCA
                                       25
<PAGE>
anticipates  that, based on historical  restaurant sales growth,  the contingent
rental provision of the leases will continue to provide increases in revenues in
the near future.

         During 1997, FFCA and United Guaranty  Commercial  Insurance Company of
Iowa (which had provided rent guaranty insurance coverage on certain properties)
reached an agreement to settle all outstanding and future claims.  Over the last
three years,  rent  guaranty  insurance  revenue has dropped  steadily from $3.3
million in 1995 to $1 million in 1997 due to expiring rent insurance policies.

         A portion of FFCA's revenues  relates to the origination and subsequent
sale  of  mortgage  loans  through  securitization  transactions.  In  order  to
facilitate the loan  origination and  securitization  process,  FFCA formed FFCA
Mortgage  Corporation  (Mortgage Corp.) during 1996. This taxable  affiliate was
designed  primarily to originate  mortgage  loans held for sale.  This affiliate
originated  mortgage  loans  during  1996  and  1997;  however,   its  financial
statements  are not  consolidated  with  FFCA  and,  accordingly,  the  mortgage
interest  income  generated by the loans  originated by Mortgage  Corp.  are not
reflected  in the  accompanying  financial  statements.  During  1997,  the loan
origination  process was  transferred to FFCA's  wholly-owned  subsidiary,  FFCA
Acquisition  Corporation,  and by the  end  of  1997  FFCA  Mortgage  Corp.  was
dissolved.

         Mortgage interest income generated by FFCA's loan portfolio totaled $11
million in 1997, $15.7 million in 1996 and $14.1 million in 1995. Rates achieved
on the loans  originated  during 1997 averaged 9.2% as compared to 9.4% achieved
during  1996 and 10.9% in 1995.  The average  interest  rates on the bank credit
facility  used to fund these new loans also  reflected a decrease  during  these
periods.  Increases and decreases in mortgage  interest income between years has
been, and will continue to be, impacted by the amount of loans held for sale and
the  timing  of the sale of these  loans  through  securitization  transactions.
Although FFCA no longer receives  mortgage interest income from the mortgages it
sold during 1996 and 1997, it retains certain  interests through the purchase of
subordinated investment securities as discussed below. These securities generate
revenues that are included in "Investment  Income and Other" in the accompanying
financial  statements  and represent the majority of the increase in this income
between years.

         Certain  mortgage  loans  originated  by  FFCA,  its  predecessors  and
affiliate  totaling  $261  million  in  1997  and  $179  million  in  1996  were
securitized and Secured Franchise Loan Pass-Through and Trust  Certificates were
sold to  investors  through  a  trust.  Approximately  89% of the  $261  million
securitized loan pool was sold to third parties in 1997. FFCA holds  investments
representing the remaining 11% of the mortgage loan pool balance.  In 1996, FFCA
retained  certain   interests  in  approximately   12.5%  of  the  $179  million
securitized loan pool and also purchased the  interest-only  certificate.  These
certificates,  totaling $55.2 million and $29.7 million at December 31, 1997 and
1996,  respectively,  generated $7.7 million and $2.7 million of revenue in 1997
and 1996, respectively.  The subordinated investment securities held by FFCA are
the last of the  securities  to be repaid from the loan pool,  so that if any of
the underlying mortgage loans default, these securities take the first loss. Any
future credit losses in the securitized loan pool would be concentrated in these
subordinated  investment  securities retained by FFCA; however,  FFCA originates
and services  mortgage  loans and has the  infrastructure  in place to deal with
potential  defaults on the  securitized  portfolio (as it does with the mortgage
loans it holds for  investment).  To date,  there have been no  defaults  on the
mortgage  loans held in either  securitized  loan pool.  FFCA also  retained the
servicing  rights on the  mortgage  loans it sold and the right to  receive  any
participations based on the gross sales of the related restaurant properties.
                                       26
<PAGE>
Approximately $430,000 and $7.1 million of gain in 1997 and 1996,  respectively,
was generated by the sale of mortgages in these securitization transactions. The
gains  recognized  represent the difference  between the carrying  amount of the
mortgage loans sold and their adjusted  sales price.  It also includes  deferred
gains  recognized on certain of the mortgages sold. The gains on the sale of the
mortgage  loans were reduced by  establishing  reserves for  estimated  probable
losses under the subordination provisions of the securitization transactions.

         FFCA, as owner of all of the issued and outstanding nonvoting preferred
stock of Mortgage  Corp.,  was entitled to receive 95% of all dividends  paid by
Mortgage Corp.  prior to its  dissolution on December 31, 1997. At  dissolution,
cash dividends were paid to the common stockholder and the remaining assets were
distributed to FFCA in  satisfaction  of its note receivable from Mortgage Corp.
FFCA  recorded  95% of Mortgage  Corp.'s net income  (loss) for 1997 and 1996 as
"Equity  in Net  Income  (Loss)  of  Affiliate"  in the  accompanying  financial
statements.  During 1996 and 1997,  FFCA provided  Mortgage Corp. with a secured
revolving  line of credit at a spread  above  FFCA's  borrowing  rate.  Interest
income  generated  on this line of credit  totaled  $9  million in 1997 and $2.9
million in 1996 and is reflected in revenues as  "Interest  (Related  Party)" in
the accompanying financial statements.

         Expenses  increased  to  $69.3  million  in 1997 as  compared  to $61.1
million in 1996 and $49.8  million in 1995,  due  primarily  to an  increase  in
interest  expense.  Interest  expense  rose by $8.8  million  in 1997 and  $10.7
million in 1996 due to the use of  borrowings  for  investments  in chain  store
properties.  FFCA's average debt balance  increased to $470 million in 1997 from
$335  million in 1996 and $175  million in 1995.  Although  FFCA's  average debt
balance has  increased  over the past two years,  its overall cost of borrowings
has  decreased.  In  February  1996,  FFCA  broadened  its sources of capital by
issuing its first unsecured  medium-term  notes,  which were six- and seven-year
obligations,  totaling $60 million.  In November 1996, FFCA issued an additional
$40 million in unsecured  notes due 2026, but callable by the holder in the year
2004. The unsecured notes issued during 1996 carry a weighted  average  interest
rate of 6.98%.  In October 1997,  FFCA issued $10.15 million in unsecured  notes
due 2007 at a rate of 6.86%.  Proceeds from  unsecured  notes in both years were
used to pay down FFCA's bank line of credit.  In December 1996, FFCA amended its
bank line of credit with  participating  banks to, among other things,  decrease
the interest rate by .5%.  During 1997, the bank credit  facility  provided that
FFCA could borrow at rates that are  competitively  bid among the  participating
banks.  The changes in FFCA's debt structure,  together with an overall decrease
in the interest  rate  environment,  reduced its effective  borrowing  rate from
7.82% during 1995 to 7.15% during 1996 and 6.93% during 1997.

         Despite  the growth in  revenues  of 32% from 1995 to 1997,  operating,
general and  administrative  expense saw an increase of only 8% during this same
period.  The  slightly  higher  operating  expenses  in 1996 as compared to 1995
primarily related to a $1.4 million provision for loan loss created in 1996. The
overall increase in operating  expenses resulted  primarily from the addition of
personnel  needed  to  increase  FFCA's  investment  origination  and  servicing
capacity.  FFCA's recent investments in computer system technology has increased
the efficiency of its information and portfolio servicing systems, which enables
FFCA to expand its revenue base while containing operating costs.

         Approximately  three-fourths of FFCA's land and building leases provide
for purchase options and approximately two-thirds of these options are currently
exercisable;  however,  only 12 properties were sold through purchase options in
1997 and only 15 and 10 such properties were sold in 1996 and 1995,
                                       27
<PAGE>
respectively.  Where  applicable,  the lessee  also has the  option to  purchase
equipment at the end of the related equipment lease term,  although few of these
options  remain  unexercised  as of December 31, 1997.  Generally,  the purchase
options are exercisable at fair market value (but not less than original cost in
most cases). FFCA expects that the exercise of purchase options will continue to
be insignificant.

         FFCA recorded net gains of $5.5 million on the sale of property  during
1997 as compared to $9.9 million during 1996 and $977,000 in 1995. Approximately
$430,000  and $7.1  million of the total  gains in 1997 and 1996,  respectively,
were  generated  by the sale of mortgages in  securitization  transactions.  The
remaining  gains  represent  the net  effect of gains and  losses  from sales of
property,  which  occur  primarily  through  the  lessee's  exercise of purchase
options and through the disposition of underperforming properties.  During 1997,
FFCA sold 55  properties  and related  equipment  (12 of which were  through the
lessee's exercise of their purchase options on the properties) as compared to 79
properties sold in 1996 and 22 sold in 1995. In addition,  during 1997, FFCA had
a $20 million mortgage payoff representing 60 restaurant properties.  There were
more property sales in 1997 and 1996 as compared to 1995 due to FFCA's  decision
to sell certain underperforming  properties where remarketing efforts had failed
to produce a suitable lessee.

         FFCA  periodically  reviews its real estate  portfolio  for  impairment
whenever events or changes in circumstances indicate that the carrying amount of
the  property  may not be  recoverable,  such  as may be the  case  with  vacant
restaurant properties.  If an impairment loss is indicated, the loss is measured
as the amount by which the carrying  amount of the asset  exceeds the fair value
of the asset.  Gain on the sale of property on the  consolidated  statements  of
income  for  the  years  ended  December  31,  1997,  1996  and  1995  is net of
approximately $1.9 million, $3.3 million and $3.4 million, respectively, of loss
related to vacant and  underperforming  properties.  Vacant  properties held for
sale represent less than 1% of FFCA's total real estate investment portfolio.

Tenant Concentration

         One restaurant operator,  Foodmaker, Inc. ("Foodmaker"),  accounted for
approximately  9.2% of FFCA's total rental and mortgage loan  interest  revenues
(generated from its investment portfolio) in 1997. Foodmaker accounted for 10.9%
and 12.5% of FFCA's total rental and mortgage loan interest revenues in 1996 and
1995,   respectively.   Foodmaker  operates  and  franchises  Jack  in  the  Box
restaurants.  The relative  decrease in the  percentage  of FFCA's  revenue from
Foodmaker since 1995 is due to the fact that FFCA's portfolio is growing and, as
a result,  Foodmaker  is  becoming a  relatively  smaller  portion of the entire
portfolio. This decrease is expected to continue.

Item 8.  Financial Statements and Supplementary Data.

         The consolidated financial statements and related financial information
required to be filed are attached to this Report.  Reference is made to page F-1
of this Report for an index to the consolidated financial statements.

Item 9.  Changes  in  and  Disagreements  with  Accountants  on  Accounting  and
         Financial Disclosure.

         None.
                                       28
<PAGE>
                                    PART III

Item 10. Directors and Executive Officers of the Registrant.

         This item is incorporated by reference from the Registrant's definitive
proxy statement for the Annual Meeting of Shareholders presently scheduled to be
held on May 13, 1998, to be filed pursuant to Regulation 14A.

Item 11. Executive Compensation.

         This item is incorporated by reference from the Registrant's definitive
proxy statement for the Annual Meeting of Shareholders presently scheduled to be
held on May 13, 1998, to be filed pursuant to Regulation 14A.


Item 12. Security Ownership of Certain Beneficial Owners and Management.

         This item is incorporated by reference from the Registrant's definitive
proxy statement for the Annual Meeting of Shareholders presently scheduled to be
held on May 13, 1998, to be filed pursuant to Regulation 14A.

Item 13. Certain Relationships and Related Transactions.

         This item is incorporated by reference from the Registrant's definitive
proxy statement for the Annual Meeting of Shareholders presently scheduled to be
held on May 13, 1998, to be filed pursuant to Regulation 14A.
                                       29
<PAGE>
                                     PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports on Form 8-K.

         (a)      The following documents are filed as part of this Report:

         1.       Financial  Statements.  See Index to Financial  Statements  on
                  page F-1 of this Report.

         2.       Financial   Statement   Schedules.   See  Index  to  Financial
                  Statements on page F-1 of this Report. All other schedules are
                  omitted since they are not required, are inapplicable,  or the
                  required  information is included in the financial  statements
                  or notes thereto.

         3.       Exhibits.

                  The following is a complete list of exhibits  filed as part of
                  this Form 10-K. For  electronic  filing  purposes  only,  this
                  report contains Exhibits 27.1 through 27.5, the Financial Data
                  Schedules.  Exhibit  numbers  correspond to the numbers in the
                  Exhibit Table of Item 601 of Regulation S-K.

Exhibit No.                         Description
-----------                         -----------

3.01              Amended and Restated Bylaws of the Company (1)

3.02              Second Amended and Restated  Certificate of  Incorporation  of
                  Franchise Finance Corporation of America (2)

4.01              Indenture  dated as of November  21,  1995  relating to the 7%
                  Senior Notes due 2000 and the 7 7/8% Senior Notes due 2005 (3)

4.02              Specimen of Common Stock Certificate (1)

10.01             Acquisition, Construction and Term Loan Agreement, dated as of
                  December  29,   1988,   by  and  between   Franchise   Finance
                  Corporation  of America  and  Scottsdale  Land  Trust  Limited
                  Partnership (1)

10.02             Promissory Note dated December 29, 1988, executed by Franchise
                  Finance  Corporation  of America in favor of  Scottsdale  Land
                  Trust  Limited   Partnership   in  the  principal   amount  of
                  $8,500,000 (1)

10.03             1995 Stock  Option and  Incentive  Plan of  Franchise  Finance
                  Corporation of America (4)
                                       30
<PAGE>
10.04             Revolving Loan Agreement dated as of September 1, 1996, by and
                  between  Franchise  Finance  Corporation  of America  and FFCA
                  Mortgage Corporation (5)

10.05             Equipment  Revolving Loan  Agreement  dated as of September 1,
                  1996, by and between Franchise Finance  Corporation of America
                  and FFCA Mortgage Corporation (5)

10.06             Guaranty of Franchise  Finance  Corporation  of America,  with
                  exhibits,  dated  December  31, 1996 with  respect to the ISDA
                  Master  Agreement and Schedule  dated December 31, 1996 by and
                  between  Franchise  Finance  Corporation  of America  and FFCA
                  Mortgage Corporation (12)

10.07             Credit  Agreement  dated  January  27,  1998  among  Franchise
                  Finance   Corporation   of   America,   Certain   Lenders  and
                  NationsBank of Texas, N.A. (11)

10.08             Stock Purchase Agreement between Franchise Finance Corporation
                  of America and Colony  Investors  III, L.P. dated February 13,
                  1998*

21.01             Subsidiaries of the Registrant*

23.01             Consent of Arthur Andersen LLP*

99.01             Credit Agreement dated as of December 27, 1995 among Franchise
                  Finance   Corporation   of   America,   Certain   Lenders  and
                  NationsBank of Texas, N.A., providing a credit facility in the
                  principal amount of $200,000,000 (the "Credit Agreement") (6)

99.02             Guaranty  Agreement dated as of December 27, 1995 made by FFCA
                  Acquisition Corporation and FFCA Institutional Advisors, Inc.,
                  guaranteeing the obligations of Franchise Finance  Corporation
                  of America under the Credit Agreement (6)

99.03             Promissory  Note dated as of  December  27,  1995  executed by
                  Franchise   Finance   Corporation   of  America  in  favor  of
                  NationsBank  of Texas,  N.A.,  in  connection  with the Credit
                  Agreement (6)

99.04             Subordination Agreement dated as of December 27, 1995, made by
                  FFCA Acquisition Corporation and Franchise Finance Corporation
                  of America for the benefit of Certain  Lenders and NationsBank
                  of Texas, N.A., in connection with the Credit Agreement (6)
                                       31
<PAGE>
99.05             Subordination Agreement dated as of December 27, 1995, made by
                  FFCA  Institutional   Advisors,  Inc.  and  Franchise  Finance
                  Corporation of America for the benefit of Certain  Lenders and
                  NationsBank  of Texas,  N.A.,  in  connection  with the Credit
                  Agreement (6)

99.06             Purchase  Agreement  dated June 27, 1996  between FFCA Secured
                  Assets Corporation,  and Merrill Lynch, Pierce, Fenner & Smith
                  Incorporated,   as  the  initial   purchaser  of  $156,490,000
                  aggregate   principal   amount  of  Secured   Franchise   Loan
                  Pass-Through Certificates, Class A, Class B, Class C and Class
                  D (7)

99.07             First  Amendment to Credit  Agreement  dated February 23, 1996
                  among  Franchise  Finance  Corporation  of  America,   Certain
                  Lenders  and  NationsBank  of Texas,  N.A.  as  Administrative
                  Lender (8)

99.08             Second Amendment to Credit Agreement dated June 24, 1996 among
                  Franchise Finance Corporation of America,  Certain Lenders and
                  NationsBank of Texas, N.A. as Administrative Lender (7)

99.09             Third  Amendment to Credit  Agreement  dated December 27, 1996
                  among  Franchise  Finance  Corporation  of  America,   Certain
                  Lenders  and  NationsBank  of Texas,  N.A.  as  Administrative
                  Lender (12)

99.10             Amended and Restated Credit Agreement among Franchise  Finance
                  Corporation of America, Certain Lenders, NationsBank of Texas,
                  N.A. as Administrative  Agent, and Co-Agents,  dated April 15,
                  1997 (2)

99.11             $45,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America, payable to the order of NationsBank of
                  Texas, N.A., dated April 15, 1997 (2)

99.12             $40,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation  of  America,  payable  to the  order  of  Bank of
                  Montreal, Chicago Branch, dated April 15, 1997 (2)

99.13             $40,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of The Long-Term
                  Credit Bank of Japan, Ltd., dated April 15, 1997 (2)

99.14             $40,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of  Commerzbank
                  Aktiengesellschaft,  Los Angeles Branch,  dated April 15, 1997
                  (2)
                                       32
<PAGE>
99.15             $40,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Union Bank of
                  Switzerland (New York Branch), dated April 15, 1997 (2)

99.16             $27,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of  Cooperatieve
                  Centtale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland,"
                  New York Branch, dated April 15, 1997 (2)

99.17             $25,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Dresdner Bank
                  AG, Los Angeles Branch, dated April 15, 1997 (2)

99.18             $25,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of AmSouth Bank
                  of Alabama, dated April 15, 1997 (2)

99.19             $20,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America, payable to the order of The Industrial
                  Bank of Japan, dated April 15, 1997 (2)

99.20             $20,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Bank Hapoalim
                  B.M., San Francisco Branch, dated April 15, 1997 (2)

99.21             $15,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of Signet Bank,
                  dated April 15, 1997 (2)

99.22             $13,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of Norwest Bank
                  Arizona, National Association, dated April 15, 1997 (2)

99.23             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America, payable to the order of NationsBank of
                  Texas, N.A., dated April 15, 1997 (2)

99.24             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation  of  America,  payable  to the  order  of  Bank of
                  Montreal, Chicago Branch, dated April 15, 1997 (2)

99.25             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of The Long-Term
                  Credit Bank of Japan, Ltd., dated April 15, 1997 (2)
                                       33
<PAGE>
99.26             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of  Commerzbank
                  Aktiengesellschaft,  Los Angeles Branch,  dated April 15, 1997
                  (2)

99.27             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Union Bank of
                  Switzerland (New York Branch), dated April 15, 1997 (2)

99.28             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of  Cooperatieve
                  Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland,"
                  New York Branch, dated April 15, 1997 (2)

99.29             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Dresdner Bank
                  AG, Los Angeles Branch, dated April 15, 1997 (2)

99.30             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of AmSouth Bank
                  of Alabama, dated April 15, 1997 (2)

99.31             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America, payable to the order of The Industrial
                  Bank of Japan, dated April 15, 1997 (2)

99.32             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Bank Hapoalim
                  B.M., San Francisco Branch, dated April 15, 1997 (2)

99.33             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation  of  America,  payable to the order  Signet  Bank,
                  dated April 15, 1997 (2)

99.34             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation  of  America,  a,  payable to the order of Norwest
                  Bank Arizona, National Association, dated April 15, 1997 (2)

99.35             Guaranty  Agreement,  dated  as of  April  15,  1997,  by FFCA
                  Acquisition Corporation, FFCA Institutional Advisors, Inc. and
                  FFCA Mortgage  Corporation,  guaranteeing  the  obligations of
                  Franchise Finance Corporation of America under the Amended and
                  Restated Credit Agreement among Franchise Finance  Corporation
                  of America,  
                                       34
<PAGE>
                  Certain Lenders,  NationsBank of Texas, N.A. as Administrative
                  Agent, and Co-Agents, dated April 15, 1997 (2)

99.36             Subordination  Agreement,  dated as of April 15, 1997, by FFCA
                  Acquisition Corporation (2)

99.37             Subordination  Agreement,  dated as of April 15, 1997, by FFCA
                  Institutional Advisors (2)

99.38             Subordination  Agreement,  dated as of April 15, 1997, by FFCA
                  Mortgage Corporation (2)

99.39             Purchase  agreement  dated June 8, 1997  between  FFCA Secured
                  Lending Corporation, and Merrill Lynch, Pierce, Fenner & Smith
                  Incorporated  and Smith Barney Inc., as initial  purchasers of
                  $232,071,000  aggregate  principal amount of Secured Franchise
                  Loan Certificates,  Series 1997-1, Class IO, Class A-1a, Class
                  A-1b, Class A-2a, Class A-2b, Class B-1, Class B-2, Class C-1,
                  Class C-2, Class D-1, Class D-2, Class E-1 and Class E-2 (9)

99.40             Second Amended and Restated  Credit  Agreement  dated December
                  29,  1997 among  Franchise  Finance  Corporation  of  America,
                  Certain Lenders and NationsBank of Texas, N.A. (10)

---------------
*Filed herewith.
(1)  Incorporated by reference from the Registrant's  Registration  Statement on
Form S-4 and amendments thereto, registration number 33-65302, as filed with the
Securities and Exchange Commission.
(2)  Incorporated by reference from the  Registrant's  Quarterly  Report on Form
10-Q for the fiscal  quarter ended March 31, 1997, as filed with the  Securities
and Exchange Commission.
(3) Incorporated by reference from the Registrant's  Current Report on Form 8-K,
dated November 24, 1995, as filed with the Securities and Exchange Commission.
(4) Incorporated by reference from the  Registrant's  Annual Report on Form 10-K
for the fiscal year ended  December 31, 1995, as filed with the  Securities  and
Exchange Commission.
(5) Incorporated by reference from the Registrant's  Current Report on Form 8-K,
dated September 1, 1996, as filed with the Securities and Exchange Commission.
(6) Incorporated by reference from the Registrant's  Current Report on Form 8-K,
dated January 25, 1996, as flied with the Securities and Exchange Commission.
(7)  Incorporated by reference from the  Registrant's  Quarterly  Report on Form
10-Q for the fiscal  quarter ended June 30, 1996,  as filed with the  Securities
and Exchange Commission.
(8)  Incorporated by reference from the  Registrant's  Quarterly  Report on Form
10-Q for the fiscal  quarter ended March 31, 1996, as filed with the  Securities
and Exchange Commission.
                                       35
<PAGE>
(9)  Incorporated by reference from the  Registrant's  Quarterly  Report on Form
10-Q for the fiscal  quarter ended June 30, 1997,  as filed with the  Securities
and Exchange Commission.
(10) Incorporated by reference from the Registrant's Current Report on Form 8-K,
dated December 29, 1997, as filed with the Securities and Exchange Commission.
(11) Incorporated by reference from the Registrant's Current Report on Form 8-K,
dated January 27, 1998, as filed with the Securities and Exchange Commission.
(12) Incorporated by reference from the Registrant's  Annual Report on Form 10-K
for the fiscal year ended  December 31, 1996, as filed with the  Securities  and
Exchange Commission.

         (b)      Reports on Form 8-K.

         FFCA did not file any reports on Form 8-K during the fourth  quarter of
fiscal year 1997.
                                       36
<PAGE>
                                   SIGNATURES


         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended,  the registrant has duly caused this Report to
be signed on its behalf by the undersigned, thereunto duly authorized.

                                 FRANCHISE FINANCE CORPORATION OF AMERICA


Date:  March 27, 1998            By /s/ M. H. Fleischer
                                    -------------------
                                    M. H. Fleischer, President and Chief 
                                    Executive Officer

         Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, this Report has been signed below by the following persons on behalf of
the registrant and in the capacities and on the dates indicated.


Date:  March 27, 1998            By /s/ M. H. Fleischer
                                    --------------------------------------------
                                    M. H. Fleischer, Chairman of the Board,  
                                    President, and Chief Executive Officer


Date:  March 27, 1998            By /s/ John Barravecchia
                                    --------------------------------------------
                                    John Barravecchia, Executive Vice President,
                                    Chief Financial Officer and Treasurer


Date:  March 27, 1998            By /s/ Catherine F. Long
                                    --------------------------------------------
                                    Catherine F. Long, Senior Vice President-
                                    Finance  and Principal Accounting Officer


Date:  March 27, 1998            By /s/ Willie R. Barnes
                                    --------------------------------------------
                                    Willie R. Barnes, Director


Date:  March 27, 1998            By /s/ Kelvin L. Davis
                                    --------------------------------------------
                                    Kelvin L. Davis, Director


Date:  March 27, 1998            By /s/ William C. Foxley
                                    --------------------------------------------
                                    William C. Foxley, Director
<PAGE>

Date:  March 27, 1998            By /s/ Robert W. Halliday
                                    --------------------------------------------
                                    Robert W. Halliday, Director


Date:  March 27, 1998            By /s/ Donald C. Hannah
                                    --------------------------------------------
                                    Donald C. Hannah, Director


Date:  March 27, 1998            By /s/ Dennis E. Mitchem
                                    --------------------------------------------
                                    Dennis E. Mitchem, Director


Date:  March 27, 1998            By /s/ Louis P. Neeb
                                    --------------------------------------------
                                    Louis P. Neeb, Director


Date:  March 27, 1998            By /s/ Kenneth B. Roath
                                    --------------------------------------------
                                    Kenneth B. Roath, Director


Date:  March 27, 1998            By /s/ Wendell J. Smith
                                    --------------------------------------------
                                    Wendell J. Smith, Director


Date:  March 27, 1998            By /s/ Casey J. Sylla
                                    --------------------------------------------
                                    Casey J. Sylla, Director


Date:  March 27, 1998            By /s/ Shelby Yastrow
                                    --------------------------------------------
                                    Shelby Yastrow, Director
<PAGE>


INDEX TO FINANCIAL STATEMENTS AND SCHEDULES


Report of Independent Public Accountants                                     F-2

Consolidated Balance Sheets - December 31, 1997 and 1996                     F-3

Consolidated Statements of Income For The Years Ended
         December 31, 1997, 1996 and 1995                                    F-4

Consolidated Statements of Changes in Shareholders' Equity
         For The Years Ended December 31, 1997, 1996 and 1995                F-5

Consolidated Statements of Cash Flows For The Years Ended
         December 31, 1997, 1996 and 1995                                    F-6

Notes to Consolidated Financial Statements                                   F-7

Schedule III - Schedule of Real Estate and Accumulated
         Depreciation as of December 31, 1997                               F-16

Schedule IV - Schedule of Mortgage Loans on Real Estate
         as of December 31, 1997                                            F-18
                                      F-1
<PAGE>
                              ARTHUR ANDERSEN LLP




                    REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To the Board of Directors of
Franchise Finance Corporation of America:

We have  audited  the  accompanying  consolidated  balance  sheets of  FRANCHISE
FINANCE  CORPORATION OF AMERICA (a Delaware  corporation) and subsidiaries as of
December 31, 1997 and 1996, and the related  consolidated  statements of income,
changes in  shareholders'  equity and cash flows for each of the three  years in
the period ended Decmeber 31, 1997. These financial statements and the schedules
referred  to below  are the  responsibility  of the  Company's  management.  Our
responsibility  is to  express  an opinion  on these  financial  statements  and
schedules based on our audits.

We  conducted  our  audits  in  accordance  with  generally   accepted  auditing
standards.  Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements.  An audit also includes
assessing the  accounting  principles  used and  significant  estimates  made by
management,  as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion,  the financial  statements  referred to above present fairly, in
all material respects,  the financial position of Franchise Finance  Corporation
of America and subsidiaries as of December 31, 1997 and 1996, and the results of
their  operations and their cash flows for each of the three years in the period
ended  December 31, 1997,  in  conformity  with  generally  accepted  accounting
principles.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements taken as a whole. The schedules listed in the index of the
financial statements are presented for purposes of complying with the Securities
and  Exchange  Commission's  rules  and are  not  part  of the  basic  financial
statements.  These  schedules  have been  subjected to the  auditing  procedures
applied in our audits of the basic  financial  statements  and, in our  opinion,
fairly  states in all material  respects the  financial  data required to be set
forth therein in relation to the basic financial statements taken as a whole.



                                        /s/ Arthur Andersen LLP


Phoenix, Arizona,
 January 27, 1998.
                                      F-2
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------

            CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 1997 AND 1996
            ---------------------------   --------------------------
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>
                                                                              1997            1996
                                                                          -----------     -----------
<S>                                                                       <C>             <C>        
                                                ASSETS
                                                ------
Investments:
    Investments in Real Estate, at cost (Note 3):
       Land                                                               $   382,637     $   346,626
       Buildings and Improvements                                             545,629         490,506
       Equipment                                                               23,039          31,083
                                                                          -----------     -----------
                                                                              951,305         868,215
       Less-Accumulated Depreciation                                          175,263         172,941
                                                                          -----------     -----------
           Net Real Estate Investments                                        776,042         695,274

    Mortgage Loans Held for Sale (Note 4)                                     251,622            --
    Mortgage Loans Receivable, net of allowances
       of $2,600 in 1997 and $1,400 in 1996 (Note 5)                           35,184          57,808
    Related Party Notes Receivable (Note 6)                                      --           147,616
    Other Investments (Note 6)                                                 55,185          37,836
                                                                          -----------     -----------
           Total Investments                                                1,118,033         938,534

Cash and Cash Equivalents                                                       7,130          11,350
Notes and Accounts Receivable, net of allowances
    of $2,300 in 1997 and $1,700 in 1996 (Note 5)                              34,699          22,020
Other Assets (Notes 2 and 12)                                                  19,336          16,872
                                                                          -----------     -----------

           Total Assets                                                   $ 1,179,198     $   988,776
                                                                          ===========     ===========

                                 LIABILITIES AND SHAREHOLDERS' EQUITY
                                 ------------------------------------
Liabilities:
    Dividends Payable                                                     $    19,640     $    18,254
    Notes Payable (Note 7)                                                    309,360         298,956
    Borrowings Under Line of Credit (Note 8)                                  302,000         150,500
    Mortgage Payable to Affiliate (Note 12)                                     8,500           8,500
    Accrued Expenses and Other                                                 16,702          17,196
                                                                          -----------     -----------

           Total Liabilities                                                  656,202         493,406
                                                                          -----------     -----------

Commitments (Note 15)

Shareholders' Equity (Notes 10 and 11):
    Preferred Stock, par value $.01 per share, 10 million shares
       authorized, none issued or outstanding                                    --              --
    Common Stock, par value $.01 per share, authorized 200 million
       shares, issued and outstanding 41,787,543 shares in 1997
       and 40,564,076 shares in 1996                                              418             406
    Capital in Excess of Par Value                                            583,056         553,335
    Cumulative Net Income                                                     202,106         129,209
    Cumulative Dividends                                                     (262,584)       (187,580)
                                                                          -----------     -----------

           Total Shareholders' Equity                                         522,996         495,370
                                                                          -----------     -----------

           Total Liabilities and Shareholders' Equity                     $ 1,179,198     $   988,776
                                                                          ===========     ===========
</TABLE>

The accompanying notes are an integral part of these consolidated balance sheets
                                      F-3
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------

                        CONSOLIDATED STATEMENTS OF INCOME
                        ---------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
              ----------------------------------------------------
                  (Amounts in thousands except per share data)

<TABLE>
<CAPTION>
                                                                  1997          1996           1995
                                                               ---------     ---------      ---------
<S>                                                            <C>           <C>            <C>      
Revenues:
      Rental                                                   $ 101,292     $  95,612      $  86,182
      Mortgage Loan Interest                                      10,987        15,738         14,118
      Interest (Related Party) (Note 6)                            9,037         2,861           --
      Investment Income and Other                                 13,672         6,955          2,283
                                                               ---------     ---------      ---------

                                                                 134,988       121,166        102,583
                                                               ---------     ---------      ---------

Expenses:
      Depreciation and Amortization                               20,784        20,654         21,201
      Operating, General and Administrative                       11,106        11,488         10,283
      Property Costs                                               1,641         2,041          2,046
      Interest                                                    34,764        25,974         15,276
      Interest (Related Party) (Note 12)                             986           973            961
                                                               ---------     ---------      ---------

                                                                  69,281        61,130         49,767
                                                               ---------     ---------      ---------

Income Before Gain on Sale of Property
      and Other                                                   65,707        60,036         52,816

Gain on Sale of Property (Note 2)                                  5,471         9,899            977
Equity in Net Income (Loss) of Affiliate (Note 6)                  1,719        (1,396)          --
                                                               ---------     ---------      ---------
Income Before Extraordinary Item                                  72,897        68,539         53,793

      Extraordinary Item - Loss on Early
        Extinguishment of Debt (Note 8)                             --            --           (2,464)
                                                               ---------     ---------      ---------

Net Income                                                     $  72,897     $  68,539      $  51,329
                                                               =========     =========      =========

Earnings Per Share (Note 2):
      Income Before Extraordinary Item                         $    1.78     $    1.70      $    1.34
      Extraordinary Item                                            --            --             (.06)
                                                               ---------     ---------      ---------
      Net Income                                               $    1.78     $    1.70      $    1.28
                                                               =========     =========      =========

Earnings Per Share - Assuming Dilution (Note 2):
      Income Before Extraordinary Item                         $    1.76     $    1.69      $    1.33
      Extraordinary Item                                            --            --             (.06)
                                                               ---------     ---------      ---------
      Net Income                                               $    1.76     $    1.69      $    1.27
                                                               =========     =========      =========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-4
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
           ----------------------------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
              ----------------------------------------------------
                  (amounts in thousands except per share data)


<TABLE>
<CAPTION>
                                                         Capital
                                          Common      in Excess of    Cumulative     Cumulative
                                           Stock        Par Value     Net Income      Dividends         Total
                                       ------------   ------------   ------------   ------------    ------------
<S>                                    <C>            <C>            <C>            <C>             <C>         
BALANCE, December 31, 1994             $        403   $    546,626   $      9,341   $    (42,263)   $    514,107
    Capital contributions - dividend
       reinvestment plan                       --              852           --             --               852
    Net income                                 --             --           51,329           --            51,329
    Dividends declared - $1.80 per share       --             --             --          (72,471)        (72,471)
                                       ------------   ------------   ------------   ------------    ------------

BALANCE, December 31, 1995                      403        547,478         60,670       (114,734)        493,817
    Capital contributions - dividend
       reinvestment plan                          2          4,897           --             --             4,899
    Exercise of stock options                     1            960           --             --               961
    Net income                                 --             --           68,539           --            68,539
    Dividends declared - $1.80 per share       --             --             --          (72,846)        (72,846)
                                       ------------   ------------   ------------   ------------    ------------

BALANCE, December 31, 1996                      406        553,335        129,209       (187,580)        495,370
    Capital contributions -
        Issuance of common stock                 10         23,297           --             --            23,307
        Dividend reinvestment plan                2          5,792           --             --             5,794
    Exercise of stock options                  --              632           --             --               632
    Net income                                 --             --           72,897           --            72,897
    Dividends declared - $1.82 per share       --             --             --          (75,004)        (75,004)
                                       ------------   ------------   ------------   ------------    ------------

BALANCE, December 31, 1997             $        418   $    583,056   $    202,106   $   (262,584)   $    522,996
                                       ============   ============   ============   ============    ============
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-5
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------

              FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
              ----------------------------------------------------
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                     1997         1996         1995
                                                                  ---------    ---------    ---------
<S>                                                               <C>          <C>          <C>      
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                     $  72,897    $  68,539    $  51,329
   Adjustments to net income:
      Depreciation and amortization                                  20,784       20,654       21,201
      Gain on sale of property                                       (5,471)      (9,899)        (977)
      Equity in net (income) loss of affiliate                       (1,719)       1,396         --
      Provision for uncollectible mortgages and notes                   791        1,400         --
      Loss on early extinguishment of debt                             --           --          2,464
      Other                                                            (958)       3,859        4,604
                                                                  ---------    ---------    ---------

        Net cash provided by operating activities                    86,324       85,949       78,621
                                                                  ---------    ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of property                                         (140,218)    (128,713)    (143,262)
   Investment in mortgage loans                                    (310,811)     (49,102)    (133,289)
   Investment in notes receivable                                   (17,460)     (17,280)      (1,200)
   Collection of (investment in) related party notes receivable     100,706     (147,616)        --
   Purchase of investment securities                                (15,946)        --           --
   Proceeds from securitization transaction                         103,975      151,720         --
   Dividend received from (investment in) affiliate                   9,822       (9,500)        --
   Proceeds from sale of property                                    26,425       34,015       12,210
   Receipt of mortgage loan and note payoffs                         30,198       12,265          489
   Collection of mortgage loan principal                              4,325        4,867        5,337
   Collection of investment security principal                        1,463          715         --
                                                                  ---------    ---------    ---------

        Net cash used in investing activities                      (207,521)    (148,629)    (259,715)
                                                                  ---------    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
   Dividends paid                                                   (73,618)     (72,725)     (72,471)
   Proceeds from issuance of common stock                            29,733        5,860          852
   Proceeds from bank borrowings                                    503,000      254,000      361,412
   Proceeds from issuance of notes                                   60,150      100,000      198,678
   Payment of bank borrowings and loan fees                        (352,288)    (215,172)    (317,405)
   Payment of other unsecured notes                                 (50,000)        --           --
                                                                  ---------    ---------    ---------

        Net cash provided by financing activities                   116,977       71,963      171,066
                                                                  ---------    ---------    ---------

NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS                                                       (4,220)       9,283      (10,028)

CASH AND CASH EQUIVALENTS, beginning of year                         11,350        2,067       12,095
                                                                  ---------    ---------    ---------

CASH AND CASH EQUIVALENTS, end of year                            $   7,130    $  11,350    $   2,067
                                                                  =========    =========    =========
</TABLE>

 The accompanying notes are an integral part of these consolidated statements.
                                      F-6
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                   ------------------------------------------

                           DECEMBER 31, 1997 AND 1996
                           --------------------------



(1)      ORGANIZATION AND OPERATION:
         ---------------------------

         Franchise    Finance    Corporation   of   America    ("FFCA")   is   a
self-administered real estate investment trust ("REIT") which primarily provides
real  estate  financing  to  the  chain  restaurant  industry  as  well  as  the
convenience  store and automotive  service and parts  industries  throughout the
United States. FFCA provides financing to operators with experienced  management
in   established   chains  through   various   financial   products,   including
sale-leaseback  transactions,  mortgage loans,  equipment loans and construction
financing.  FFCA and its  predecessor  companies have provided  financing to the
chain restaurant industry since 1981 and began financing  convenience stores and
automotive  service and parts stores in 1997.  FFCA's portfolio of properties is
diversified by tenant, property concept and geographic location. At December 31,
1997, FFCA had interests in 2,481 properties  consisting of investments in 2,275
chain  restaurants,  198  convenience  and automotive  stores and 8 other retail
properties.   FFCA's  portfolio   included  1,855   properties   represented  by
investments  in real estate and mortgage  loans  receivable  and 626  properties
represented  by  securitized  mortgage  loans in  which  FFCA  holds a  residual
interest.  These  properties  are  operated by  approximately  420  operators in
approximately 50 chains in 47 states.

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
         -------------------------------------------

         Consolidation   and  Equity  Method   Investments  -  The  accompanying
consolidated   financial  statements  include  the  accounts  of  FFCA  and  its
wholly-owned subsidiaries,  FFCA Acquisition Corporation, FFCA Residual Interest
Corporation,  FFCA Secured Assets Corporation,  FFCA Secured Lending Corporation
and FFCA Institutional  Advisors,  Inc. All intercompany  transactions have been
eliminated. Investments in companies in which FFCA has significant influence but
less than a  controlling  voting  interest  are  accounted  for using the equity
method.  Under the equity method, only FFCA's investment in and amounts due from
the equity investee are included in the consolidated  balance sheet, only FFCA's
share of the  investee's  earnings  is included  in the  consolidated  operating
results, and only the cash investment, loans or other cash paid to the investee,
less any dividends,  cash distributions,  loan repayments or other cash received
from the investee, are included in the consolidated cash flows.

         Federal Income Taxes - FFCA has elected to be taxed as a REIT under the
Internal Revenue Code of 1986, as amended, as of June 1, 1994. As a result, FFCA
generally will not be subject to federal income  taxation at the corporate level
provided it meets  certain  tests which,  among other  things,  require that its
assets consist  primarily of real estate,  its income be derived  primarily from
real estate and at least 95% of its taxable  income be  distributed  annually to
its shareholders.  The tax basis of the assets and liabilities has been recorded
based upon the value of the consideration exchanged upon the merger of FFCA with
its  predecessor  companies  and,  accordingly,  the tax basis of the net assets
exceeds the book basis by approximately $227 million at December 31, 1997.

         Real  Estate - FFCA  records  the  acquisition  of real estate at cost,
which includes  miscellaneous  acquisition  and closing costs.  Depreciation  is
computed using the straight-line  method over the estimated useful life of 24 to
30 years for buildings and  improvements  and 7 to 8 years for  equipment.  FFCA
periodically reviews its real estate portfolio for impairment whenever events or
changes in  circumstances  indicate that the carrying amount of the property may
not be  recoverable,  such as may be the  case  with  vacant  properties.  If an
impairment  loss is  indicated,  the loss is measured as the amount by which the
carrying amount of the asset exceeds the estimated fair value of the asset. Gain
on sale of property in the consolidated statements of income for the years ended
December 31, 1997,  1996 and 1995 is net of  approximately  $1.9  million,  $3.3
million and $3.4 million,  respectively,  of impairment  loss related to certain
vacant properties. Vacant properties held for sale represent less than 1% of the
total real estate investment portfolio at December 31, 1997.
                                      F-7
<PAGE>
         Lease and Loan Origination  Fees and Costs - FFCA generally  receives a
fee related to  activities  performed  to process a  borrower's  request for and
origination of credit.  Direct costs associated with these activities are offset
against the related fees received and the balance is deferred and amortized into
revenue over the term of the related lease or loan.  Loan  origination  fees and
costs  related to mortgage  loans held for sale are  deferred  until the related
loan is sold.

         Cash and Cash Equivalents - Cash and cash equivalents  include all cash
and highly liquid investment  securities with maturities at acquisition of three
months or less.  Such  investment  securities  are carried at cost plus  accrued
interest which approximates fair market value.

         Debt Financing Costs - Included in Other Assets are costs totaling $4.3
million in 1997 and $5.3  million in 1996 (net of  accumulated  amortization  of
$2.2 million in 1997 and $1.1 million in 1996)  associated  with the issuance in
1995 of  FFCA's  Senior  Notes  and the  issuance  in 1996 and  1997 of  various
unsecured  notes,  which  costs are  amortized  over the terms of the notes on a
straight-line basis (which approximates effective interest method). Amortization
of these debt  issuance  costs for the years ended  December 31, 1997,  1996 and
1995  amounted to $1.3  million,  $994,000 and $90,000,  respectively,  which is
included in interest expense in the accompanying financial statements.

         Derivative  Financial  Instruments  - FFCA's  portfolio  of  fixed-rate
mortgage  loans held for sale is funded on an interim  basis by a variable  rate
bank credit facility until the loans are sold in a  securitization  transaction.
FFCA hedges against  fluctuations  in interest rates from the time the loans are
originated until the time they are sold through the use of derivative  financial
instruments.  FFCA does not hold or issue derivative  financial  instruments for
speculative trading purposes.  The instruments used are interest rate agreements
which are non-leveraged and involve little complexity. FFCA intends to terminate
these agreements upon  securitization of the fixed-rate mortgage loans, at which
time  both the gain or loss on the  securitization  of the  fixed-rate  mortgage
loans  and the  gain  or  loss on the  termination  of the  interest  rate  swap
agreements will be measured and recognized in the statement of operations.

         Rental  Revenue  Recognition  -  FFCA  leases  its  real  estate  under
long-term net leases which are  classified as operating  leases.  Rental revenue
from operating leases is recognized as it is earned.

         Investment  Property Sales - FFCA records certain sales of property and
equipment  under  the  installment  or  cost  recovery  method.  Gains  totaling
approximately  $592,000  in 1997,  $664,000  in 1996 and $3 million in 1995 were
deferred on such sales.  For financial  reporting  purposes,  deferred  gains on
property sales reduced the related mortgage loans receivable balance and totaled
$1.6 million and $1.5 million at December 31, 1997 and 1996, respectively.

         Earnings Per Share - Earnings per share  amounts for 1996 and 1995 have
been  restated to conform with 1997's  presentation  as required by Statement of
Financial  Accounting  Standards  (SFAS) No.  128,  "Earnings  Per  Share".  The
following is a  reconciliation  of basic earnings per share to diluted  earnings
per share for income before  extraordinary  items (amounts in thousands,  except
per share data):

<TABLE>
<CAPTION>
                                                   1997                          1996                          1995
                                        --------------------------    --------------------------    --------------------------
                                                              Per                           Per                           Per
                                        Earnings    Shares   Share    Earnings    Shares   Share    Earnings    Shares   Share
                                        --------    ------   -----    --------    ------   -----    --------    ------   -----
<S>                                     <C>         <C>      <C>      <C>         <C>      <C>      <C>         <C>      <C>   
Basic Earnings Per Share -
    Income before extraordinary items   $ 72,897    40,968   $ 1.78   $ 68,539    40,423   $ 1.70   $ 53,793    40,256   $ 1.34
       Effect of Dilutive Securities-
          Common stock options              --         365                --         180                --          38
                                        --------   -------            --------   -------            --------   -------

Diluted Earnings Per Share              $ 72,897    41,333   $ 1.76   $ 68,539    40,603   $ 1.69   $ 53,793    40,294   $ 1.33
                                        ========   =======   ======   ========   =======   ======   ========   =======   ======
</TABLE>

         Stock options to purchase 692,336 shares of common stock at $26.375 per
share were outstanding  during 1997, but were not included in the computation of
diluted earnings per share, because the options' exercise price was greater than
the average market price of the common shares.
                                      F-8
<PAGE>
         Use of  Estimates - The  preparation  of the  financial  statements  in
conformity with generally accepted accounting  principles requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting period.  Although management believes
its estimates are reasonable, actual results could differ from those estimates.

         New Pronouncements - In June 1997, the Financial  Accounting  Standards
Board (FASB) issued SFAS No. 130 "Reporting  Comprehensive Income". SFAS No. 130
establishes  standards for reporting and display of comprehensive income and its
components in a full set of general-purpose  financial statements.  Also in June
1997, the FASB issued SFAS No. 131 "Disclosures  about Segments of an Enterprise
and Related  Information".  SFAS No. 131 establishes  standards for the way that
public companies report certain  information  about operating  segments of their
business in their financial  statements  (including interim financial  reports).
Both standards are effective for FFCA's fiscal year 1998 at which time FFCA will
adopt them. The adoption of these new accounting  standards would not have had a
material effect on FFCA's financial  statements for the years ended December 31,
1997, 1996 or 1995.

(3)      INVESTMENTS IN REAL ESTATE:
         ---------------------------

         FFCA's real estate portfolio is comprised of property leased to tenants
under long-term net operating leases. The lease agreements generally provide for
monthly rentals equal to the greater of a percentage of the property's cost or a
percentage of its gross sales.  The term of the leases is generally 20 years for
land and buildings and seven or eight years for equipment (if any).  The initial
terms of FFCA's leases  extend  through 2017 with a weighted  average  remaining
term of 11.7 years as of December 31, 1997. Land and building  leases  generally
provide for two or four five-year renewal options. Generally, the lessee has the
option to purchase equipment at the end of the lease term and land and buildings
anytime  after the first ten years of the lease at fair  market  value  (but not
less than original cost in most cases). Leases entered into after 1994 generally
provide  for  90-day  option  windows at various  dates  during the lease  term.
Approximately  three-fourths  of FFCA's  land and  building  leases  provide for
purchase options, two-thirds of which are currently exercisable.

         Minimum  future  rentals under  noncancellable  operating  leases as of
December 31, 1997, are as follows (amounts in thousands):

         Year ending December 31,
         ------------------------
                  1998                               $  101,400
                  1999                                  100,600
                  2000                                   98,700
                  2001                                   96,600
                  2002                                   92,700
                  Thereafter                            668,600
                                                     ----------

                  Total minimum future rentals       $1,158,600
                                                     ==========

         The above table  assumes  that all leases which expire are not renewed;
therefore,  neither  renewal  rentals nor rentals from  replacement  lessees are
included. In addition,  minimum future rentals do not include contingent rentals
which may be received  under the leases based upon a percentage  of the lessee's
gross sales.  These  percentage  rentals totaled  approximately  $6.4 million in
1997, $5 million in 1996 and $4 million in 1995.

(4)      MORTGAGE LOANS HELD FOR SALE:
         -----------------------------

         At  December  31,  1997,  FFCA's  portfolio   included  mortgage  loans
originated in 1997 which are held for sale.  These  mortgage loans are stated at
the lower of cost or fair market value,  determined in the aggregate.  The loans
represent first mortgage loans on the land and/or  buildings and/or equipment of
360 properties  comprising  $167.3 million in fixed-rate loans and $68.1 million
in variable-rate loans. Construction loans totaled $16.2 million at December 31,
1997. The fixed-rate  loans carry a weighted  average  interest rate of 9.6% and
mature 5 to 20 years from the date of origination. The variable-rate loans carry
interest rates which adjust monthly based on 30-day LIBOR plus a margin (average
interest  rate was 9.2% at December  31,  1997).  Total  principal  and interest
                                      F-9
<PAGE>
payments aggregate approximately $2.4 million per month. The fixed-rate mortgage
loans generally  provide for no prepayment for the first five years of the loan;
prepayments  during  the  next  five  years  of the  loan  generally  require  a
prepayment penalty based on a percentage of the loan balance.  The variable-rate
mortgage loans generally have no prepayment restrictions.

(5)      OTHER MORTGAGE LOANS AND NOTES RECEIVABLE:
         ------------------------------------------

         At December 31, 1997, FFCA held first mortgage loans on the land and/or
buildings and/or equipment of approximately 160 properties  represented by $35.2
million in  participating  fixed-rate  loans (net of reserve of $2.6  million in
1997).  These loans are held for long-term  investment  and carry interest rates
ranging  from 10% to 13.5% per annum and  mature 5 to 20 years  from the date of
origination.  In addition, these loans generally provide for additional interest
payments  based on a percentage of the  mortgagor's  gross sales.  Principal and
interest  payments on the mortgage  loans are due in level amounts with payments
aggregating approximately $7.4 million per year to maturity.

         FFCA also held  various  secured and  unsecured  notes  totaling  $27.1
million at  December  31, 1997 and $18.8  million at  December  31, 1996 (net of
allowances of $460,000 in 1997 and $875,000 in 1996). Generally, the notes carry
interest  rates  ranging from 10% to 12% per annum and mature 5 to 10 years from
the date of origination.

(6)      OTHER INVESTMENTS:
         ------------------

         Investment Securities - Certain mortgage loans originated by FFCA , its
predecessors and its affiliate, FFCA Mortgage Corporation, totaling $261 million
in 1997 and $178.8 million in 1996 were  securitized and Secured  Franchise Loan
Pass-Through and Trust Certificates (the "Certificates") were sold to investors.
Upon sale, the mortgage loans receivable were removed from the balance sheet and
a gain on the sale was recognized for the difference between the carrying amount
of the mortgage  loans and the adjusted  sales price.  The  servicing  rights on
these  mortgage loans have been retained by FFCA and are not  significant.  FFCA
also retained certain interests, approximating 11% in 1997 and 12.5% in 1996, in
the  aggregate   mortgage  loan  principal   balance  through  the  purchase  of
subordinated  investment  securities of the  securitization  trust and, in 1996,
also  purchased the  interest-only  certificate.  These  investment  securities,
totaling  $55.2  million  and  $29.7  million  at  December  31,  1997 and 1996,
respectively,  were recorded by allocating the previous  carrying  amount of the
mortgages  between the assets sold and the  retained  interests,  based on their
relative fair values and are included in Other  Investments in the  accompanying
consolidated  balance  sheets.  The  investment  securities  retained  in  1997,
totaling  $26.6  million,  related to the sale of  mortgage  loans  from  FFCA's
held-for-sale  portfolio,  and are  accounted  for as  trading  securities.  The
investment  securities retained in 1996, totaling $28.6 million,  related to the
sale of mortgage loans from FFCA's  original loan portfolio are accounted for as
available-for-sale  securities.  At December 31, 1997, the estimated fair market
value of FFCA's  investment  securities  is not  materially  different  than the
carrying amount. In 1997, the securitization  transaction  resulted in unrelated
business taxable income of $.005 per share for FFCA's tax-exempt investors.

         Investment in Affiliate - FFCA Mortgage  Corporation  (Mortgage  Corp.)
was  formed  in  1996  to  originate  mortgage  loans  to  be  held  for  future
securitization transactions. FFCA, as owner of all of the issued and outstanding
nonvoting  preferred stock of Mortgage Corp., was entitled to receive 95% of all
dividends paid by Mortgage Corp.  prior to the  dissolution of Mortgage Corp. on
December  31,  1997.  At  dissolution,  cash  dividends  were paid to the common
stockholder and the remaining assets were distributed to FFCA in satisfaction of
its note receivable  from Mortgage Corp.  FFCA recorded 95% of Mortgage  Corp.'s
net  income  (loss)  for  1997 and  1996 as  "Equity  in Net  Income  (Loss)  of
Affiliate" in the accompanying financial statements.

         Prior  to  Mortgage  Corp.'s  dissolution,  FFCA  provided  funding  to
Mortgage  Corp.  for the  origination of mortgage  loans.  Under  revolving loan
agreements  with Mortgage  Corp.,  FFCA was entitled to receive a draw fee of 1%
and  interest  at a rate  equal  to  LIBOR or a Base  rate  (as  defined  in the
agreement),  plus a margin ranging from 2.5% to 3%. FFCA also provided temporary
working  capital  advances to Mortgage  Corp.  bearing an interest rate of LIBOR
plus 3%.
                                      F-10
<PAGE>
         A summary of  selected  financial  information  as reported by Mortgage
Corp.  as of, and for the years ended  December 31, 1997 and 1996,  is set forth
below (amounts in thousands):

                                                1997        1996
                                               ------     --------
         Revenues                              $9,632     $  2,336
         Interest expense                       9,037        2,861
         Net income (loss)                      1,809       (1,470)
         Mortgage loans held for sale             -        140,967
         Total Assets                             -        156,928
         Notes payable to FFCA                    -        147,616
         Total Liabilities                        -        148,398
         Total Shareholders' Equity               -          8,530

(7)      NOTES PAYABLE:
         --------------

A summary of FFCA's unsecured notes payable follows (amounts in thousands):

<TABLE>
<CAPTION>
                                                                       1997          1996
                                                                     --------      --------
<S>                                                                  <C>           <C>     
         7% Senior Notes due 2000, net of unamortized
              discount of $709 in 1997 and $952 in 1996              $149,291      $149,048
         7.875% Senior Notes due 2005, net of unamortized
              discount of $81 in 1997 and $92 in 1996                  49,919        49,908
         6.78% Notes due 2002                                          30,000        30,000
         7.02% Notes due 2003                                          30,000        30,000
         7.1% Notes due 2026, callable by holder in 2004               40,000        40,000
         6.95% Notes due 2007                                          10,150           -
                                                                     --------      --------
                                                                     $309,360      $298,956
                                                                     ========      ========
</TABLE>

         Interest  on all of the notes is  payable  semi-annually  in arrears on
each May 30 and November 30 with  principal due at maturity.  With the exception
of the $40 million notes due 2026,  the notes may not be redeemed prior to their
respective  maturities.  The note agreements  contain certain  covenants  which,
among other restrictions, limit the incurrence of additional debt if FFCA's debt
exceeds 60% of total  assets (as defined in the note  agreements),  or if FFCA's
debt service  coverage is less than 1.5 to 1. As of December 31, 1997,  FFCA was
in compliance with its note covenants.

         In January  1997,  FFCA issued $50 million in  variable-rate  unsecured
notes due 1998 bearing interest at a weighted average rate of 3-month LIBOR plus
 .33%  (interest  reset  quarterly).  The notes were redeemed by FFCA on July 14,
1997 at a redemption price of 100% of the principal amount of the notes.

         Subsequent  to December 31, 1997,  FFCA issued $17 million in unsecured
notes due 2007 bearing  interest at a rate of 6.86%.  Interest on these notes is
payable  semi-annually  in arrears on each May 30 and November 30 with principal
due at maturity.

(8)      BORROWINGS UNDER LINE OF CREDIT:
         --------------------------------

The following is a summary of borrowings under FFCA's line of credit (amounts in
thousands):

<TABLE>
<CAPTION>
                                                                       1997          1996
                                                                     --------      --------
<S>                                                                  <C>           <C>   
         Borrowings at LIBOR Bid Rate, weighted average           
              interest rate of 6.69% at December 31, 1997            $ 56,000      $    -
         Borrowings at 30-day LIBOR plus 1%, weighted             
              average interest rate of 6.96% and 6.71% at         
              December 31, 1997 and 1996, respectively                210,000        85,500
         Borrowings at Base rate, 8.50% and 8.25% at              
              December 31, 1997 and 1996, respectively,           
              subsequently converted to LIBOR loans                    36,000        65,000
                                                                     --------      --------
                                                                     $302,000      $150,500
                                                                     ========      ========
</TABLE>
                                      F-11
<PAGE>
         At December  31,  1997,  FFCA had  outstanding  $302  million on a $350
million acquisition loan facility with participating banks used to provide funds
for the  acquisition  or financing of chain store  properties.  Interest on this
unsecured  revolving credit facility is due in periodic  installments  (weighted
average rate of 6.63% in 1997 and 7.12% in 1996).  Effective  December 27, 1996,
FFCA also has the option  under this loan  facility  to borrow at rates that are
competitively bid among the participating  banks. The loan facility provides for
a fee on the unused  commitment  amount of .20% per annum,  payable quarterly in
arrears.  The  acquisition  loan  facility  expires in December  2000,  with the
possibility of annual extensions. The credit agreement contains covenants which,
among other restrictions, require FFCA to maintain a fixed charge coverage ratio
of 2 to 1 and a minimum net worth of $425  million,  as defined.  As of December
31, 1997, FFCA was in compliance with its debt covenants.

         Amortization  of loan fees  related to these  facilities  for the years
ended December 31, 1997, 1996 and 1995 amounted to $1.2 million and $1.4 million
and $2.1  million,  respectively,  which is included in interest  expense in the
accompanying consolidated financial statements. In 1995, FFCA initiated an early
termination of its then existing  credit facility which enabled it to reduce its
cost of borrowings while also removing the bank's security interest in the stock
of FFCA's wholly-owned subsidiary,  FFCA Acquisition Corporation. As a result of
the early extinguishment of this debt, FFCA expensed  approximately $2.5 million
in unamortized loan costs in 1995 which is reported as an extraordinary  item on
the consolidated statement of income.

         Subsequent  to December  31,  1997,  FFCA  entered  into a $100 million
acquisition  loan  facility  with a bank with  substantially  the same terms and
conditions  as the $350  million  acquisition  loan  facility.  The $100 million
acquisition  loan  facility  expires no later than May 30, 1998, as described in
the credit agreement.

(9)      DERIVATIVE FINANCIAL INSTRUMENTS:
         ---------------------------------

         At December 31, 1997, FFCA had outstanding interest rate swap contracts
aggregating $152.6 million in notional amount. The notional amount serves solely
as a basis for the calculation of payments to be exchanged and are not a measure
of the exposure of FFCA through its use of derivatives.  Under the interest rate
swap contracts, two parties agree to swap payments over a specified period. FFCA
agrees to make  payments  at a  specified  fixed rate and the other party to the
contract  agrees to make payments  based on a variable  market index rate.  FFCA
intends to terminate the interest rate  agreements  upon  securitization  of the
fixed-rate mortgage loans in mid-1998, at which time FFCA would generally expect
to receive (if rates rise) or pay (if rates fall) an amount equal to the present
value of the  difference  between  the fixed  rate set at the  beginning  of the
interest  rate swap  contract  and the  variable  market  index rate.  Under the
contracts,  no  cash  payments  would  be  required  until  the  earlier  of the
securitization transaction or November 2, 1998. At December 31, 1997, there were
no hedging gains or losses explicitly deferred under these contracts.

(10)     DIVIDENDS:
         ----------

         FFCA declared a fourth quarter 1997 dividend of $.47 per share, payable
on February  20, 1998,  to  shareholders  of record on February  10,  1998.  The
dividend payments made by FFCA to its shareholders for 1997 are characterized as
ordinary  income of $1.68 per share and  return of  capital  of $.12 per  share.
Dividend payments made by FFCA to its shareholders for 1996 are characterized as
ordinary income of $1.58 per share and capital gain of $.22 per share.  Dividend
payments made by FFCA to its shareholders for 1995 are characterized as ordinary
income of $1.35 per share.

(11)     STOCK OPTIONS:
         --------------

         On May  10,  1995,  FFCA  shareholders  approved  a  stock  option  and
incentive plan which permits the issuance of options, restricted stock and other
stock-based  awards  to key  employees,  the  Board  of  Directors  and  certain
independent  contractors of FFCA. The plan reserves  3,018,804  shares of common
stock for grant and provides  that the term of each award be  determined  by the
compensation  committee of the Board of Directors.  Under the terms of the plan,
options granted may be either  non-qualified  or incentive stock options and the
exercise  price,  determined  by the  committee,  may not be less  than the fair
market  value of a share of common stock on the grant date.  Options  granted to
FFCA's non-employee directors are immediately exercisable, while
                                      F-12
<PAGE>
the remaining  options vest over a three-year period from the date of grant. The
options expire ten years after the date of grant.

         FFCA measures the  compensation  cost of its stock option and incentive
plan using the  intrinsic  value based method of  accounting  prescribed  in APB
Opinion  25,  "Accounting  for  Stock  Issued  to  Employees".  Accordingly,  no
compensation  cost has been  recognized for its stock option and incentive plan.
Had FFCA's  compensation  cost been determined using the fair value based method
of accounting prescribed by Statement of Financial Accounting Standards No. 123,
"Accounting  for Stock-Based  Compensation",  FFCA's net income and earnings per
share would have been changed to the following pro forma amounts (in  thousands,
except per share data):

<TABLE>
<CAPTION>
                                                        1997        1996        1995
                                                      -------     -------     -------
<S>                                                   <C>         <C>         <C>    
         Net income:
              As reported                             $72,897     $68,539     $51,329
              Pro forma                               $70,718     $67,605     $48,812
         Earnings per share of common stock:
              As reported:
                   Basic                                $1.78       $1.70      $1.28
                   Assuming dilution                    $1.76       $1.69      $1.27
              Pro forma:
                   Basic                                $1.73       $1.67      $1.21
                   Assuming dilution                    $1.71       $1.67      $1.21
</TABLE>

         The fair value of each option  grant is  estimated on the date of grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions used for grants in 1997, 1996 and 1995, respectively: dividend yield
of 6.4%,  8.2% and 8%;  expected  stock price  volatility of 18.47%,  20.13% and
21.36%;  risk-free  interest  rates of 5.65%,  5.59% and 6.52%;  and an expected
option term of seven years.

         A summary of the status of FFCA's stock option and incentive plan as of
December 31, 1997,  1996 and 1995, and changes  during the years then ended,  is
presented below:

<TABLE>
<CAPTION>
                                                1997                     1996                    1995
                                       ---------------------    ---------------------    --------------------
                                                    Weighted                 Weighted                Weighted
                                                    Average                  Average                 Average
                                                    Exercise                 Exercise                Exercise
                                         Shares      Price        Shares      Price        Shares     Price
                                       ---------    --------    ---------    --------    ---------   --------
<S>                                    <C>          <C>         <C>          <C>         <C>         <C>
Outstanding, beginning of year         1,705,181    $  20.23    1,227,989    $  19.50         --         --
Granted                                  774,730    $  26.32      526,091    $  21.87    1,227,989   $  19.50
Exercised                                (32,166)   $  19.62      (48,899)   $  19.63         --         --
Cancellations                            (22,500)   $  24.38         --          --           --         --
                                       ---------                ---------                ---------
Outstanding, end of year               2,425,245    $  22.14    1,705,181    $  20.23    1,227,989   $  19.50
                                       =========                =========                =========

Options exercisable, end of year         956,071    $  20.07      400,181    $  19.64       20,489   $  19.75
Weighted average fair value of
    each option granted during year    $    2.88                $    2.05                $    1.78
</TABLE>

         As of  December  31,  1997,  options  outstanding  under  the  plan had
exercise prices ranging from $19.50 to $26.375 with a weighted  average price of
$22.06,  and expiration  dates ranging from May 2005 to May 2007 with a weighted
average remaining term of 8 years.

(12)     RELATED PARTY TRANSACTIONS:
         ---------------------------

         In  1988,  a  partnership  managed  by an  affiliate  of FFCA  provided
financing  for  land  purchased  by  FFCA  from  the  partnership  and  for  the
construction  of  the  corporate  headquarters  of  FFCA  (together,   the  FFCA
Premises).  The term of the mortgage  loan on the FFCA Premises is ten years and
provides for payments of interest  only, at the rate of 10% per year,  until May
2000,  at  which  time  the  entire  principal  amount  must  be  repaid  to the
partnership.  The loan also provides for the payment of additional interest upon
maturity based upon
                                      F-13
<PAGE>
the increase,  if any, in the value of the FFCA Premises, as defined in the loan
agreement. Under certain circumstances, FFCA may be required to prepay the loan.
The loan is secured by land and land  improvements,  the FFCA  Premises  and the
guaranty of an affiliate.  The FFCA Premises,  including equipment,  amounted to
$10.5 million in 1997 and $9 million in 1996 (net of accumulated depreciation of
$3.2  million in 1997 and $2.6  million in 1996) and is included in Other Assets
in the accompanying financial statements.

         FFCA  provides  certain  accounting,   computer,   investor  and  other
administrative services to its affiliates under service agreements which provide
for a monthly fee based upon the amount of services used by each affiliate. Fees
for such services aggregated approximately $1.4 million in 1997, $1.6 million in
1996 and $760,000 in 1995.

(13)     FINANCIAL INSTRUMENTS:
         ----------------------

         The carrying value of FFCA's financial  instruments  approximates  fair
value,  except for  differences  with  respect  to  mortgage  loans  receivable,
investment securities and long-term, fixed-rate debt (Notes Payable and Mortgage
Payable to  Affiliate).  The fair value of a financial  instrument  is generally
determined  by reference to its quoted  market price or, if quoted market prices
are not available,  to the market price of a financial  instrument  with similar
characteristics.

         The fair value of FFCA's mortgage loans is estimated by discounting the
future  cash flows  using the  current  interest  rates for  similar  loans with
similar  maturities  at December  31,  1997.  The  estimated  fair values of the
mortgage  loans held for long-term  investment  and the mortgage  loans held for
sale  exceeded  their   carrying   amounts  by  $2.9  million  and  $5  million,
respectively.  Based on market  prices of similar  investments  at December  31,
1997,  the fair value of FFCA's  long-term  investment  securities  exceeded the
carrying amount by $2.3 million. The fair value of FFCA's long-term,  fixed rate
debt  exceeded the carrying  amount by $9 million based on the level of interest
rates prevailing at December 31, 1997.

         The fair value of FFCA's  interest rate swap  contracts is based on the
theoretical cost to unwind or terminate the swap  transactions.  FFCA would have
paid  approximately  $3.7 million if it had  terminated  its interest  rate swap
contracts at December 31, 1997.

         The combined fair value differences of these financial instruments,  is
equivalent  to an  unrealized  loss of $2.5  million;  however,  changes  in the
unrealized  gains  or  losses  on  mortgage  loans,  the  long-term   investment
securities,  fixed-rate  debt and the interest rate swap contracts do not result
in the  realization or expenditure of cash unless the  investments  are actually
sold or the debt is retired.

(14)     EMPLOYEE SAVINGS PLANS:
         -----------------------

         The FFCA 401K Plan (the  Plan) was  established  as a savings  plan for
FFCA's employees who have been employed by FFCA for a minimum of six months. The
Plan  allows  employees  to  make  their  own   contributions   through  payroll
deductions.  FFCA  matches  participating  employees'  contributions  up to  six
percent   of  the   participating   employees'   salaries.   Employer   matching
contributions are made in FFCA stock, which is purchased by the Plan on the open
market,  and are  subject to  years-of-service  vesting  requirements.  Employer
contributions totaled $256,000 in 1997, $213,000 in 1996 and $169,000 in 1995.

         In 1997,  FFCA  established an employee stock purchase plan.  Under the
plan,  employees can purchase stock through payroll  deductions at a price equal
to 85% of the fair  market  value of the stock,  as  defined  in the  agreement.
Employee  purchases  are  limited to 10% of their  salary each year and were not
significant in 1997.

(15)     COMMITMENTS:
         ------------

         In the normal  course of  business,  FFCA makes  commitments  to extend
credit  to meet the  financing  needs of its  clients  in the  chain  restaurant
industry  as well as the  convenience  store and  automotive  service  and parts
industries.  FFCA  evaluates  each client's  credit and,  based on  management's
evaluation of the client and the proposed  property site,  determines the amount
of credit to be extended and collateral obtained. The commitments
                                      F-14
<PAGE>
generally have fixed expiration dates or other  termination  clauses and require
payment  of a fee by the  client.  At  December  31,  1997,  FFCA's  outstanding
commitments to extend credit aggregated approximately $500 million.

(16)     ADDITIONAL FINANCIAL INFORMATION:
         ---------------------------------

         Additional  information  with respect to cash flows follows (amounts in
thousands):

<TABLE>
<CAPTION>
                                                                         1997       1996       1995
                                                                       -------    -------    -------
<S>                                                                    <C>        <C>        <C>    
         Mortgage loans obtained as part of property sale
             proceeds, net of deferred gain                            $   997    $   825    $ 5,542
         Acquisition of property and equipment through
             foreclosure                                                     -      1,245          -
         Investment in securities resulting from securitization         11,303     30,763          -
         Mortgage loans received from affiliate                         46,910          -          -
         Interest paid                                                  32,296     23,692     12,802
         Taxes paid/(refunds received)                                     119         27       (816)
</TABLE>

(17)     QUARTERLY FINANCIAL INFORMATION (Unaudited):
         --------------------------------------------

<TABLE>
<CAPTION>
                                                                  Quarter Ended
                                           -----------------------------------------------------------
                                           March 31,        June 30,     September 30,    December 31,
                                           ---------        --------     -------------    ------------
                                                  (amounts in thousands, except per share data)
<S>                                          <C>             <C>               <C>             <C>    
1997
----
Revenues                                     $32,775         $34,648           $32,861         $34,704
Net income                                    18,215          21,570            16,457          16,655
Net income per share,                                                                         
    assuming dilution                           0.44            0.53              0.40            0.40
Dividends per share                          $  0.45         $  0.45           $  0.45         $   .47
Weighted average shares                       40,977          40,973            41,247          42,121
                                                                                              
1996                                                                                          
----                                                                                          
Revenues                                     $29,667         $31,208           $29,061         $31,230
Net income                                    13,777          21,894            15,831          17,037
Net income per share,                                                                         
    assuming dilution                           0.34            0.54              0.39            0.42
Dividends per share                          $  0.45         $  0.45           $  0.45         $  0.45
Weighted average shares                       40,425          40,486            40,683          40,865
</TABLE>
                                      F-15
<PAGE>
                                                                    SCHEDULE III
                                                                     Page 1 of 2

                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------
              SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
              ----------------------------------------------------
                             AS OF DECEMBER 31, 1997
                             -----------------------

<TABLE>
<CAPTION>
                                    Initial Cost to Company and
                                 Gross Amount at December 31, 1997             Accumulated Depreciation
                            --------------------------------------------   --------------------------------

                 No. of
U.S. Region    Properties     Land      Buildings   Equipment    Total     Buildings   Equipment    Total
-----------    ----------   --------    ---------   ---------   --------   ---------   ---------   --------

<S>                  <C>    <C>         <C>         <C>         <C>        <C>         <C>         <C>     
Mideast              183    $ 53,094    $ 81,407    $    912    $135,413   $ 15,389    $    912    $ 16,301
Northeast            102      27,247      42,591         765      70,603      7,152         763       7,915
E.N. Central         208      46,471      88,956       4,771     140,198     26,289       4,680      30,969
W.N. Central         149      28,055      47,860       3,418      79,333     15,738       3,324      19,062
Southeast            379      92,930     133,566       5,402     231,898     43,299       5,389      48,688
Southwest            231      62,312      82,472       5,445     150,229     22,924       5,436      28,360
Mountain              94      30,048      37,967       1,886      69,901     10,085       1,887      11,972
Pacific              131      42,480      30,810         440      73,730     11,556         440      11,996
                --------    --------    --------    --------    --------   --------    --------    --------
                                                                                                  
TOTAL              1,477    $382,637    $545,629    $ 23,039    $951,305   $152,432    $ 22,831    $175,263
                ========    ========    ========    ========    ========   ========    ========    ========
</TABLE>
                                      F-16
<PAGE>                                                             
                                                                    SCHEDULE III
                                                                     Page 2 of 2

                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------
              SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
              ----------------------------------------------------
                             AS OF DECEMBER 31, 1997
                             -----------------------
                             (Amounts in thousands)

NOTES: 
     (1)  The properties consist of restaurant properties.
     (2)  There are no encumbrances on properties.
     (3)  The aggregate  cost for Federal  income tax purposes is  approximately
          $990 million.
     (4)  Depreciation  is computed over the  estimated  useful life of 24 to 30
          years  for the  buildings  and  improvements  and 7 to 8 years for the
          equipment.
     (5)  Transactions in real estate and equipment and accumulated depreciation
          during 1997, 1996, and 1995 are summarized as follows:

                                                                    Accumulated
                                                         Cost       Depreciation
                                                      ---------     ------------
Balance, December 31, 1994                            $ 681,125      $ 169,569
                                                 
      Acquisitions                                      143,262           --
      Cost of real estate sold                          (17,992)        (4,952)
      Cost of equipment sold                             (8,400)        (7,851)
      Impairment loss                                    (3,415)          --
      Depreciation expense                                 --           19,466
                                                      ---------      ---------
                                                 
Balance, December 31, 1995                              794,580        176,232
                                                 
      Acquisitions                                      128,713           --
      Cost of real estate sold                          (42,447)       (12,705)
      Cost of equipment sold                            (10,591)       (10,122)
      Foreclosed property                                 1,245           --
      Impairment loss                                    (3,285)          --
      Depreciation expense                                 --           19,536
                                                      ---------      ---------
                                                 
Balance, December 31, 1996                              868,215        172,941
                                                 
      Acquisitions                                      140,218           --
      Cost of real estate sold                          (31,321)        (9,531)
      Cost of equipment sold                             (8,059)        (8,016)
      Construction in progress transferred to    
            mortgage loans held for sale                (15,819)          --
      Impairment loss                                    (1,929)          --
      Depreciation expense                                 --           19,869
                                                      ---------      ---------
                                                 
Balance, December 31, 1997                            $ 951,305      $ 175,263
                                                      =========      =========
                                      F-17
<PAGE>
                                                                     SCHEDULE IV
                                                                     Page 1 of 2

                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------
                    SCHEDULE OF MORTGAGE LOANS ON REAL ESTATE
                    -----------------------------------------
                             AS OF DECEMBER 31, 1997
                             -----------------------

<TABLE>
<CAPTION>
                                        No. of                                             
                                       Financed         Interest          Maturity Date    
U.S. Region    Original Loan Amount   Properties       Rate Range             Range        
-----------    --------------------   ----------    ---------------   ---------------------
<S>             <C>                       <C>        <C>              <C>                  
Southeast            under $500,000       28         10.25% - 13.5%   Jun. 2001 - Jan. 2005
                $501,000-$1,000,000        2          10.0% - 10.5%   Jul. 2002 - Aug. 2014
                    over $1,000,000        1                  9.95%               Jan. 2010
                                                                                           
                                                                                           
                                                                                           

Mideast              under $500,000        5          11.0% - 12.5%   Aug. 1999 - Mar. 2003
                $501,000-$1,000,000        1                  10.5%               Jan. 2006
                    over $1,000,000        1                  10.0%               Oct. 1999
                                                                                           
                                                                                           
                                                                                           

Northeast            under $500,000       23         11.25% - 11.5%   Apr. 2003 - Apr. 2004
                    over $1,000,000        3                  11.5%   Sep. 2015 - Nov. 2015
                                                                                           
                                                                                           
                                                                                           

E.N. Central         under $500,000        4          11.0% - 12.5%   Sep. 1999 - Oct. 2002
                $501,000-$1,000,000       10         11.25% - 15.0%   Dec. 2001 - May  2015
                    over $1,000,000        1                  10.5%               Sep. 2015
                                                                                           
                                                                                           
                                                                                           

W.N. Central         under $500,000       17         10.0% - 11.25%   Oct. 1999 - Oct. 2002
                $501,000-$1,000,000        7          10.5% - 13.5%   Jul. 2002 - Dec. 2008
                                                                                           
                                                                                           
                                                                                           

Southwest            under $500,000       19         10.25% - 12.5%   Jun. 1999 - Jun. 2016
                $501,000-$1,000,000        1                  11.5%               Apr. 2015
                                                                                           
                                                                                           
                                                                                           

Mountain             under $500,000       10        10.25% - 11.29%   Feb. 2000 - Jan. 2004
                $501,000-$1,000,000        4         10.75% - 14.5%   Mar. 2001 - Feb. 2011
                                                                                           
                                                                                           
                                                                                           

Pacific              under $500,000        1                  11.0%               Jan. 2004
                $501,000-$1,000,000        1                  11.5%               Oct. 2002
<PAGE>
<CAPTION>
                  Face      Carrying           Principal Amount         
                Amount of   Amount of         of Loans Subject to       
U.S. Region     Mortgages   Mortgages   Delinquent Principal or Interest
-----------     ---------   ---------   --------------------------------
<S>              <C>         <C>                    <C>                 
Southeast        $  4,918    $  3,314               $   -               
                      936         835                   -               
                    4,000       4,000                   -               
                 --------    --------               -------             
                    9,854       8,149                   -               
                 --------    --------               -------             
                                                                        
Mideast             1,112         480                   -               
                      750         395                   -               
                    1,290         640                   -               
                 --------    --------               -------             
                    3,152       1,515                   -               
                 --------    --------               -------             
                                                                        
Northeast           4,392       2,171                 1,980             
                    4,126       2,334                 2,334             
                 --------    --------               -------             
                    8,518       4,505                 4,314             
                 --------    --------               -------             
                                                                        
E.N. Central        1,175         526                   -               
                    7,152       6,442                   -               
                    1,600       1,475                   -               
                 --------    --------               -------             
                    9,927       8,443                   -               
                 --------    --------               -------             
                                                                        
W.N. Central        1,523         703                   -               
                    4,711       3,567                   -               
                 --------    --------               -------             
                    6,234       4,270                   -               
                 --------    --------               -------             
                                                                        
Southwest           3,803       3,038                   -               
                      500         480                   -               
                 --------    --------               -------             
                    4,303       3,518                   -               
                 --------    --------               -------             
                                                                        
Mountain            3,305       2,500                   206             
                    2,484       1,605                   -               
                 --------    --------               -------             
                    5,789       4,105                   206             
                 --------    --------               -------             
                                                                        
Pacific               214         214                   -               
                      549         465                   -               
                 --------    --------               -------             
                      763         679                   -               
                 --------    --------               -------             
                                                                        
    TOTAL        $ 48,540    $ 35,184               $ 4,520             
                 ========    ========               =======             
</TABLE>

                                      F-18
<PAGE>
                                                                     SCHEDULE IV
                                                                     Page 2 of 2

                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------
                    SCHEDULE OF MORTGAGE LOANS ON REAL ESTATE
                    -----------------------------------------
                             AS OF DECEMBER 31, 1997
                             -----------------------
                             (Amounts in thousands)

NOTES:
     (1)  Generally, loans are first mortgages  for  restaurant land,  buildings
          and/or equipment.
     (2)  Principal and interest are payable at level amounts to maturity.
     (3)  For  mortgages  where  the  land is under a ground  lease,  there  are
          generally no provisions  for prepayment of the mortgage loans in whole
          or in part, except upon sale of the related property.
     (4)  There are no prior liens.
     (5)  The aggregate  cost for Federal  income tax purposes is  approximately
          $40 million.
     (6)  Transactions  in mortgage  loans on real estate during 1997,  1996 and
          1995 are summarized as follows:

Balance, December 31, 1994                                   $  65,980
      Additions during period:
          New mortgage loans                                   141,789
          Deferred gain, net of gain recognized                 (2,715)
          Unamortized loan fees, net of amortization            (1,229)
      Deductions during period:
          Collections of principal                              (3,382)
          Mortgage loan payoffs                                   (957)
                                                             ---------

Balance, December 31, 1995                                     199,486
      Additions during period:
          New mortgage loans                                    50,592
          Recognition of deferred gain, net of additional
               deferred gains in 1996                            5,145
          Net loan fees recognized                               1,490
      Deductions during period:
          Collections of principal                              (4,867)
          Mortgage loan payoffs                               (190,769)
          Reserve for mortgage loan losses                      (1,400)
          Foreclosures                                          (1,869)
                                                             ---------

Balance, December 31, 1996                                      57,808

      Additions during period:
          New mortgage loans                                     6,760
          Deferred gain, net of gain recognized                   (192)
          Unamortized loan fees, net of amortization              (496)
      Deductions during period:
          Collections of principal                              (3,217)
          Mortgage loan payoffs                                (24,265)
          Reserve for mortgage loan losses                      (1,214)
                                                             ---------

Balance, December 31, 1997                                   $  35,184
                                                             =========
                                      F-19
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA

                          ----------------------------

                                  Exhibit Index
                          ----------------------------

The  following is a complete  list of exhibits  filed as part of this Form 10-K.
For electronic  filing purposes only, this report contains Exhibits 27.1 through
27.5, the Financial Data Schedules. Exhibit numbers correspond to the numbers in
the Exhibit Table of Item 601 of Regulation S-K.

Exhibit No.                          Description
-----------                          -----------

3.01              Amended and Restated Bylaws of the Company (1)

3.02              Second Amended and Restated  Certificate of  Incorporation  of
                  Franchise Finance Corporation of America (2)

4.01              Indenture  dated as of November  21,  1995  relating to the 7%
                  Senior Notes due 2000 and the 7 7/8% Senior Notes due 2005 (3)

4.02              Specimen of Common Stock Certificate (1)

10.01             Acquisition, Construction and Term Loan Agreement, dated as of
                  December  29,   1988,   by  and  between   Franchise   Finance
                  Corporation  of America  and  Scottsdale  Land  Trust  Limited
                  Partnership (1)

10.02             Promissory Note dated December 29, 1988, executed by Franchise
                  Finance  Corporation  of America in favor of  Scottsdale  Land
                  Trust  Limited   Partnership   in  the  principal   amount  of
                  $8,500,000 (1)

10.03             1995 Stock  Option and  Incentive  Plan of  Franchise  Finance
                  Corporation of America (4)

10.04             Revolving Loan Agreement dated as of September 1, 1996, by and
                  between  Franchise  Finance  Corporation  of America  and FFCA
                  Mortgage Corporation (5)

10.05             Equipment  Revolving Loan  Agreement  dated as of September 1,
                  1996, by and between Franchise Finance  Corporation of America
                  and FFCA Mortgage Corporation (5)

10.06             Guaranty of Franchise  Finance  Corporation  of America,  with
                  exhibits,  dated  December  31, 1996 with  respect to the ISDA
                  Master  Agreement and Schedule  dated December 31, 1996 by and
                  between  Franchise  Finance  Corporation  of America  and FFCA
                  Mortgage Corporation (12)
<PAGE>
10.07             Credit  Agreement  dated  January  27,  1998  among  Franchise
                  Finance   Corporation   of   America,   Certain   Lenders  and
                  NationsBank of Texas, N.A. (11)

10.08             Stock Purchase Agreement between Franchise Finance Corporation
                  of America and Colony  Investors  III, L.P. dated February 13,
                  1998*

21.01             Subsidiaries of the Registrant*

23.01             Consent of Arthur Andersen LLP*

99.01             Credit Agreement dated as of December 27, 1995 among Franchise
                  Finance   Corporation   of   America,   Certain   Lenders  and
                  NationsBank of Texas, N.A., providing a credit facility in the
                  principal amount of $200,000,000 (the "Credit Agreement") (6)

99.02             Guaranty  Agreement dated as of December 27, 1995 made by FFCA
                  Acquisition Corporation and FFCA Institutional Advisors, Inc.,
                  guaranteeing the obligations of Franchise Finance  Corporation
                  of America under the Credit Agreement (6)

99.03             Promissory  Note dated as of  December  27,  1995  executed by
                  Franchise   Finance   Corporation   of  America  in  favor  of
                  NationsBank  of Texas,  N.A.,  in  connection  with the Credit
                  Agreement (6)

99.04             Subordination Agreement dated as of December 27, 1995, made by
                  FFCA Acquisition Corporation and Franchise Finance Corporation
                  of America for the benefit of Certain  Lenders and NationsBank
                  of Texas, N.A., in connection with the Credit Agreement (6)

99.05             Subordination Agreement dated as of December 27, 1995, made by
                  FFCA  Institutional   Advisors,  Inc.  and  Franchise  Finance
                  Corporation of America for the benefit of Certain  Lenders and
                  NationsBank  of Texas,  N.A.,  in  connection  with the Credit
                  Agreement (6)

99.06             Purchase  agreement  dated June 27, 1996  between FFCA Secured
                  Assets Corporation,  and Merrill Lynch, Pierce, Fenner & Smith
                  Incorporated,   as  the  initial   purchaser  of  $156,490,000
                  aggregate   principal   amount  of  Secured   Franchise   Loan
                  Pass-Through Certificates, Class A, Class B, Class C and Class
                  D (7)
<PAGE>
99.07             First  Amendment to Credit  Agreement  dated February 23, 1996
                  among  Franchise  Finance  Corporation  of  America,   Certain
                  Lenders  and  NationsBank  of Texas,  N.A.  as  Administrative
                  Lender (8)

99.08             Second Amendment to Credit Agreement dated June 24, 1996 among
                  Franchise Finance Corporation of America,  Certain Lenders and
                  NationsBank of Texas, N.A. as Administrative Lender (7)

99.09             Third  Amendment to Credit  Agreement  dated December 27, 1996
                  among  Franchise  Finance  Corporation  of  America,   Certain
                  Lenders  and  NationsBank  of Texas,  N.A.  as  Administrative
                  Lender (12)

99.10             Amended and Restated Credit Agreement among Franchise  Finance
                  Corporation of America, Certain Lenders, NationsBank of Texas,
                  N.A. as Administrative  Agent, and Co-Agents,  dated April 15,
                  1997 (2)

99.11             $45,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America, payable to the order of NationsBank of
                  Texas, N.A., dated April 15, 1997 (2)

99.12             $40,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation  of  America,  payable  to the  order  of  Bank of
                  Montreal, Chicago Branch, dated April 15, 1997 (2)

99.13             $40,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of The Long-Term
                  Credit Bank of Japan, Ltd., dated April 15, 1997 (2)

99.14             $40,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of  Commerzbank
                  Aktiengesellschaft,  Los Angeles Branch,  dated April 15, 1997
                  (2)

99.15             $40,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Union Bank of
                  Switzerland (New York Branch), dated April 15, 1997 (2)

99.16             $27,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of  Cooperatieve
                  Centtale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland,"
                  New York Branch, dated April 15, 1997 (2)
<PAGE>
99.17             $25,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Dresdner Bank
                  AG, Los Angeles Branch, dated April 15, 1997 (2)

99.18             $25,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of AmSouth Bank
                  of Alabama, dated April 15, 1997 (2)

99.19             $20,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America, payable to the order of The Industrial
                  Bank of Japan, dated April 15, 1997 (2)

99.20             $20,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Bank Hapoalim
                  B.M., San Francisco Branch, dated April 15, 1997 (2)

99.21             $15,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of Signet Bank,
                  dated April 15, 1997 (2)

99.22             $13,000,000  Promissory  Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of Norwest Bank
                  Arizona, National Association, dated April 15, 1997 (2)

99.23             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America, payable to the order of NationsBank of
                  Texas, N.A., dated April 15, 1997 (2)

99.24             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation  of  America,  payable  to the  order  of  Bank of
                  Montreal, Chicago Branch, dated April 15, 1997 (2)

99.25             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of The Long-Term
                  Credit Bank of Japan, Ltd., dated April 15, 1997 (2)

99.26             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of  Commerzbank
                  Aktiengesellschaft,  Los Angeles Branch,  dated April 15, 1997
                  (2)

99.27             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Union Bank of
                  Switzerland (New York Branch), dated April 15, 1997 (2)
<PAGE>
99.28             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of  Cooperatieve
                  Centrale Raiffeisen-Boerenleenbank B.A., "Rabobank Nederland,"
                  New York Branch, dated April 15, 1997 (2)

99.29             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Dresdner Bank
                  AG, Los Angeles Branch, dated April 15, 1997 (2)

99.30             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation  of America,  payable to the order of AmSouth Bank
                  of Alabama, dated April 15, 1997 (2)

99.31             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America, payable to the order of The Industrial
                  Bank of Japan, dated April 15, 1997 (2)

99.32             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation of America,  payable to the order of Bank Hapoalim
                  B.M., San Francisco Branch, dated April 15, 1997 (2)

99.33             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation  of  America,  payable to the order  Signet  Bank,
                  dated April 15, 1997 (2)

99.34             $175,000,000  Promissory Note,  executed by Franchise  Finance
                  Corporation  of  America,  a,  payable to the order of Norwest
                  Bank Arizona, National Association, dated April 15, 1997 (2)

99.35             Guaranty  Agreement,  dated  as of  April  15,  1997,  by FFCA
                  Acquisition Corporation, FFCA Institutional Advisors, Inc. and
                  FFCA Mortgage  Corporation,  guaranteeing  the  obligations of
                  Franchise Finance Corporation of America under the Amended and
                  Restated Credit Agreement among Franchise Finance  Corporation
                  of America,  Certain  Lenders,  NationsBank of Texas,  N.A. as
                  Administrative Agent, and Co-Agents, dated April 15, 1997 (2)

99.36             Subordination  Agreement,  dated as of April 15, 1997, by FFCA
                  Acquisition Corporation (2)

99.37             Subordination  Agreement,  dated as of April 15, 1997, by FFCA
                  Institutional Advisors (2)

99.38             Subordination  Agreement,  dated as of April 15, 1997, by FFCA
                  Mortgage Corporation (2)
<PAGE>
99.39             Purchase  agreement  dated June 8, 1997  between  FFCA Secured
                  Lending Corporation, and Merrill Lynch, Pierce, Fenner & Smith
                  Incorporated  and Smith Barney Inc., as initial  purchasers of
                  $232,071,000  aggregate  principal amount of Secured Franchise
                  Loan Certificates,  Series 1997-1, Class IO, Class A-1a, Class
                  A-1b, Class A-2a, Class A-2b, Class B-1, Class B-2, Class C-1,
                  Class C-2, Class D-1, Class D-2, Class E-1 and Class E-2 (9)

99.40             Second Amended and Restated  Credit  Agreement  dated December
                  29,  1997 among  Franchise  Finance  Corporation  of  America,
                  Certain Lenders and NationsBank of Texas, N.A. (10)

---------------
*Filed herewith.
(1)  Incorporated by reference from the Registrant's  Registration  Statement on
Form S-4 and amendments thereto, registration number 33-65302, as filed with the
Securities and Exchange Commission.
(2)  Incorporated by reference from the  Registrant's  Quarterly  Report on Form
10-Q for the fiscal  quarter ended March 31, 1997, as filed with the  Securities
and Exchange Commission.
(3) Incorporated by reference from the Registrant's  Current Report on Form 8-K,
dated November 24, 1995, as filed with the Securities and Exchange Commission.
(4) Incorporated by reference from the  Registrant's  Annual Report on Form 10-K
for the fiscal year ended  December 31, 1995, as filed with the  Securities  and
Exchange Commission.
(5) Incorporated by reference from the Registrant's  Current Report on Form 8-K,
dated September 1, 1996, as filed with the Securities and Exchange Commission.
(6) Incorporated by reference from the Registrant's  Current Report on Form 8-K,
dated January 25, 1996, as flied with the Securities and Exchange Commission.
(7)  Incorporated by reference from the  Registrant's  Quarterly  Report on Form
10-Q for the fiscal  quarter ended June 30, 1996,  as filed with the  Securities
and Exchange Commission.
(8)  Incorporated by reference from the  Registrant's  Quarterly  Report on Form
10-Q for the fiscal  quarter ended March 31, 1996, as filed with the  Securities
and Exchange Commission.
(9)  Incorporated by reference from the  Registrant's  Quarterly  Report on Form
10-Q for the fiscal  quarter ended June 30, 1997,  as filed with the  Securities
and Exchange Commission.
(10) Incorporated by reference from the Registrant's Current Report on Form 8-K,
dated December 29, 1997, as filed with the Securities and Exchange Commission.
(11) Incorporated by reference from the Registrant's Current Report on Form 8-K,
dated January 27, 1998, as filed with the Securities and Exchange Commission.
(12) Incorporated by reference from the Registrant's  Annual Report on Form 10-K
for the fiscal year ended  December 31, 1996, as filed with the  Securities  and
Exchange Commission.