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, 1995

                                       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                         New York Stock Exchange
    $.01 per share

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. [ ]

         The aggregate  market value of the voting stock held by  non-affiliates
of the Registrant as of February 1, 1996 was $868,023,836.

         The number of shares of the Registrant's $.01 par value common stock as
of February 1, 1996 was 40,294,822. 

                      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 8, 1996, to be filed pursuant to Regulation 14A.


<PAGE>

PART I

Item 1.  Business.

         Franchise  Finance  Corporation  of  America,  a  Delaware  corporation
("FFCA"),  was organized on June 22, 1993 to  facilitate  the  consolidation  by
merger (the  "Consolidation")  of Franchise Finance  Corporation of America I, a
Delaware corporation ("FFCA I"), and eleven public limited partnerships with and
into FFCA. The  Consolidation was completed on June 1, 1994. The common stock of
FFCA began trading on the New York Stock Exchange on June 29, 1994 and there are
currently   40,294,822  shares  outstanding.   During  1994,  FFCA  created  two
wholly-owned  subsidiaries,  FFCA Acquisition Corporation and FFCA Institutional
Advisors,  Inc.,  both Delaware  corporations.  In January 1996,  FFCA created a
third  wholly-owned  subsidiary,  FFCA  Mortgage  Corporation,  also a  Delaware
corporation.

         FFCA has elected to be taxed as a real estate investment trust ("REIT")
under  the  applicable  provisions  of the  Internal  Revenue  Code of 1986,  as
amended.  To qualify,  FFCA must meet 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 REIT  taxable  income be
distributed  annually to its  shareholders.  As a REIT,  FFCA is  generally  not
subject to federal income taxes.

         FFCA is a fully integrated and self-administered  equity REIT. Together
with  its  predecessors,  FFCA  has  been  engaged  in the  financing  of  chain
restaurant real estate since 1981. FFCA and its wholly-owned  subsidiaries  have
provided  financing  principally  through sale and  leaseback  transactions  and
through  participating  mortgage  loans,  both of which  generally  provide  for
payment  escalations  based  upon  participations  in  the  gross  sales  of the
restaurant or upon specified  contractual  increases.  FFCA's primary investment
strategy is to invest in quality chain restaurant  properties located throughout
the  United  States  which  have   experienced   management  and  operate  under
established  restaurant concepts.  Chain restaurant  properties financed by FFCA
are anticipated to be primarily existing  restaurant  locations which are either
being  refinanced  or financed in  connection  with  acquisitions  by restaurant
operating  companies.  FFCA also  anticipates  financing  new  chain  restaurant
locations,  primarily for expansion by multi-unit  operators in existing markets
or in markets  adjacent to those markets in which the restaurant  chain brand is
established  and  recognized.  In  addition,  FFCA will finance  existing  chain
restaurant  properties by purchasing  properties  subject to existing  long-term
lease  arrangements with operators.  FFCA's portfolio of properties is generally
diversified  by  tenant,  restaurant  concept  and  geographic  location.  As of
December 31, 1995, FFCA had  investments in 1,508  properties and as of February
8, 1996, FFCA had investments in 1,529 properties  operated by approximately 400
restaurant  operators  in over 35 chains  located in 46 states.  No real  estate
investments by FFCA are located outside of the United States.

         FFCA's lease transactions  provide that the lessees are responsible for
the payment of all operating expenses, including property taxes, maintenance and
insurance  expenses.  FFCA is generally not required to make significant capital
expenditures  in  connection  with any  property  it  finances.  Both  lease and
participating  mortgage  loan  financing  provided  by  FFCA  generally  are for
twenty-year  terms.  FFCA targets a rate of return for leases and  participating
mortgage loans which typically  ranges
 
                                       2
<PAGE>
between 400 and 500 basis  points over the  interest  rate for  ten-year  United
States Treasury Bonds at the time of investment, with escalations over time.

         FFCA also monitors and administers its real estate investment portfolio
through seven departments including Real Estate Acquisitions,  Asset Management,
Property Management,  Research and Underwriting,  Accounting, Legal Services and
Information Systems, with a total of 91 employees as of February 8, 1996. FFCA's
properties are regularly  inspected by an in-house staff to monitor the physical
condition of the restaurants.  Asset Management staff monitor payment  receipts,
as well as  property  tax and  insurance  compliance.  Lease  and  participating
mortgage loan payments are generally collected from the restaurant  operators by
electronic account debits on the first day of each month. Underperforming leases
and loans are administered by Property  Management and Legal Services  personnel
who also oversee the in-house administration of property dispositions and tenant
substitutions.

         Although an individual restaurant'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 restaurant concept;  however, FFCA
may be  dependent  to a certain  extent upon one or more of the  franchisors  or
restaurant  concepts  since a failure of any of the  franchisors  or  restaurant
systems to support their  franchisees or restaurants could materially affect the
ability of their  franchisees  to make  payments to FFCA or result in  financial
difficulty  for  such  franchisees.  FFCA  is  not  affiliated  with  any of the
franchisors or franchisees.

         Approximately  90% of FFCA's  investments are in real estate properties
occupied by 16 national and regional restaurant chains.  Other restaurant chains
within the  portfolio are each less than one-half of one percent of FFCA's total
investments. Management anticipates that FFCA's portfolio will grow more diverse
through future  financings.  The restaurant chain  distribution shown below does
not  represent  concentration  of  tenants  under the  leases  or  participating
mortgage loan agreements.  These  agreements are with the restaurant  operators,
not  the  restaurant  chains,  and  there  are  over  400  restaurant  operators
represented within FFCA's investment portfolio.

                                       3

<PAGE>


 Restaurant Chain Distribution by Number of Restaurants as of December 31, 1995

                                                 Number of         Percentage of
           Chain                                 Restaurants           Total
           -----                                 -----------       -------------
Arby's                                               276                18%
Hardee's                                             184                 12
Jack In The Box                                      172                 11
Wendy's                                              157                 10
Burger King                                          152                 10
Kentucky Fried Chicken                                90                  6
Mrs. Winner's Chicken & Biscuits                      70                  5
Taco Bell                                             69                  5
Lee's Chicken                                         41                  3
Applebee's                                            27                  2
Perkins                                               23                  2
Whataburger                                           20                  1
Pizza Hut                                             12                  1
Fuddruckers                                           12                  1
Bojangles                                             11                  1
Denny's                                               10                  1
Non-restaurant properties                              9                  1
All other restaurant concepts                        173                 10
                                                     ---                 --

                   Totals                          1,508                100%
                                                   =====                ===


         One restaurant operator,  Foodmaker,  Inc.  ("Foodmaker"),  contributed
12.5% of FFCA's  total  rental and  mortgage  loan  interest  revenues  in 1995.
Foodmaker  accounted  for 14% of FFCA's total rental and mortgage  loan interest
revenues in both 1994 and 1993.  Foodmaker  operates and franchises  Jack In The
Box restaurants.  The relative  decrease in revenue from Foodmaker  between 1994
and 1995 is due to the fact that FFCA's  portfolio  is growing and  Foodmaker is
becoming a relatively smaller portion of the entire portfolio.  This decrease is
expected to continue.  For  information on Foodmaker,  Inc.,  see  "Management's
Discussion  and  Analysis of  Financial  Condition  and Results of  Operations -
Tenant Concentration" in Item 7 below.

Competitive Conditions

         The  financing of chain  restaurant  real estate for  multi-unit  chain
restaurant   operating  companies  is  both  competitive  and  fragmented,   and
competition  exists in every  geographic  market in which  FFCA seeks to invest.
Other  competing  participants  include  banks,  insurance  companies,   finance
companies  and  leasing  companies.   FFCA  believes  that  it  is  the  largest
independent source of real estate capital to the chain restaurant industry, even
though it has less than a two percent share of the chain  restaurant real estate
market.
                                       4
<PAGE>

         FFCA believes that it has several  competitive  advantages which enable
it  to  be  selective  with  respect  to  its  real  estate   investments.   The
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  comprise  properties  which are  diversified by
restaurant operator, restaurant chain and geographic location. As FFCA grows, it
anticipates  that  this  diversification  will  further  reduce  risk and have a
favorable  impact  upon its  access  to,  and cost of,  capital.  In 1994,  FFCA
instituted a "Preferred  Client  Program"  designed to offer  forward  financing
commitments  and a streamlined  financing  process for leading chain  restaurant
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 also  believes  that its ability to provide  both sale and
leaseback  financing and  participating  mortgage  loans improves its restaurant
operators' flexibility and provides a competitive advantage to FFCA in obtaining
financing opportunities.

The Food Service Industry

         The food service  industry  employs more people and has more  locations
than any other  retail  industry  in the United  States.  According  to industry
publications,  total food service industry sales during 1995 were  approximately
$298  billion.  In  1995  there  were  approximately  180,000  chain  restaurant
locations in the United States.  During 1994 and 1995 the largest 70 chains,  as
targeted  by FFCA's  management  for  potential  investment,  had  increases  of
approximately  6.2% and 6.7%,  respectively,  in the number of restaurant units.
Industry  sources  estimated  that during 1995 the fast food segment of the food
service industry had revenues of approximately $94 billion.

         The  commercial  food  service  sector  of the  food  service  industry
includes  a category  identified  as "Total  Eating  Places,"  which  represents
quickservice  (fast  food),  midscale  and  upscale  restaurants  in addition to
commercial cafeterias,  social caterers and ice cream, frozen-custard and yogurt
retail outlets.  NPD Crest, an industry  analyst for the food service  industry,
defines the quickservice  (fast food) segment as those restaurants  perceived by
consumers  as fast  food or  take-out  establishments,  without  table  service,
specializing in food items such as pizza,  chicken,  hamburgers and similar food
items.  The  upscale  segment  typically   represents  casual  and  fine  dining
restaurants  that accept major credit  cards,  offer an improved  level of table
service and provide full liquor service.  The midscale  segment  comprises those
restaurants  that do not meet the  criteria  for fast food or upscale.  Although
these segments can be further differentiated by price, NPD Crest emphasizes that
consumer  perception,  as opposed to average  meal price,  provides the dominant
influence with respect to the classification of restaurants.  However,  research
indicates  that the sale receipts for  quickservice  (fast food) items  averages
approximately  $3 per  person,  and that sale  receipts  for  upscale  items are
usually in excess of $18 per person. Sales receipts for midscale items typically
range  between $5 and $18 per  person.  Since 1990,  menu  prices have  remained
relatively stable as a result of the greater use of promotions and other efforts
by restaurant operators to limit increases in menu prices due to an increasingly
competitive environment.

                                       5
<PAGE>
         The fast food segment  represented  71% of all visits to the commercial
food service  sector,  with midscale and upscale  segments  responsible  for the
remaining 29%. According to the National Restaurant Association, the trade group
for this industry,  the fast food sector  represented  49.5% of the Total Eating
Places  dollar market share in 1995  (excluding  commercial  cafeterias,  social
caterers, ice cream, frozen-custard and yogurt retail outlets) versus a combined
50.5% share for the midscale and upscale sectors.

         Development and maturation of the fast food segment of the food service
industry  has  led  to  a  consolidation  of  restaurant  operators.   Increased
competition has decreased  profit margins which has contributed to the emergence
of increasingly large and professionally managed restaurant operating companies.
Large operators  typically have greater economies of scale and better management
systems   which   allow  them  to  compete   more   effectively.   As  size  and
diversification become increasingly  important,  many chain restaurant operators
are becoming affiliated with multiple restaurant systems. FFCA believes that the
maturation of the fast food segment is likely to result in greater stability for
this industry  segment.  Chain  restaurant  consolidation  has also created real
estate  investment  opportunities for FFCA arising from the demand by restaurant
operators for acquisition financing.

         Over 90% of FFCA's  portfolio is represented  by fast food  restaurants
which include, but are not limited to, Arby's,  Burger King,  Hardee's,  Jack In
The Box, Kentucky Fried Chicken,  Pizza Hut, Taco Bell, Whataburger and Wendy's.
Midscale  restaurant chains represented in FFCA's portfolio include  Applebee's,
Denny's,  T.G.I. Friday's and Fuddruckers.  FFCA anticipates that its investment
emphasis  will  continue  to  emphasize  fast  food  properties,   although  the
proportion of midscale and upscale establishments may increase.

Restaurant Chains

         Beyond a 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 Restaurant Consulting Group, restaurant
chains having three or more properties  accounted for  approximately  45% of all
restaurants in the United States in 1995.  The majority of these  properties are
fast food  restaurants,  with others generally in the midscale  segment.  Of the
slightly more than 180,000  restaurants having an identified  restaurant concept
as of  December  31,  1995,  approximately  91,500  were  within  the 40 largest
restaurant  chains.  Each of these  restaurant  chains had 1995 projected  total
system-wide sales exceeding $500 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  positions  which in essence  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 lessen 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

                                       6
<PAGE>
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 specific restaurant chain.

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 governments that affects the development
and regulation of chain restaurant  properties.  FFCA's leases and participating
mortgage loans impose the primary  obligation  for regulatory  compliance on the
operators of the restaurant  properties.  In most instances,  FFCA does not have
primary  responsibility  for  regulatory  compliance  and any obligation of FFCA
would  be based  upon  the  failure  of  restaurant  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.

         Environmental assessments have been performed on each property financed
by FFCA since the  Consolidation  on June 1, 1994, as is the current practice in
the real estate industry.  Properties  acquired from FFCA's predecessors did not
have  environmental  audits performed either at the time of the Consolidation 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.

Item 2.  Properties.

         FFCA has provided financing to the chain restaurant  industry primarily
through sale/leaseback and participating  mortgage loan financing  transactions.
Of the 1,508 restaurant  properties  included in FFCA's investment  portfolio at
December  31,  1995,  FFCA has an  ownership  interest  in  approximately

                                       7
<PAGE>
1,250  restaurant  properties on a fee-simple basis in which FFCA holds title to
the restaurant property (the "owned"  properties).  FFCA also holds title to the
restaurant  equipment on approximately one fourth of these properties.  The real
estate owned by FFCA  consists of the land and buildings  comprising  each chain
restaurant property, except for approximately 85 properties at December 31, 1995
on which FFCA held title to the land only and made participating  mortgage loans
for the related  restaurant  buildings (the "hybrid  mortgages").  The remaining
restaurant   properties   represent   participating   mortgage  loan   financing
transactions  in which FFCA  holds a first  mortgage  on the land and  buildings
comprising the restaurant properties (the "financed properties"). The properties
owned by FFCA and the land  related  to the hybrid  mortgages  are leased to the
restaurant  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 restaurant  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  restaurant  is  located on each of the  properties  except  nine,  which were
converted to other uses, such as a bank and an optical retail outlet.

         All  restaurants  owned  or  financed  by FFCA  are  free-standing  and
surrounded  by  paved  parking  areas.  The  land  size  for a chain  restaurant
generally  ranges from 15,000 to 50,000 square feet,  with original  acquisition
costs generally ranging from $75,000 to $650,000.  The restaurant  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.  Buildings  generally  range from 1,500 to 4,000  square feet in size,
with the larger  restaurants  having a greater  seating  capacity and  equipment
area. Site preparation varies depending upon the area in which the restaurant is
located and on the size of the building and site.  Building and site preparation
costs generally range from $150,000 to $750,000 for each restaurant.

         Management believes that its chain restaurant 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 restaurant 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.  An uninsured loss could result in a loss to FFCA of both its capital
investment and anticipated profits from the affected property.

         FFCA's  lease  and  participating  mortgage  loan  financing  documents
require each  restaurant  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 

                                       8
<PAGE>

capital  expenditures  in  connection  with any  property it  financed.  Capital
expenditures  in 1995 amounted to  approximately  $40,000,  with similar amounts
expended in 1994 and 1993.

         As of February 8, 1996,  FFCA owned or financed 1,529  properties in 46
states and all but 28 of the  properties  were being  leased or were  performing
under a mortgage loan agreement.  Of these nonperforming  properties,  seven are
being actively  remarketed  and 21 are currently  held for sale after  extensive
efforts to remarket these  properties did not produce suitable  lessees.  Vacant
properties held for sale represent  approximately 1% of FFCA's total real estate
investment portfolio.

         FFCA  invests in chain  restaurant  real estate  throughout  the United
States. No one property is a principal  property of FFCA,  because each property
represents  less  than  1% 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,  1995.  In  addition,  FFCA  has  financed,  through
participating  mortgage  loans,  certain  chain  restaurant  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 participating mortgages.

         During 1995, approximately 85% of FFCA's revenues were derived from net
lease equity real estate  investments.  The leases have been  originated by FFCA
and its  predecessors  since 1981. Few leases were  originated  between 1989 and
June 1, 1994, the date of the  Consolidation.  The leases are generally 20 years
in  length  with  two or four  five-year  renewal  options.  One  lessee,  which
represented  approximately  2.5% of FFCA's  lease  and  mortgage  loan  interest
revenues  in  1995,  operates  Hardee's   restaurants  under  a  one-year  lease
agreement.  The expiration schedule of the initial term of FFCA's leases extends
through  2017,  with a  weighted  term of such  investments  of 12  years  as of
December 31, 1995.  Approximately  22% of FFCA's lease revenues are derived from
leases which  expire in 2005 and 12% of FFCA's  lease  revenues are derived from
leases which expire in 2015. In all other years, the lease  expirations are less
than 10% of total lease  revenues.  FFCA views the  expirations as the potential
opportunity to increase  revenues,  although there can be no assurance that such
expirations  will result in any increase in 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, 1995.

                                       9
<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           Distributions
                                      ---------------------      -------------
   Fiscal 1994                         High           Low
   -----------                        -------       -------
  
   Second Quarter(a)                  $22           $20-3/4          $ .15(b)
   Third Quarter                       21-3/8        17-3/4            .45
   Fourth Quarter                      18-7/8        16-1/2            .45
                                                                     -----
                                                                     $1.05
                                                                     =====
   Fiscal 1995
   -----------
  
   First Quarter                      $20           $17-3/4          $ .45
   Second Quarter                      21-3/4        18                .45
   Third Quarter                       22-1/2        20-3/8            .45
   Fourth Quarter                      23-3/8        19-3/4            .45
                                                                     -----      
                                                                     $1.80
                                                                     =====
---------------
(a)      Common stock began trading June 29, 1994.
(b)      For period June 1 through June 30, 1994.


         Future  distributions will be dependent upon cash flow from operations,
financial  position and cash  requirements of FFCA.  Management of FFCA believes
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 22,479 holders of record of FFCA's shares of common stock as
of February 1, 1996; however,  FFCA believes the total number of shareholders of
FFCA to be in excess of 80,000  since,  to the best  knowledge of FFCA,  certain
shares are held by nominees.


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

                                       10
<PAGE>
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 February 9, 1996,  shareholders  owning
approximately 6% of the outstanding shares participate in the Plan.

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, 1995.  The  Consolidation  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  Partnerships  and FFCA I were carried over at
their  historical  book  values and their  operations  have been  recorded  on a
combined historical basis.

                                       11

<PAGE>
                             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                       1995     1994         1993     1992      1991
                                                                        (as restated on a combined basis)
---------------------------------------------------------------------------------------------------------
<S>                                                    <C>        <C>         <C>       <C>       <C>

Operations Data(a)
 Total revenues                                        $102,583   $91,062     $93,789   $95,572   $98,524
 Income before gain (loss) on sale of property and       
   REIT transaction-related costs                        52,816    51,319      53,867    53,044    48,665
 Income before extraordinary item(c)                     53,793    25,905(b)   53,711    50,186    49,221
 Net income                                              51,329    25,905(b)   53,711    50,186    49,221
 Funds from operations (d)                               76,256    75,068      76,571    78,080    80,323
 Dividends/Distributions  declared                       72,471    75,913      75,200    77,901    87,698
 Per share:
       Income before gain (loss) on sale of property
          and REIT transaction-related  costs             $1.31     $1.27       $1.34     $1.32     $1.21                
       Income before extraordinary item(c)                $1.33     $0.64       $1.33     $1.25     $1.22 
       Net income                                         $1.27     $0.64       $1.33     $1.25     $1.22   
       Dividends/Distributions  declared                  $1.80     $1.82       $1.86     $1.94     $2.18
                                                          
---------------------------------------------------------------------------------------------------------
Balance Sheet Data(a)
 Real estate owned, at cost                            $794,580  $681,126    $661,576  $685,338  $696,220
 Mortgage loans receivable                              199,486    65,980      38,091    42,038    53,161
 Total assets                                           843,504   612,228     619,443   643,113   675,985
    Senior Notes                                        198,702        --          --        --        --
 Notes payable                                          110,000    59,000          --        --        --
 Other debt                                               8,500     8,500      10,942    12,540    14,420
 Shareholders' equity                                  $493,817  $514,107    $576,775  $598,264  $626,092

 Number of shares outstanding                            40,295    40,251      40,251    40,251    40,251
</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 Partnerships
as if they had been  consolidated  since January 1, 1991.  The per share amounts
for the same periods  were  computed as if 40.251  million  shares of FFCA stock
were outstanding each year.

(b) Net  income  for the year  ended  December  31,  1994 was  impacted  by REIT
transaction costs recognized upon consummation of the Consolidation.

(c) Income before  extraordinary  item excludes debt  extinguishment  charges of
$2.5 million in 1995.

(d) Funds from operations is defined by the National  Association of Real Estate
Investment  Trusts ("NAREIT") to mean net income (loss) determined in accordance
with generally accepted accounting principles,  excluding gains (or losses) from
debt  restructuring  and sales of property,  plus depreciation and amortization,
and after  adjustment for  unconsolidated  partnerships  and joint ventures.  In
March 1995, NAREIT modified the definition of funds from operations  ("FFO") to,
among other  things,  eliminate  amortization  of deferred  financing  costs and
depreciation  of non-real  estate  assets as items added back to net income when
computing  FFO.  The  modified  definition  of FFO will become  effective  as of
January 1, 1996, at which time FFCA will adopt the modified definition.

                                       12
<PAGE>
Item 7.   Management's Discussion and Analysis of
          Financial Condition and Results of Operations.

General

         FFCA was organized as a Delaware corporation in June 1993 to facilitate
the  consolidation  by  merger  (the   "Consolidation")   of  Franchise  Finance
Corporation  of America I ("FFCA  I") and  eleven  public  real  estate  limited
partnerships  (the  "Partnerships")  with and into FFCA. The  Consolidation  was
effected 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  Partnerships  and FFCA I
were carried over at their historical book values and their operations have been
recorded on a combined  historical  basis. The Consolidation did not require any
material  adjustments  to conform the  accounting  policies  of the  Predecessor
Companies to that of FFCA; however, certain  reclassifications have been made to
prior years' financial statements to conform with current year presentation.

         The  consolidated  statement of income for the year ended  December 31,
1994 includes the  operations  of the  Predecessor  Companies  combined from the
beginning  of the year  through May 31, 1994 and those of FFCA from June 1, 1994
to December 31, 1994. The financial  statements for 1993 have also been restated
on a combined basis to provide comparative information.

         The  most  notable  change  in  operations  since  June 1,  1994 is the
emphasis  on  growth  through  new  investment  in  property.   The  Predecessor
Companies'  structure did not provide the  opportunity  for new  investments  in
restaurant  properties (through  borrowings or otherwise).  FFCA's potential for
increased  distributions  to shareholders  and  appreciation in the price of its
shares  is  expected  to  result  from  growth  opportunities  based  on  FFCA's
anticipated cost of capital  (including  borrowings) and the anticipated  return
from investment in additional properties.  In addition, FFCA believes that there
is potential for future increases in lease and loan payments from  participating
revenues  which are based on a percentage of the gross sales of the  restaurants
(as discussed further below).

Liquidity and Capital Resources

         At December 31, 1995, FFCA's portfolio  included 1,508 chain restaurant
properties.  Rental and mortgage interest revenue generated by this portfolio of
properties  has,  and  will  continue  to,  comprise  the  majority  of the cash
generated from operations.  Net cash provided by operations was $78.6 million in
1995 as compared to $76 million in 1994.  Cash generated from operations is held
in temporary  investment  securities pending distribution to the shareholders in
the form of quarterly dividends.  This cash also may be used on an interim basis
to fund investments.

         During  1995,  FFCA  acquired or  financed  354  restaurant  properties
totaling  approximately $278 million. These investment portfolio properties were
funded  by cash  generated  from

                                       13
<PAGE>
operations,  proceeds of a debt offering of  approximately  $200 million and net
draws of approximately $50 million on FFCA's revolving credit facilities through
December 31, 1995.  During 1995, FFCA sold 22 properties and related  equipment,
ten of which were through the lessees' exercise of their purchase options on the
properties.  Nine additional  properties  which exercised  purchase options were
refinanced as mortgages by FFCA. Cash proceeds from these sales,  the collection
of mortgage  loan  principal  payments and the receipt of mortgage loan payoffs,
approximating  $18 million in total,  were used to partially  fund new portfolio
investments  in 1995. Net cash used in such  investing  activities  increased to
$260  million in 1995 from $56 million in 1994,  reflecting  FFCA's focus on the
growth of the portfolio through real estate investments.

         Currently,  FFCA's primary  source of funding for new  investments is a
$200 million  unsecured  acquisition loan facility  obtained from NationsBank in
December 1995.  This two-year  revolving  credit  facility bears annual interest
(payable  monthly)  at LIBOR  (London  Interbank  Offered  Rate) plus  1.5%,  as
compared to the prior loan  facility's  original rate of LIBOR plus 2.25% during
1995. The loan facility  expires in December 1997 with the  possibility of three
annual  extensions  and an increase to $250 million in the loan facility  during
1996. The interest rate in effect at December 31, 1995 was 7.35%.

         In November 1995, FFCA issued senior  unsecured debt consisting of $150
million  of 7% Senior  Notes due  November  30,  2000 and $50  million of 7-7/8%
Senior Notes due November 30, 2005.  The notes were issued at a discount and the
effective  rates on the Senior Notes  approximate  7.2% and 7.9%,  respectively.
Interest on these fixed rate notes is payable  semi-annually  in arrears on each
May 30 and November 30, commencing May 30, 1996, with principal due at maturity.
The notes may not be redeemed prior to their respective maturities. The proceeds
of the  Senior  Notes  were  used to pay  down  the  revolving  credit  facility
discussed  below,  while reducing  FFCA's cost of borrowing.  The debt issued by
FFCA has been  rated  investment  grade as BBB- by  Standard & Poor's and Duff &
Phelps and Baa3 by Moody's rating services.

         Bank debt  outstanding  at December  31, 1994  totaled $59 million on a
credit  facility  scheduled  to  expire  in  July  1996.  This  debt,  including
additional borrowings of $251 million in 1995, was repaid in 1995 in conjunction
with the Senior Note offering and the NationsBank acquisition loan facility. The
early  termination  of this credit  facility  enabled FFCA 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 $2.5 million in  unamortized
loan  costs  in  1995  which  is  reported  as  an  extraordinary  item  on  the
consolidated statement of income.

         At December 31, 1995,  FFCA had cash and cash  equivalents  totaling $2
million and had $90 million  available on its revolving credit facility.  FFCA's
anticipated  investments include commitments totaling $130 million at the end of
1995.  These  commitments  were  made  to  several  large  restaurant  operators
including Arby's, Fuddruckers, Applebee's, Burger King and Wendy's to acquire or
finance (subject to FFCA's customary underwriting procedures)  approximately 110
restaurant  properties over the next 12 months.  FFCA anticipates  funding these
specific

                                       14
<PAGE>
commitments,  and other  investments in restaurant  properties,  through amounts
available  through  its  revolving  credit  facility,   issuance  of  additional
unsecured debt similar to the senior note offering  discussed  above or issuance
of additional equity  securities of FFCA.  Although FFCA's cost of borrowings is
expected to be lower in 1996, debt and related  interest  expense will be higher
than 1995 amounts as a result of increased  borrowings  for continued  portfolio
investments.

         In November 1995, FFCA  implemented a dividend  reinvestment  plan (the
"Plan") which allows  shareholders to acquire additional shares of FFCA stock by
automatically reinvesting the quarterly dividends. Shares are acquired under the
Plan at a price equal to 98% of the market  price of the shares on the  dividend
payment date, without payment of any brokerage  commission or service charge. As
of February 9, 1996,  shareholders  owning  approximately  6% of the outstanding
shares of FFCA stock  participate  in the Plan.  FFCA declared a fourth  quarter
dividend of $.45 per share, or $1.80 per share on an annualized  basis,  payable
on February 20, 1996, to shareholders of record on February 9, 1996.  Management
of FFCA believes that cash generated from  operations will be sufficient to meet
operating  requirements and provide the level of shareholder  dividends required
to maintain its status as a REIT.

Results of Operations
Year Ended December 31, 1995
Compared to Year Ended December 31, 1994

         FFCA  reported net income of $51 million,  or $1.27 per share,  for the
year ended December 31, 1995 as compared to $26 million,  or $.64 per share, for
the year ended December 31, 1994. Income before gain on the sale of property and
special  charges  rose to $53  million in 1995 from $51  million in 1994.  These
results reflect the growth of FFCA's portfolio in 1995.

         Total  revenues rose to $102.6  million for the year ended December 31,
1995  from  $91  million  for  the  year  ended  December  31,  1994.  Portfolio
investments were the primary source of revenue increases, despite the sale of 22
properties  in the past 12  months.  Portfolio  investments  in  1995,  totaling
approximately  $278 million,  are represented by  approximately  $135 million in
mortgage loans and  approximately  $143 million in property subject to operating
leases;  however,  since these investments  occurred  throughout the year, their
weighted average balance in 1995 is equivalent to approximately  $120 million of
investments  and the  impact of these 1995  investments  on rental  revenue  and
mortgage  interest income will not be fully reflected until 1996. Lease and loan
base rates on new investments  ranged from  approximately  10% to 11.5%,  with a
weighted average rate of 10.9%. Both the leases and participating mortgage loans
provide for contingent  revenues based on a percentage of the gross sales of the
related restaurants.

         Rental revenues include both rental payments  received from lessees and
rent guaranty  insurance  payments.  Rental  revenues  collected  under the rent
guaranty insurance policies for 1995 decreased to $3.3 million from $6.2 million
in 1994  due to  expiring  rent  insurance  policies.  Rent  guaranty  insurance
policies  covering  FFCA's  properties will continue to expire at various dates,
with the majority of the policies  expiring in 1998;  therefore,  rental revenue
from rent guaranty insurance in 1996 is expected to be lower than in 1995.

                                       15
<PAGE>
         The  restaurant  leases and loans  generally  provide that lessees make
monthly  payments  equal to the greater of a fixed base rate or a percentage  of
the gross sales of the  restaurants  (percentage  rentals).  Percentage  rentals
approximated  $4 million in 1995 as compared to $3.8  million in 1994. A portion
of the increase  reflected  in 1995 relates to lessees  whose sales levels have,
for the first time,  exceeded the  threshold  where  percentage  rent is due. In
addition,  a  portion  of  the  increase  relates  to  increases  in  individual
restaurant-level  sales volumes related to lessees who have previously  exceeded
the percentage rent threshold.  FFCA believes there will be, in the near future,
increased lease payments from such percentage of gross sales rental provisions.

         FFCA recorded  gains of $4.4 million on the sale of properties  both in
1995 and in 1994.  Results of  operations  may be largely  impacted  by gains or
losses on the sale of properties,  however,  FFCA  anticipates  that the sale of
properties,  if any,  will occur  primarily  through  the  exercise  of purchase
options and does not expect losses on such sales.  The lessee  generally has the
option to purchase  land and  building any time after the first ten years of the
lease. Generally,  leases entered into in 1995 provide for 90 day option windows
at various  dates  during the lease term and the  participating  mortgage  loans
funded in 1995 provide for no prepayment  for the first ten years of the loan or
provide for prepayment penalties. Where applicable, the lessee has the option to
purchase  equipment  at the end of the lease term.  Equipment  leases  expire at
various dates through 1997.  Rental revenue from equipment leases is expected to
be approximately  $350,000 lower in 1996 than in 1995.  Purchase options,  where
applicable,  are  exercisable  at fair market value (but generally not less than
original cost, in the case of land and  building).  To the extent these purchase
options are  exercised,  FFCA expects to invest the proceeds  from such sales in
new  properties.  The impact on FFCA's  rental  revenues  of such  activity is a
function of the amount of proceeds  received on any properties sold and the base
lease rate generated on new properties acquired.

         Approximately two-thirds of FFCA's land and building leases provide for
purchase  options.  Although  approximately  two-thirds  of  these  options  are
currently exercisable, in 1995 only 10 properties were sold through the exercise
of purchase options.  Management  believes that the exercise of purchase options
will continue to be  insignificant,  because past  experience has shown that the
increase in the fair market value of the properties  will  generally  offset any
decrease in interest or lease rates the lessee could obtain upon exercise of the
purchase option, providing no measurable change in cash flow.

         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 (loss) on sale of property on the consolidated  statements of
income  for  the  years  ended  December  31,  1995,   1994  and  1993  includes
approximately  $3.4 million,  $1.6 million and $534,000,  respectively,  of loss
related to vacant  properties  held for sale.  These vacant  properties held for
sale represent approximately 1% of the total real estate investment portfolio.

                                       16
<PAGE>
         The  increase  in  interest  expense  from $2.5  million in 1994 to $15
million in 1995 is due to the use of borrowings  during 1995 for the  investment
in  restaurant  properties.  During 1995,  FFCA  entered  into an interest  rate
agreement to enhance its ability to manage  interest rate  exposures in its debt
portfolio which exist as part of its ongoing business  operations.  The costs of
this hedge were  deferred and are being  amortized to interest  expense over the
term of the associated  debt. FFCA issued $200 million of unsecured senior notes
in November  1995.  The  issuance of these fixed rate notes  allowed FFCA to pay
down its acquisition loan facility while also reducing its cost of borrowing. In
December 1995,  FFCA replaced its original  secured  revolving  credit  facility
scheduled  to expire in July 1996  (originally  bearing  interest  at LIBOR plus
2.25%) with an unsecured  revolving loan facility bearing interest at LIBOR plus
1.50%. As a result of the early  extinguishment of the original revolving credit
facility, FFCA expensed $2.5 million in unamortized loan costs which is reported
as an extraordinary item on the consolidated statement of income.

         Operating,   general   and   administrative   expenses   decreased   by
approximately  $900,000, or 8%, primarily due to a decrease in professional fees
which include legal, accounting, consulting and appraisal services. Depreciation
and  amortization  decreased to $21.2  million from $22.8  million,  despite the
investment in restaurant property during 1995 due to the sale of over $8 million
in restaurant equipment at the expiration of the related lease terms in 1995.

Results of Operations
Year Ended December 31, 1994
Compared to Year Ended December 31, 1993

         FFCA  reported  earnings  per share,  before  REIT  transaction-related
costs, of $1.34 for the year ended December 31, 1994 as compared to the combined
earnings  per share of the  Predecessor  Companies  of $1.33 for the year  ended
December  31, 1993.  Earnings per share for 1994 after REIT  transaction-related
costs amounted to $.64.

         Rental and mortgage loan interest revenues  accounted for approximately
96% of FFCA's total revenues of $91 million for the year ended December 31, 1994
as  compared  to 94% of the total  revenues  of $94  million  for the year ended
December 31, 1993. The sale of  properties,  together with the expiration of the
original  equipment  leases  and the sale of  property  in the prior  year,  had
resulted in decreasing revenues of the Predecessor  Companies due to a declining
number of  properties  in the  portfolio.  This trend is now expected to reverse
because,  subsequent to the  Consolidation,  FFCA's property portfolio has grown
through  investments  despite the sale of  properties  through  lessee  purchase
options  exercised  during the year.  Since all of the real  estate  investments
occurred  in the late third  quarter  and early  fourth  quarter of 1994,  their
impact on rental and  mortgage  loan  interest  revenue was not fully  reflected
until 1995. Portfolio  investments in 1994, totaling  approximately $82 million,
are  represented by $34 million in mortgage loans bearing  interest at 10.5% and
$48  million in  property  subject to  operating  leases  with base lease  rates
ranging from 10.5% to 11.5%.

                                       17
<PAGE>
         Rental revenues include both rental payments  received from lessees and
rent  guaranty  insurance  payments.  Rental  revenue  collected  under the rent
guaranty insurance policies for 1994 decreased to $6.2 million from $6.8 million
in 1993 due to expiring rent  insurance  policies.  The decrease in base rentals
and rent insurance  revenues was partially  offset by a $1.3 million increase in
percentage  rentals to $3.8 million in 1994 as compared to $2.5 million in 1993.
A portion of the  increase  reflected  in 1994  relates to lessees  whose  sales
levels have, for the first time, exceeded the threshold where percentage rent is
due. In addition, a portion of the increase in percentage rental revenue relates
to increases in individual restaurant-level sales volumes.

         FFCA recorded  gains totaling $4.4 million on the sale of properties in
1994 as compared  to gains  totaling  $378,000  in 1993.  Gain (loss) on sale of
property for the years ended  December  31, 1994 and 1993 include an  impairment
loss of approximately  $1.6 million and $534,000,  respectively,  to reflect the
estimated decline in value of eight vacant properties held for sale.

         Operating,   general  and   administrative   costs  were  reduced  from
approximately  $16 million in 1993 to $13.5 million in 1994 principally due to a
decrease in compensation  levels. The increase in interest expense from $316,000
in 1993  to $2.5  million  in  1994  is due to the use of the  acquisition  loan
facility  during  the  last  half  of  1994  for  the  investment  in  portfolio
properties.

         REIT  transaction-related  costs  aggregating  $28 million for the year
ended December 31, 1994 represent costs incurred to effect the Consolidation and
integrate  the  continuing  operations  of the  entities  into  FFCA.  Under the
pooling-of-interests method of accounting for the Consolidation, these costs are
charged to expense upon  consummation of the  Consolidation  in 1994. Such costs
included,  among  other  things,  the costs of  registration,  costs to  furnish
information to stockholders,  fees of underwriters and consultants and the legal
fees related to the  settlement  of the class action  litigation  related to the
Consolidation.  These costs also  include  the payoff of  deferred  compensation
arrangements related to FFCA I.

         Upon  consummation  of the  Consolidation,  FFCA I and investors in the
Partnerships  received an aggregate of 40,250,719 shares of FFCA's common stock.
Certain  investors  elected to receive  variable rate senior notes (the Variable
Rate Notes) totaling  $10,825,911.  Rather than issuing the Variable Rate Notes,
FFCA paid to those  investors an amount  equal to the  Variable  Rate Notes plus
interest at an  annualized  rate of 5.0625% for the period June 1, 1994  through
June 30, 1994. In addition, cash was used to pay REIT transaction-related  costs
aggregating approximately $24 million in 1994 as compared to $4 million in 1993.
These factors  contributed to the overall  decrease in cash and cash equivalents
at December 31, 1994 as compared to 1993.

Tenant Concentration

         During the years ended  December 31, 1995,  1994 and 1993,  one lessee,
Foodmaker, Inc. ("Foodmaker"), accounted for approximately 12.5% in 1995 and 14%
in both 1994 and 1993 of total rental and  mortgage  loan  interest  revenues of
FFCA.  Foodmaker  operates  and  franchises  Jack  In The Box  restaurants.  The
relative  decrease in the percentage of FFCA's  revenue from  Foodmaker  between
1994 and 1995 is due to the fact that FFCA's  portfolio is growing and

                                       18
<PAGE>
Foodmaker is becoming a relatively smaller portion of the entire portfolio. This
decrease  is expected to  continue.  The  following  table  represents  selected
financial data of Foodmaker,  Inc. and  Subsidiaries as reported by Foodmaker in
its 1995 annual report.





                                       19
<PAGE>
<TABLE>
                        Foodmaker, Inc. and Subsidiaries
                             Selected Financial Data
                                 (in Thousands)
<CAPTION>
Consolidated Balance Sheet Data:                      October 1, 1995     October 2, 1994
-------------------------------                       ---------------     ---------------
<S>                                                   <C>                 <C>                    <C>
Current Assets                                            $  97,889            $107,486
Noncurrent Assets                                           564,785             632,799
Current Liabilities                                         132,017             140,238
Noncurrent Liabilities                                      499,404             499,996

                                                  Fifty-two Weeks Ended/Fifty-two Weeks Ended/Fifty-three Weeks Ended
                                                  --------------------  --------------------  -----------------------
Consolidated Statements of Operations Data:          October 1, 1995      October 2, 1994        October 3, 1993
------------------------------------------           ---------------      ---------------        ---------------
Gross Revenues                                           $1,018,716           $1,053,326             $1,240,727
Costs and Expenses (including taxes)                      1,087,674            1,089,594              1,284,855
Extraordinary Item - loss on early
   extinguishment of debt, net of taxes                          --               (3,302)                    --
Cumulative effect on prior years of
   adopting SFAS 106 and SFAS 109                                --                   --                (53,980)
                                                        -----------          -----------           ------------
Net Loss                                                $   (68,958)         $   (39,570)          $    (98,108)
                                                        ===========          ===========           ============
Loss per share - primary and fully diluted:
   Loss before extraordinary item                           $(1.77)              $  (.94)                $(1.15)
   Extraordinary item                                           --                  (.09)                    --
   Cumulative effect of accounting change                       --                    --                  (1.40)
                                                        ----------           -----------           ------------
Net loss per share                                          $(1.77)               $(1.03)                $(2.55)
                                                        ==========           ===========           ============
</TABLE>
     In January 1994,  Foodmaker  contributed its Chi-Chi's  Mexican  restaurant
chain to Family  Restaurants,  Inc.  ("FRI") in exchange for an approximate  39%
equity  interest  in  FRI  and  other  consideration  including  cash  and  debt
assumption.  Therefore,  the consolidated statements of operations for the years
reflected  above include Chi Chi's results of operations for a full year in 1993
as  compared  to only 16 weeks in 1994 (the first  fiscal  quarter)  and none in
1995.  Chi-Chi's  revenues  were $123.9  million,  its costs of sales were $32.7
million,  its restaurant  operating  costs were $80.7 million,  and its selling,
general and  administrative  expenses  were $9.1 million in the first quarter of
1994.
     Revenues increased $89.3 million,  or 9.6% to $1,018.7 million in 1995 from
$929.4 million in 1994,  excluding  Chi-Chi's  revenues of $123.9 million in the
first quarter of 1994. Sales by Jack In The Box, Foodmaker-operated restaurants,
increased $84.3 million,  or 11.7% in 1995 from 1994. This increase is primarily
due to an increase in the average  number of  Foodmaker-operated  restaurants to
839  in  1995  from  761 in  1994  (the  average  number  of  Foodmaker-operated
restaurants in 1993 was 717)  reflecting the addition of 21 new  restaurants and
the acquisition of 42 restaurants from  franchisees  during the fiscal year. Per
store average sales for comparable  restaurants increased  approximately 3.5% in
1995 as compared to 1994,  strengthened by marketing  strategies including a new
advertising  campaign and the  introduction of aggressive  value-priced  product
alternatives.
     Foodmaker  recorded a loss in 1995  relating  to its equity in FRI of $57.2
million,  most of  which  was  the  result  of the  complete  write-down  of its
investment  in FRI due to the write-off by FRI of the goodwill  attributable  to
Chi-Chi's.  Subsequent to its fiscal year end, Foodmaker  transferred its entire
equity interest in FRI to another entity with an equity interest in FRI. Jack In
The Box restaurant  operating costs increased  $33.1, or 8%, due to increases in
both the average  number of  Company-operated  restaurants  and  variable  costs
associated  with  improved  sales volume.  Jack In The Box selling,  general and
administrative  expenses  increased  $18.5 million,  or 20%,  principally due to
increased  advertising and promotions costs and to an $8 million settlement with
stockholders in the first quarter of 1995.  Foodmaker  incurred an extraordinary
loss of $5.1 million,  less currently  recognizable  income tax benefits of $1.8
million, on the early extinguishment of debt in 1994.
     Foodmaker  indicates  that it  expects  that  sufficient  cash flow will be
generated from operations so that,  combined with other  financing  alternatives
available  to it,  Foodmaker  will  be  able to  meet  all of its  debt  service
requirements,   as  well  as  its  capital   expenditures  and  working  capital
requirements, for the foreseeable future.

                                       20
<PAGE>
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.

                                    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 8, 1996, 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 8, 1996, 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 8, 1996, 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 8, 1996, to be filed pursuant to Regulation 14A.






                                     PART IV

                                       21
<PAGE>
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 Exhibit 27,  Financial Data Schedule.  Exhibit
                  numbers correspond to the numbers in the Exhibit Table of Item
                  601 of Regulation S-K.

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

3.02                Amended and Restated Bylaws of the Company(1)

3.03                Restated Certificate of Incorporation of the Company(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)

10.09               Revolving  Acquisition Loan Agreement,  dated as of July 22,
                    1994,  between Franchise Finance  Corporation of America and
                    Nomura Asset Capital Corporation(2)

                                       22
<PAGE>
10.10               Termination  Agreement  dated  December  28,  1995,  between
                    Franchise  Finance  Corporation  of  America,  Nomura  Asset
                    Capital  Corporation  and  the  other  signatories  thereto,
                    terminating the Revolving Acquisition Loan Agreement,  dated
                    as of July 22, 1994*

10.11               1995 Stock Option and  Incentive  Plan of Franchise  Finance
                    Corporation of America*

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")(4)

99.02               Guaranty  Agreement  executed in connection  with the Credit
                    Agreement(4)

99.03               Promissory  Note  executed  in  connection  with the  Credit
                    Agreement(4)

99.04               Subordination  Agreement  executed  in  connection  with the
                    Credit Agreement(4)

99.05               Subordination  Agreement  executed  in  connection  with the
                    Credit Agreement(4)


*Filed herewith.
---------------
(1) Incorporated by reference to 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 to the Registrant's Annual Report on Form 10-K for
the fiscal  year ended  December  31,  1994,  as filed with the  Securities  and
Exchange Commission.
(3)  Incorporated by reference to 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 to the  Registrant's  Current Report on Form 8-K,
dated January 25, 1996, as filed with the Securities and Exchange Commission.

                                       23
<PAGE>
         (b)      Reports on Form 8-K filed in the fourth quarter of 1995:

                  Form 8-K dated November 24, 1995
                           Item      5.    Other    Events--Authorization    and
                                     execution  of  Indenture  establishing  the
                                     form and terms of Senior Notes 
                           Item      7.      Financial       Statements      and
                                     Exhibits--Indenture, Legal Opinion of Kutak
                                     Rock and Officer's Certificate

                  Form 8-K dated November 27, 1995

                           Item      5. Other Events--Purchase Agreement related
                                     to the sale of Senior Notes

                           Item      7.      Financial       Statements      and
                                     Exhibits--Purchase Agreement

                                       24

<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:  February 12, 1996     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:  February 12, 1996     By /s/ M. H. Fleischer
                                -------------------
                                      M. H.  Fleischer,  Chairman of the Board,
                                      President, and Chief Executive Officer


Date:  February 12, 1996     By /s/ John R. Barravecchia
                                ------------------------
                                      John  R.  Barravecchia,   Executive  Vice
                                      President, Chief Financial Officer and 
                                      Treasurer

Date:  February 12, 1996     By /s/ Catherine F. Long
                                ---------------------
                                      Catherine  F. Long, Vice President-Finance
                                      and Principal Accounting Officer


Date:  February 12, 1996     By /s/ Willie R. Barnes
                                --------------------
                                      Willie R. Barnes, Director


Date:  February 12, 1996     By /s/ William C. Foxley
                                ---------------------
                                      William C. Foxley, Director

                                       
<PAGE>

Date:  February 12, 1996     By /s/ Robert W. Halliday
                                ----------------------
                                      Robert W. Halliday, Director


Date:  February 12, 1996     By /s/ Donald C. Hannah
                                --------------------
                                      Donald C. Hannah, Director


Date:  February 12, 1996     By /s/ Dennis E. Mitchem
                                ---------------------
                                      Dennis E. Mitchem, Director


Date:  February 12, 1996     By /s/ Louis P. Neeb
                                -----------------
                                      Louis P. Neeb, Director


Date:  February 12, 1996     By /s/ Kenneth B. Roath
                                --------------------
                                      Kenneth B. Roath, Director


Date:  February 12, 1996     By /s/ Wendell J. Smith
                                --------------------
                                      Wendell J. Smith, Director


Date:  February 12, 1996     By /s/ Casey J. Sylla
                                ------------------
                                      Casey J. Sylla, Director


<PAGE>


--------------------------------------------------------------------------------
                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES
--------------------------------------------------------------------------------


Report of Independent Public Accountants                                     F-2

Consolidated Balance Sheets - December 31, 1995 and 1994                     F-3

Consolidated Statements of Income For The Years Ended
         December 31, 1995, 1994 and 1993                                    F-4

Consolidated Statements of Changes in Shareholders' Equity
         For The Years Ended December 31, 1995, 1994 and 1993                F-5

Consolidated Statements of Cash Flows For The Years Ended
         December 31, 1995, 1994 and 1993                                    F-6

Notes to Consolidated Financial Statements                                   F-7

Schedule III - Schedule of Real Estate and Accumulated
         Depreciation as of December 31, 1995                               F-15

Schedule IV - Schedule of Mortgage Loans on Real Estate
         as of December 31, 1995                                            F-17







                                       F-1

<PAGE>


                    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, 1995 and 1994, and the related  consolidated  statements of income,
changes in  shareholders'  equity and cash flows for each of the three  years in
the period ended December 31, 1995. 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, 1995 and 1994, and the results of
their  operations and their cash flows for each of the three years in the period
ended  December 31, 1995,  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
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 the audits of the basic  financial  statements  and, in our  opinion,
fairly state 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 26, 1996.
                                       F-2


<PAGE>
<TABLE>

                    FRANCHISE FINANCE CORPORATION OF AMERICA
            CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 1995 AND 1994
                    (Amounts in thousands except share data)
<CAPTION>
                                                                      1995        1994
                                                                   ---------    ---------
                                     ASSETS
                                     ------
<S>                                                                <C>          <C>
Investments:
    Investments in Real Estate, at cost (Note 3):
       Land                                                        $ 304,641    $ 252,733
       Buildings and Improvements                                    448,427      378,503
       Equipment                                                      41,512       49,890
                                                                   ---------    ---------
                                                                     794,580      681,126
       Less-Accumulated Depreciation                                 176,232      169,570
                                                                   ---------    ---------
           Net Real Estate Investments                               618,348      511,556
    Mortgage Loans Receivable (Note 4)                               199,486       65,980
                                                                   ---------    ---------
           Total Investments                                         817,834      577,536

Cash and Cash Equivalents                                              2,067       12,095
Accounts and Unsecured Notes Receivable, net of allowances
    of $2,000 in 1995 and $1,500 in 1994                               6,820        7,230
Other Assets (Note 2)                                                 16,783       15,367
                                                                   ---------    ---------

           Total Assets                                            $ 843,504    $ 612,228
                                                                   =========    =========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
                      ------------------------------------
Liabilities:
    Accounts Payable and Accrued Expenses                          $   5,608    $   3,980
    Dividends Payable                                                 18,133       18,113
    Senior Notes due 2000 - 2005 (Note 5)                            198,702           --
    Notes Payable to Bank (Note 6)                                   110,000       59,000
    Mortgage Payable to Affiliate (Note 9)                             8,500        8,500
    Rent Deposits                                                      5,630        6,180
    Other Liabilities                                                  3,114        2,348
                                                                   ---------    ---------
           Total Liabilities                                         349,687       98,121
                                                                   ---------    ---------

Commitments (Note 11)

Shareholders' Equity (Notes 7 and 8):
    Common Stock,  par value  $.01 per share,  authorized 200
       million  shares, issued and outstanding 40,294,822 shares
        in 1995 and 40,250,719 shares in 1994                            403          403
    Capital in Excess of Par Value                                   547,478      546,626
    Cumulative Net Income                                             60,670        9,341
    Cumulative Dividends                                            (114,734)     (42,263)
                                                                   ---------    ---------
           Total Shareholders' Equity                                493,817      514,107
                                                                   ---------    ---------

           Total Liabilities and Shareholders' Equity              $ 843,504    $ 612,228
                                                                   =========    =========
</TABLE>

                   The accompanying notes are an integral part
                     of these consolidated balance sheets.
                                                        
                                      F-3
<PAGE>
<TABLE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------
                        CONSOLIDATED STATEMENTS OF INCOME
                        ---------------------------------
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
              ----------------------------------------------------
                  (Amounts in thousands except per share data)
<CAPTION>
                                                   1995         1994         1993
                                                 ---------    ---------    -------
                                                                       (as restated on 
                                                                        a combined basis
                                                                         - Note 13)
<S>                                              <C>          <C>          <C>

Revenues:
      Rental                                     $  86,182    $  81,760    $  83,095
      Mortgage Loan Interest                        14,118        5,596        4,889
      Investment Income and Other                    2,283        3,706        5,805
                                                 ---------    ---------    ---------

                                                   102,583       91,062       93,789
                                                 ---------    ---------    ---------

Expenses:
      Depreciation and Amortization                 21,201       22,810       22,704
      Operating, General and Administrative         10,283       11,195       13,111
      Property Costs                                 2,046        2,310        2,850
      Interest                                      15,276        2,477          316
      Related Party Interest (Note 9)                  961          951          941
                                                 ---------    ---------    ---------

                                                    49,767       39,743       39,922
                                                 ---------    ---------    ---------

Income Before Gain (Loss) on Sale of Property
      and REIT Transaction Related Costs            52,816       51,319       53,867

      Gain (Loss) on Sale of Property (Note 2)         977        2,784         (156)
      REIT Transaction Related Costs (Note 13)          --      (28,198)          --
                                                 ---------    ---------    ---------                      

Income Before Extraordinary Item                    53,793       25,905       53,711

      Extraordinary Item - Loss on Early
         Extinguishment of Debt (Note 6)            (2,464)          --           --
                                                 ---------    ---------    ---------                                

Net Income                                       $  51,329    $  25,905    $  53,711
                                                 =========    =========    =========


Net Income Per Share (Note 2):
      Income Before Extraordinary Item           $    1.33    $     .64    $    1.33
      Extraordinary Item                              (.06)          --           --
                                                 ---------    ---------    ---------                       

      Net Income Per Share                       $    1.27    $     .64    $    1.33
                                                 =========    =========    =========
</TABLE>

                   The accompanying notes are an integral part
                        of these consolidated statements.

                                       F-4

<PAGE>
<TABLE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------
           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
           ----------------------------------------------------------
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
              ----------------------------------------------------
                  (amounts in thousands except per share data)
<CAPTION>
                                                            Capital
                                                  Common  in Excess   Cumulative  Cumulative
                                                              of
                                                   Stock   Par Value  Net Income  Dividends    Total
                                                 -------   ---------  ---------   ---------  ---------
<S>                                              <C>       <C>        <C>         <C>        <C>
BALANCE, December 31, 1992                       $    10   $ 598,254  $      --   $      --  $ 598,264
    Distributions                                     --     (75,200)        --          --    (75,200)
    Net income                                        --      53,711         --          --     53,711
                                                 -------   ---------  ---------   ---------  ---------                     

BALANCE, December 31, 1993                            10     576,765         --          --    576,775
    Shareholders' contribution                        --       3,189         --          --      3,189
    Distributions                                     --     (33,650)        --          --    (33,650)
    Net income -                                      --      16,564         --          --     16,564
                                                 -------   ---------  ---------   ---------  ---------                    

BALANCE, June 1, 1994 (date of Consolidation)         10     562,868         --          --    562,878
    Shares issued in exchange for FFCA I
       stock and limited partnership interests       393        (393)        --          --         --
    Payment of Variable Rate Notes and
       fractional shares (Note 13)                    --     (11,745)        --          --    (11,745)
    Net distribution upon consolidation
        (Note 13)                                     --      (4,104)        --          --     (4,104)
    Net income -                                      --          --      9,341          --      9,341
    Dividends declared - $1.05 per share              --          --         --     (42,263)   (42,263)
                                                 -------   ---------  ---------   ---------  ---------

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
                                                 =======   =========  =========   =========  =========
</TABLE>

                   The accompanying notes are an integral part
                        of these consolidated statements.

                                       F-5
<PAGE>
<TABLE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                      -------------------------------------
              FOR THE YEARS ENDED DECEMBER 31, 1995, 1994 AND 1993
              ----------------------------------------------------
                             (Amounts in thousands)
<CAPTION>
                                                                    1995         1994         1993
                                                                 ---------    ---------    ---------
                                                                                       (as restated on a
                                                                                     combined basis - Note 13) 
<S>                                                              <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
   Net income                                                    $  51,329    $  25,905    $  53,711
   Adjustments to net income:
      Depreciation and amortization                                 21,201       22,810       22,704
      (Gain) loss on sale of property                                 (977)      (2,784)         156
      REIT transaction related costs                                    --       28,198         --
      Loss on early extinguishment of debt                           2,464           --           --
      Other                                                          4,604        1,854        1,497
                                                                 ---------    ---------    ---------
        Net cash provided by operating activities                   78,621       75,983       78,068
                                                                 ---------    ---------    ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
   Acquisition of property                                        (143,262)     (48,233)      (3,685)
   Investment in mortgage loans                                   (133,289)     (33,868)        (484)
   Investment in note receivable                                    (1,200)          --           --
   Proceeds from sale of property                                   12,210       18,628       11,160
   Receipt of mortgage payoffs                                         489        5,345        5,415
   Collection of mortgage and note principal                         5,337        2,445        3,046
                                                                 ---------    ---------    ---------
        Net cash provided by (used in) investing activities       (259,715)     (55,683)      15,452
                                                                 ---------    ---------    ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
   Dividends/distributions paid                                    (72,471)     (76,420)     (76,848)
   Capital contributions - dividend reinvestment plan                  852           --           --
   Proceeds from bank borrowings                                   361,412       64,475           --
   Proceeds from issuance of senior notes                          198,678           --           --
   Payment of bank borrowings and loan fees                       (317,405)     (12,190)      (1,598)
   Payment of variable rate notes and fractional shares                 --      (11,745)          --
   Payment of REIT transaction related costs                            --      (24,173)      (3,669)
                                                                 ---------    ---------    ---------
        Net cash provided by (used in) financing activities        171,066      (60,053)     (82,115)
                                                                 ---------    ---------    ---------
NET INCREASE (DECREASE) IN CASH AND CASH
   EQUIVALENTS                                                     (10,028)     (39,753)      11,405
CASH AND CASH EQUIVALENTS, beginning of year                        12,095       51,848       40,443
                                                                 ---------    ---------    ---------

CASH AND CASH EQUIVALENTS, end of year                           $   2,067    $  12,095    $  51,848
                                                                 =========    =========    =========
Supplemental Disclosure of Noncash Activities:
   Mortgage loans obtained as part of property sale proceeds,
      net of deferred gain                                       $   5,542    $   2,356    $   5,619
   Acquisition of property and equipment through foreclosure            --    $     120    $   3,295
   Shares issued in exchange for limited partnership interests          --    $     393           --
   Distribution of FFCA I assets to shareholders                        --    $   4,104           --
   Interest paid                                                 $  12,802    $   3,030    $   1,282
   Taxes paid/(refunds received)                                 $    (816)   $     231    $     580
</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, 1995 AND 1994
                           --------------------------

(1)      ORGANIZATION AND OPERATION:
         --------------------------
         Franchise  Finance  Corporation of America (FFCA) is a fully integrated
and self-administered real estate investment trust (REIT) which invests in chain
restaurant real estate throughout the United States.  FFCA provides financing to
chain restaurant operators with experienced management in established restaurant
chains  principally  through sale and leaseback  transactions and  participating
mortgage loans.  FFCA and its predecessor  companies have provided  financing to
the chain  restaurant  industry  since 1981.  FFCA's  portfolio of properties is
diversified by tenant,  restaurant concept and geographic location.  At December
31, 1995,  FFCA's  portfolio  included 1,508 restaurant  properties  operated by
approximately 400 restaurant operators in over 35 chains in 46 states.

(2)      SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
         ------------------------------------------
         Consolidation  and  Reorganization  -  The  accompanying   consolidated
financial   statements  include  the  accounts  of  FFCA  and  its  wholly-owned
subsidiaries,  FFCA Acquisition Corporation and FFCA Institutional Advisors. All
intercompany transactions have been eliminated. 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.

         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.  Prior to June 1, 1994, the majority of FFCA's operations were
conducted  through public real estate limited  partnerships.  In accordance with
partnership  taxation,  each of the partners is responsible for reporting his or
her share of taxable income.  Accordingly, no income tax provision has been made
in the  accompanying  consolidated  financial  statements.  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
(see Note 13) and, accordingly, the tax basis of the net assets exceeds the book
basis by approximately $234 million at December 31, 1995.

         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 the  restaurant  buildings  and  improvements  and 7 to 8 years for
restaurant  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 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
estimated  fair  value of the  asset.  Gain  (loss) on sale of  property  on the
consolidated  statements of income for the years ended  December 31, 1995,  1994

                                      F-7
<PAGE>
and 1993  includes  approximately  $3.4  million,  $1.6  million  and  $534,000,
respectively,  of impairment loss related to certain vacant  properties.  Vacant
properties  held for sale  represent  approximately  1% of the total real estate
investment portfolio at December 31, 1995.

         Lease and Loan Origination  Fees and Costs - FFCA generally  receives a
fee related to activities  performed to process a borrower's request for 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.

         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.

         Prepaid Rent  Insurance - Other Assets  include  prepaid rent insurance
which is amortized over a period of 118 months using the  straight-line  method.
The policy  guarantees  80% of rental  payments  for land and note  payments  on
buildings (but not  equipment)  for a period of 10 years.  At December 31, 1995,
28% of the  total  cost of FFCA's  real  estate is  covered  by rent  insurance.
Included  in  rental  revenue  for  1995,  1994 and 1993 is  approximately  $3.3
million, $6.2 million and $6.8 million, respectively, of rent insurance revenue.
Rent insurance  coverage on FFCA properties  expires at various dates,  with the
majority of the policies expiring by 1998.

         Debt Financing Costs - Included in Other Assets are costs totaling $5.3
million  associated  with the issuance in 1995 of FFCA's  Senior Notes (see Note
5),  which  costs  are  amortized  over  the  terms  of the  Senior  Notes  on a
straight-line  basis.  Amortization  of these debt  issuance  costs for the year
ended  December  31, 1995  amounted  to  $90,000,  which is included in interest
expense in the accompanying financial statements.

         Derivative Financial Instruments - FFCA may periodically use derivative
financial  instruments to enhance its ability to manage  interest rate exposures
in its debt portfolio  which exist as part of its ongoing  business  operations.
FFCA does not hold or issue  derivative  financial  instruments  for speculative
trading purposes.  The derivative  instruments used are interest rate agreements
which are  non-leveraged and involve little  complexity.  Gains and losses under
such  agreements  designated  as hedges are deferred  and  amortized to interest
expense over the term of the associated debt.

         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 $3 million in 1995, $600,000 in 1994 and $3.1 million in 1993 were
deferred on such sales.  For financial  reporting  purposes,  deferred  gains on
property sales are deducted from the related  mortgage loan receivable  balances
and  totaled  $6.6  million  and $3.8  million at  December  31,  1995 and 1994,
respectively.

         Net  Income  Per  Share - Net  income  per  share is  calculated  using
40,294,427  weighted  average common and common  equivalent  shares  outstanding
during the year.  In 1994 and 1993,  net income  per share is  calculated  using
40,250,719  shares  of FFCA's  common  stock  issued  upon  consummation  of the
Consolidation as if these shares were outstanding during both years.

         Accounting  Changes - Effective January 1, 1995, FFCA adopted Statement
of Financial  Accounting  Standards  (SFAS) 114,  "Accounting  by Creditors  for
Impairment  of a Loan," as amended by

                                      F-8
<PAGE>


SFAS 118. In  addition,  during 1995 FFCA  elected  early  adoption of SFAS 121,
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of". The adoption of these new  accounting  standards did not have a
material effect on FFCA's financial position or results of operations.

         The Financial  Accounting  Standards  Board  recently  issued SFAS 123,
"Accounting  for  Stock-Based  Compensation".  As is permitted under this recent
pronouncement,  FFCA plans to continue to measure the  compensation  cost of its
employee  stock  compensation  plans using the  intrinsic  value based method of
accounting  prescribed  by APB  Opinion  25,  "Accounting  for  Stock  Issued to
Employees". FFCA will adopt the disclosure requirements of SFAS 123 in 1996.

(3)      INVESTMENTS IN REAL ESTATE:
         --------------------------
         FFCA's real estate  portfolio is 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 12
years as of December 31, 1995.  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).  Approximately  two-thirds  of  FFCA's  land and
building  leases provide for purchase  options and  approximately  two-thirds of
these options are currently exercisable. One lessee (Foodmaker, Inc.), operating
171 Jack In The Box  restaurants  in the western  United  States,  accounted for
approximately  12.5% of total rental and mortgage loan interest revenues in 1995
and 14% in both 1994 and 1993.

         Minimum  future  rentals under  noncancellable  operating  leases as of
December 31, 1995, are as follows (dollars in thousands):

  Year ending December 31,
  -----------------------
           1996                                         $  85,560
           1997                                            82,678
           1998                                            81,976
           1999                                            81,202
           2000                                            80,120
           Thereafter                                     557,257
                                                        ---------

           Total minimum future rentals                  $968,793
                                                        =========
         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   ("percentage   rentals").   These   percentage   rentals  totaled
approximately $4 million in 1995, $3.8 million in 1994 and $2.5 million in 1993.



(4)      MORTGAGE LOANS RECEIVABLE:
         -------------------------

                                      F-9
<PAGE>
         At December 31, 1995, FFCA held first mortgage loans on the land and/or
buildings  and/or equipment of approximately  430  restaurants.  Generally,  the
loans carry interest rates of 10.5 to 13.5 percent per annum and mature in 15 to
22 years from the date of origination. Total principal and interest payments are
due in level amounts with  payments  aggregating  approximately  $26 million per
year to maturity.  In addition to the base  interest,  the  mortgage  agreements
generally provide for additional  interest payments based on a percentage of the
mortgagor's  gross restaurant sales. The estimated fair value of FFCA's mortgage
loans at December  31,  1995  approximates  carrying  value based on the current
rates at which similar loans would be made to borrowers  with similar credit and
for the same  remaining  maturities.  The scheduled  collections of principal on
mortgage loans held at December 31, 1995, are as follows (dollars in thousands):

  Year ending December 31,
  -----------------------
           1996                                        $    7,229
           1997                                             8,058
           1998                                             8,727
           1999                                             9,548
           2000                                            10,254
           Thereafter                                     163,761
                                                        ---------

           Subtotal                                       207,577
           Less deferred gains and other                   (8,091)
                                                        ---------
           Total mortgage principal                      $199,486
                                                        =========
 (5)     SENIOR NOTES:

         In November 1995, FFCA issued unsecured debt consisting of $150 million
of 7% Senior Notes due November 30, 2000 and $50 million of 7-7/8%  Senior Notes
due November 30, 2005, with related discounts totaling  $1,196,000 and $102,000,
respectively,  at December 31,  1995.  The  effective  rates on the Senior Notes
approximate  7.2% and  7.9%,  respectively.  Interest  on the  notes is  payable
semi-annually  in arrears on each May 30 and  November  30,  commencing  May 30,
1996, with principal due at maturity. The proceeds of the Senior Notes were used
to pay down the revolving acquisition line of credit (see Note 6). The notes may
not be redeemed  prior to their  respective  maturities.  Based on the borrowing
rates  currently  available to FFCA for loans with similar terms and maturities,
the carrying value of the Senior Notes approximates fair value.

         The Senior Note agreements contain certain covenants which, among other
restrictions, limit the incurrence of additional debt if FFCA's debt exceeds 60%
of total assets  (40%,  if secured  debt) as defined,  or if FFCA's debt service
coverage is less than 1.5 to 1. As of December 31, 1995,  FFCA was in compliance
with its Senior Note covenants.

(6)      NOTES PAYABLE TO BANK:
         ---------------------

         At December  31,  1995,  FFCA had  outstanding  $110  million on a $200
million  acquisition  loan facility used to provide funds for the acquisition or
financing  of chain  restaurant  properties.  This  unsecured  revolving  credit
facility  is due in  monthly  installments  of  interest  only at LIBOR  (London
Interbank  Offered Rate) plus 1.5% or at the bank's base rate,  as defined.  The
loan  facility  provides  for  an  origination  fee  of  $1,750,000,  an  annual
administration  fee of $75,000 and a fee on the unused commitment amount of .25%
per annum,  payable quarterly in arrears.  The acquisition loan facility expires
in December 1997, with the possibility of three annual extensions.  The interest
rate in effect at December  31,  1995 was

                                      F-10
<PAGE>
7.35%.  Based on the borrowing rates currently  available to FFCA for loans with
similar  terms  and  maturities,  the  carrying  value  of these  notes  payable
approximates fair value.

         The  credit   agreement   contains   covenants   which,   among   other
restrictions,  require FFCA to maintain a fixed charge  coverage of 2 to 1 and a
minimum net worth of $425 million,  as adjusted.  As of December 31, 1995,  FFCA
was in compliance with its debt covenants.

         Bank debt  outstanding  at December  31, 1994  totaled $59 million on a
credit facility  scheduled to expire in July 1996. This secured debt,  including
additional borrowings of $251 million in 1995, was repaid in 1995 in conjunction
with the unsecured  Senior Note offering (see Note 5) and the  acquisition  loan
facility  referred  to above.  The early  termination  of this  credit  facility
enabled  FFCA 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.
Amortization  of loan fees related to this facility for the year ended  December
31, 1995 amounted to $2.1 million,  which is included in interest expense in the
accompanying consolidated financial statements.

(7)      DIVIDENDS:
         ---------
         FFCA declared a fourth quarter  dividend of $.45 per share,  payable on
February  20,  1996,  to  shareholders  of record on February  9, 1996.  For tax
reporting  purposes  this  dividend is not  included in the  shareholders'  1995
taxable income. The remaining dividend payments made by FFCA to its shareholders
for 1995 are  characterized  as  ordinary  income  of $1.35  per  share.  FFCA's
dividend  payments  for the  period  from June 1,  1994 to  December  31,  1994,
including  the fourth  quarter 1994  dividend,  were  characterized  as ordinary
income of $0.87 per share and return of capital of $0.18 per share.

(8)      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 nonqualified
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. In May 1995, FFCA granted  1,227,989 stock options at prices ranging
from $19.50 to $19.75 per share,  none of which have been exercised.  Other than
the restrictions which limit the sale and transfer of these shares, participants
are entitled to all the rights of a shareholder.  Options become  exercisable as
determined  at the date of grant by the  committee.  At December 31,  1995,  the
options granted to FFCA's non-employee  Directors,  totaling 20,489 shares, were
exercisable.  The remaining  options vest over a three-year period from the date
of grant.  Options  expire ten years  after the date of grant  unless an earlier
expiration date is set at the time of grant.

(9)      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

                                      F-11
<PAGE>
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
the increase,  if any, in the value of the FFCA Premises, as defined in the loan
agreement.  FFCA is accruing this additional  interest over the term of the loan
based on an estimated payment of $1,130,000.  Under certain circumstances,  FFCA
may be required to prepay the loan;  however,  management  does not believe that
such  circumstances  are  probable.  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 $8,992,000 in 1995 and $9,130,000 in
1994,   respectively   (net  of  accumulated   depreciation  of  $2,375,000  and
$1,905,000,  respectively)  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 a  service  agreement  which
provides  for a monthly  fee based  upon the  amount  of  services  used by each
affiliate.  Fees for such services  aggregated  approximately  $760,000 in 1995,
$599,000 in 1994 and $469,000 in 1993.

(10)     EMPLOYEE SAVINGS PLAN:
         ---------------------
         The FFCA 401K Plan (the  Plan) was  established  as a savings  plan for
FFCA's  employees  who have been  employed  by FFCA (or its  predecessor)  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 and are subject to
years-of-service vesting requirements.  Employer matching contributions are made
in FFCA  stock,  which is  purchased  by the Plan on the open  market.  Employer
contributions totaled $169,000 in 1995 and $70,000 in 1994.

(11)     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.  FFCA  evaluates  each  client's  credit  and,  based on  management's
evaluation of the client and the proposed restaurant site, determines the amount
of credit to be extended and collateral obtained. The commitments generally have
fixed expiration dates or other termination clauses and require payment of a fee
by the client.  At December 31, 1995,  outstanding  commitments to extend credit
aggregated approximately $130 million.


                                      F-12
<PAGE>
(12)     QUARTERLY FINANCIAL INFORMATION (Unaudited):
         -------------------------------------------
                                                  Quarter Ended
                                   March 31   June 30  September 30 December 31
                                   --------   --------    --------   --------
                                   (amounts in thousands, except per share data)
1995
----
Revenues                           $ 23,231   $ 24,854    $ 26,524   $ 27,974
Income before extraordinary item     13,707     12,887      13,695     13,504
Net income                           13,707     12,887      13,695     11,040

Income before extraordinary
    item per share                     0.34       0.32        0.34       0.33
Net income per share                   0.34       0.32        0.34       0.27
Dividends per share                $   0.45   $   0.45    $   0.45   $   0.45

Weighted average shares              40,251     40,251      40,251     40,394

1994(a)
-------
Revenues                           $ 22,933   $ 22,734    $ 22,458   $ 22,937
REIT transaction related costs          348     27,197         591         62
Net income (loss)                    13,249    (12,428)     12,134     12,950

Net income (loss) per share            0.33      (0.31)       0.30       0.32
Dividends/distributions per share  $   0.47   $   0.45    $   0.45   $   0.45

 (a) The  merger  of FFCA  with  its  predecessor  companies  (see  Note 13) was
consummated  on June 1,  1994.  The  quarterly  information  for the  first  two
quarters  of 1994 is, in  effect,  a  restatement  of the  historical  operating
results of the  predecessor  companies  as if they had been  consolidated  as of
January  1,  1994;  however,  it does not  necessarily  present  the  results of
operations  as they  would  have  been had  FFCA  operated  as a REIT for  those
periods.  The per  share  amounts  for the  same  periods  were  computed  as if
40,250,719 shares were outstanding in each quarter. The net loss for the quarter
ended  June 30,  1994 is  attributable  to the REIT  transaction  related  costs
recognized upon consummation of the merger.


(13)     REIT FORMATION:
         --------------
         FFCA was organized as a Delaware corporation in June 1993 to facilitate
the consolidation by merger (the Consolidation) of Franchise Finance Corporation
of America I (FFCA I) and eleven public real estate  limited  partnerships  (the
Partnerships) with and into FFCA. The Consolidation was effected 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 Partnerships and FFCA I were carried over at their
historical  book values and their  operations  have been  recorded on a combined
historical basis. The Consolidation did not require any material  adjustments to
conform the accounting  policies of the  predecessor  companies to that of FFCA;
however,  certain  reclassifications  have been made to prior  years'  financial
statements to conform with current year presentation.

         Certain costs  incurred to effect the  Consolidation  and integrate the
continuing  operations of the separate  companies  were expensed in 1994 and are
included in REIT  Transaction  Related  Costs in the  accompanying  consolidated
statements of income. These expenses included,  among other things, the costs of
registration,   costs  of  furnishing  information  to  shareholders,   fees  of
underwriters and consultants and the legal fees related to the settlement of the
class  action  litigation  in 1994.  No monetary  consideration  was paid to the
plaintiffs in connection  with the settlement;  however,  FFCA agreed to pay the
attorneys' fees and expenses of plaintiffs' counsel amounting to $800,000.

                                      F-13
<PAGE>
         FFCA I and investors in the  Partnerships who elected to invest in FFCA
received shares of common stock of FFCA totaling  40,250,719 shares  (fractional
shares  totaling  $918,820  were paid in cash).  Certain  investors  elected  to
receive   variable  rate  senior  notes  (the  Variable  Rate  Notes)   totaling
$10,825,911.  Rather than  issuing the Variable  Rate Notes,  FFCA paid to those
investors  an amount  equal to the  Variable  Rate  Notes  plus  interest  at an
annualized  rate of 5.0625% for the period June 1, 1994  through  June 30, 1994.
Certain  non-real  estate assets and  liabilities of FFCA I were not included in
the Consolidation and, accordingly,  were not transferred to FFCA. These amounts
are  treated  as a net  distribution  upon  Consolidation  in  the  accompanying
financial statements.

         The  consolidated  statement of income for the year ended  December 31,
1994 includes the  operations  of the  Predecessor  Companies  combined from the
beginning  of the year  through May 31, 1994 and those of FFCA from June 1, 1994
to December 31, 1994. The financial  statements for 1993 have also been restated
on  a  combined  basis  to  provide  comparative  information.  The  results  of
operations of the Predecessor  Companies during these periods follow (amounts in
thousands):

                               January 1, 1994           Year Ended
                            through  May 31, 1994     December 31, 1993
                             ------------------      ------------------
                                          Net                     Net
 Entity                      Revenues    Income      Revenues    Income
 ------                      --------   -------      --------    ------
 Partnerships                 $37,112   $21,559       $89,659   $53,263
 FFCA I                         5,335    (4,815)       14,048     1,156
 Intercompany eliminations     (4,006)     (180)       (9,918)     (708)
                             --------   -------      --------   -------
      Combined results        $38,441   $16,564       $93,789   $53,711
                             ========   =======      ========   =======

         The  results of  operations  of FFCA I for the  period  January 1, 1994
through May 31, 1994 include  expenses  approximating  $6 million in  connection
with the payoff of deferred  compensation  arrangements  and stock  compensation
paid prior to, and in  connection  with,  the  Consolidation.  The  Partnerships
involved in the Consolidation  are Hardee's Lease Partners 1980,  Insured Income
Properties 1981, Insured Income Properties 1982, Insured Income Properties 1983,
Insured Income Properties 1984,  Insured Income Properties 1985,  Insured Income
Properties 1986, Insured Income Properties 1988, Insured Pension Investors 1983,
Insured Pension Investors 1984 and Insured Pension Investors 1985.


                                      F-14
<PAGE>
<TABLE>
                                                                                                                 SCHEDULE III 
                                                                                                                  Page 1 of 2
                                              FRANCHISE FINANCE CORPORATION OF AMERICA                            
                                        SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION                      
                                                       AS OF DECEMBER 31, 1995

<CAPTION>
                                          Initial Cost to Company and
                                       Gross Amount at December 31, 1995                       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          124       $ 33,721,148    $ 48,442,402   $ 2,037,570   $ 84,201,120   $ 12,709,931  $ 1,801,494  $ 14,511,425
Northeast         74         19,420,778      31,754,103     1,799,507     52,974,388      5,918,115    1,774,307     7,692,422
E.N. Central     194         36,259,953      78,860,545     8,493,283    123,613,781     25,997,131    7,616,780    33,613,911
W.N. Central     114         20,227,559      41,373,341     4,570,945     66,171,845     14,206,473    4,505,191    18,711,664
Southeast        354         83,896,422     125,281,921    10,930,745    220,109,088     37,035,893   10,603,967    47,639,860
Southwest        182         45,299,468      59,181,361     9,032,157    113,512,986     21,030,193    8,624,877    29,655,070
Mountain          95         25,821,588      37,925,608     3,800,772     67,547,968     10,261,734    3,618,526    13,880,260
Pacific          121         39,994,631      25,607,427       846,914     66,448,972      9,680,945      846,914    10,527,859
               -----       ------------    ------------   -----------   ------------   ------------  -------------------------

TOTAL          1,258       $304,641,547    $448,426,708   $41,511,893   $794,580,148   $136,840,415  $39,392,056  $176,232,471
               =====       ============    ============   ===========   ============   ============  ===========  ============
</TABLE>

                                      F-15
<PAGE>
                                                                    SCHEDULE III
                                                                     Page 2 of 2

                    FRANCHISE FINANCE CORPORATION OF AMERICA                    
                    ----------------------------------------
              SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
              ----------------------------------------------------
                             AS OF DECEMBER 31, 1995
                             -----------------------
NOTES:
      (1) All property is restaurant property.
      (2) There are no encumbrances on properties.
      (3) The aggregate  cost for Federal  income tax purposes is  approximately
          $824 million.
      (4) Depreciation  is computed over the  estimated  useful life of 24 to 30
          years for the restaurant  buildings and  improvements and 7 to 8 years
          for the restaurant equipment.
      (5) Transactions in real estate and equipment and accumulated depreciation
          during 1995, 1994, and 1993 are summarized as follows:

                                                                    Accumulated
                                                  Cost             Depreciation
                                              -------------       -------------
Balance, December 31, 1992                    $ 685,337,795       $ 153,048,265

      Acquisitions                                6,980,118                  --
      Cost of real estate sold                  (18,166,362)         (3,446,266)
      Cost of equipment sold                    (12,304,998)        (10,738,037)
      Impairment loss                              (270,000)                 --
      Depreciation expense                               --          20,489,917
                                              -------------       -------------

Balance, December 31, 1993                      661,576,553         159,353,879

      Acquisitions                               48,233,127                  --
      Repossessed equipment                         119,681                  --
      Cost of real estate sold                  (19,907,230)         (4,098,224)
      Cost of equipment sold                     (7,296,677)         (6,472,931)
      Impairment loss                            (1,600,000)                 --
      Depreciation expense                               --          20,786,738
                                              -------------       -------------

Balance, December 31, 1994                      681,125,454         169,569,462

      Acquisitions                              143,261,856                  --
      Cost of real estate sold                  (17,992,221)         (4,952,630)
      Cost of equipment sold                     (8,399,941)         (7,850,715)
      Impairment loss                            (3,415,000)                 --
      Depreciation expense                               --          19,466,354
                                              -------------       -------------

Balance, December 31, 1995                    $ 794,580,148       $ 176,232,471
                                              =============       =============



                                      F-16
<PAGE>
<TABLE>
                                              FRANCHISE FINANCE CORPORATION OF AMERICA                             SCHEDULE IV
                                              ----------------------------------------                             Page 1 of 2
                                              SCHEDULE OF MORTGAGE LOANS ON REAL ESTATE
                                              -----------------------------------------
                                                       AS OF DECEMBER 31, 1995
                                                       -----------------------
<CAPTION>
                                           No. of          Face Amount  Carrying Amount    Interest          Maturity Date
U.S. Region   Original Loan Amount   Financed Properties  of Mortgages   of Mortgages     Rate Range             Range
-----------   --------------------   -------------------  ------------   ------------   --------------   ---------------------
<S>           <C>                           <C>           <C>            <C>            <C>              <C>
Southeast             $31,244,960             62          $ 31,244,960   $ 30,422,988            10.5%               Oct. 2014
                        1,755,040              4             1,755,040      1,722,939            10.5%               Oct. 2014
                   under $500,000             53            10,450,858      8,407,311   10.75% - 13.5%   Jul. 1999 - Dec. 2015
              $501,000-$1,000,000             20            14,195,853     13,679,918    10.0% - 11.5%   Jan. 2000 - Jan. 2016   
                  over $1,000,000             13            15,455,935     15,283,445    10.5% - 11.5%   Jun. 2015 - Jan. 2016
                                                          ------------   ------------
                                                            73,102,646     69,516,601
                                                          ------------   ------------
Mideast            under $500,000              9             2,602,491      2,472,703    11.0% - 12.5%   Nov. 1997 - Jun. 2015
              $501,000-$1,000,000             17            12,932,652     11,744,552    10.5% - 13.5%   Jul. 2001 - Jan. 2016
                  over $1,000,000              2             3,089,660      1,577,965    10.0% - 14.5%   Oct. 1999 - Oct. 2000
                                                          ------------   ------------
                                                            18,624,803     15,795,220
                                                          ------------   ------------
Northeast          under $500,000             24             4,170,000      4,000,245    11.0% - 11.5%   Apr. 2003 - Jul. 2003
              $501,000-$1,000,000              1               645,230        462,271            13.5%               Oct. 2001
                  over $1,000,000              3             4,126,175      4,107,185            11.5%   Sep. 2015 - Nov. 2015
                                                          ------------   ------------
                                                             8,941,405      8,569,701
                                                          ------------   ------------
E.N. Central       under $500,000             19             5,740,333      5,341,551     8.0% - 12.5%   Nov. 1997 - Jun. 2015
              $501,000-$1,000,000             28            18,609,839     17,787,885     8.0% - 15.0%   Oct. 1999 - Jan. 2016
                  over $1,000,000              5             6,670,028      5,505,862    10.5% - 11.5%   Nov. 2001 - Nov. 2015
                                                          ------------   ------------
                                                            31,020,200     28,635,298
                                                          ------------   ------------
W.N. Central       under $500,000             24             3,366,221      2,723,256    10.0% - 12.5%   Nov. 1999 - Jan. 2016
              $501,000-$1,000,000             34            25,409,586     20,825,467    10.0% - 13.5%   Jun. 2001 - Jan. 2016
                  over $1,000,000              4             4,771,136      2,841,561   10.75% - 11.0%   Dec. 2001 - Jan. 2007
                                                          ------------   ------------
                                                            33,546,943     26,390,284
                                                          ------------   ------------
Southwest          under $500,000             22             5,321,355      4,097,479    11.0% - 12.5%   Nov. 1997 - Apr. 2015
              $501,000-$1,000,000             18            13,960,668     13,711,765    11.0% - 13.5%    May 2002 - Jul. 2017
                  over $1,000,000              9            10,086,632      9,824,626            11.0%               Jul. 2017
                                                          ------------   ------------
                                                            29,368,655     27,633,870
                                                          ------------   ------------
Mountain           under $500,000              9             3,253,254      2,950,207    11.0% - 11.5%   Feb. 2000 - Apr. 2015
              $501,000-$1,000,000             10             7,479,662      6,302,046     8.0% - 14.5%   Mar. 2001 - Jan. 2016
                  over $1,000,000              6             6,599,344      5,277,451    11.0% - 11.5%   Jan. 2005 - Jan. 2016
                                                          ------------   ------------
                                                            17,332,260     14,529,704
                                                          ------------   ------------
Pacific            under $500,000             28             6,958,160      5,260,243            11.5%                May 2005
              $501,000-$1,000,000              2             1,143,553        990,131    11.0% - 11.5%    May 2005 - Oct. 2005
                  over $1,000,000              2             2,478,400      2,165,626    10.6% - 11.0%   Jun. 2008 - Apr. 2015
                                            ----          ------------   ------------
                                                            10,580,113      8,416,000
                                                          ------------   ------------
                            TOTAL            428          $222,517,025   $199,486,678
                                             ===          ============   ============
                                                                F-17
</TABLE>
<PAGE>
                                                                     SCHEDULE IV
                                                                     Page 2 of 2
                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    ----------------------------------------
                    SCHEDULE OF MORTGAGE LOANS ON REAL ESTATE
                    -----------------------------------------
                             AS OF DECEMBER 31, 1995
                             -----------------------

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
          $207 million.      
      (6) Transactions  in mortgage  loans on real estate during 1995,  1994 and
          1993 are summarized as follows:

Balance, December 31, 1992                                        $  42,037,782
      Additions during period:
          New mortgage loans                                          9,980,896
          Deferred gain, net of gain recognized                      (3,094,823)
      Deductions during period:
          Collections of principal                                   (1,997,753)
          Mortgage payoffs                                           (5,414,745)
          Foreclosures                                               (3,378,523)
          Increase in provision for uncollectible accounts              (41,436)
                                                                  -------------

Balance, December 31, 1993                                           38,091,398
      Additions during period:
          New mortgage loans                                         36,641,734
          Deferred gain, net of gain recognized                        (513,306)
          Unamortized loan fees, net of amortization                   (261,321)
      Deductions during period:
          Collections of principal                                   (2,149,648)
          Mortgage payoffs                                           (5,344,918)
          Foreclosures                                                 (119,681)
          Conversion of mortgage loans to notes                        (364,124)
                                                                  -------------

Balance, December 31, 1994                                           65,980,134
      Additions during period:
          New mortgage loans                                        141,788,744
          Deferred gain, net of gain recognized                      (2,714,965)
          Unamortized loan fees, net of amortization                 (1,228,717)
      Deductions during period:
          Collections of principal                                   (3,381,980)
          Mortgage payoffs                                             (489,405)
          Conversion of mortgage loans to notes                        (467,133)
                                                                  -------------

Balance, December 31, 1995                                        $ 199,486,678
                                                                  =============
                                      F-18

<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 Exhibit 27, Financial
Data Schedule. Exhibit numbers correspond to the numbers in the Exhibit Table of
Item 601 of Regulation S-K.

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

3.02                Amended and Restated Bylaws of the Company(1)

3.03                Restated Certificate of Incorporation of the Company(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)

10.09               Revolving  Acquisition Loan Agreement,  dated as of July 22,
                    1994,  between Franchise Finance  Corporation of America and
                    Nomura Asset Capital Corporation(2)

10.10               Termination  Agreement  dated  December  28,  1995,  between
                    Franchise  Finance  Corporation  of  America,  Nomura  Asset
                    Capital  Corporation  and  the  other  signatories  thereto,
                    terminating the Revolving Acquisition Loan Agreement,  dated
                    as of July 22, 1994*

10.11               1995 Stock Option and  Incentive  Plan of Franchise  Finance
                    Corporation of America*

21.01               Subsidiaries of the Registrant*

<PAGE>
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")(4)

99.02               Guaranty  Agreement  executed in connection  with the Credit
                    Agreement(4)

99.03               Promissory  Note  executed  in  connection  with the  Credit
                    Agreement(4)

99.04               Subordination  Agreement  executed  in  connection  with the
                    Credit Agreement(4)

99.05               Subordination  Agreement  executed  in  connection  with the
                    Credit Agreement(4)

---------------
*Filed herewith.
(1) Incorporated by reference to 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 to the Registrant's Annual Report on Form 10-K for
the fiscal  year ended  December  31,  1994,  as filed with the  Securities  and
Exchange Commission.
(3)  Incorporated by reference to 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 to the  Registrant's  Current Report on Form 8-K,
dated January 25, 1996, as filed with the Securities and Exchange Commission.