UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K

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

    FOR THE FISCAL YEAR ENDED DECEMBER 31, 2000

                                       OR

[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
    EXCHANGE ACT OF 1934

    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)


            Maryland                                             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: (480) 585-4500

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

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

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

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

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

     The aggregate  market value of the voting stock held by  non-affiliates  of
the Registrant as of March 1, 2001 was $1,228,192,489.

     The  number of  shares of the  Registrant's  $.01 par  value  common  stock
outstanding as of March 1, 2001 was 56,125,250.

                       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 9, 2001, to be filed pursuant to Regulation 14A.
<PAGE>
                                     PART I

ITEM 1. BUSINESS.

BACKGROUND

     Franchise Finance Corporation of America is a self-administered real estate
investment  trust ("REIT")  which  provides real estate  financing to multi-unit
operators of chain restaurants,  convenience stores and automotive  services and
parts outlets.  Franchise  Finance  Corporation of America and its  subsidiaries
(collectively,  "FFCA") offer  financing  through  various  products,  including
mortgage  loans,  equipment  loans,  construction  financing and long-term  real
estate leases. FFCA was incorporated in the state of Delaware in 1993 and is the
successor to Franchise Finance Corporation of America I, a Delaware corporation,
and eleven  public  limited  partnerships  that were merged into FFCA on June 1,
1994. On December 31, 2000, FFCA changed its state of incorporation to Maryland.
FFCA, together with its predecessors, has been engaged in the financing of chain
restaurant  real estate since 1980 and began  financing  convenience  stores and
automotive  services  and parts stores in 1997.  At December 31, 2000,  FFCA had
interests  in  over  5,400   properties   operated  by  over  480  operators  in
approximately  170 chains  located  throughout  the United  States and in Canada
(although the amount of FFCA's  investments in Canada is not significant).  FFCA
invested in over 900 properties during 2000, and cumulative  investment activity
now totals  nearly $4.4  billion  since the  formation of FFCA as a REIT in June
1994.  The common stock of FFCA began trading on the New York Stock  Exchange on
June 29, 1994 under the symbol "FFA".

     FFCA began 2000 with a new source of capital through a three-year loan sale
agreement with Washington  Mutual Bank, FA, effective through December 31, 2002.
The loan sale  agreement was a result of FFCA's  strategic  decision to focus on
offering  mortgage loan products to its customers.  Under the Washington  Mutual
loan sale  agreement,  a taxable REIT  subsidiary of FFCA  originates  loans and
simultaneously  sells them to Washington Mutual.  FFCA then acts as servicer for
the  loans.  Accordingly,  Washington  Mutual  effectively  funds  the  loans at
origination;  therefore FFCA does not require significant liquidity or access to
capital  to  originate  these  loans.  During  2000,  approximately  half of the
mortgage loans FFCA originated were sold to Washington Mutual. The transition to
this whole loan sale strategy  resulted in mortgage loans  comprising 95% of the
$909  million  in  new  investments  in  2000,  the  remaining  5%  representing
sale/leaseback  properties.  FFCA's 1999 investment level was $1.36 billion. The
decreased  investment  level in 2000 was due in part to the reduced  transaction
volume associated with the transition to FFCA's whole loan sale strategy, higher
interest  rates and a reduction in  financings  of large ($100  million or more)
transactions.

     In addition  to  Washington  Mutual  becoming a  significant  new source of
capital in 2000, FFCA also accessed the debt markets and continued selling loans
through  securitization  transactions.  During 2000, FFCA issued $265 million in
unsecured  notes,  $150  million of which  replaced  the 7% Senior  Notes  which
matured in November  2000.  In  September  2000,  FFCA  renewed its $350 million
unsecured  bank credit  facility,  extending  $235 million to September 2003 and
$115 million to September 2001 (with options to further  extend).  As of January

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1, 2001,  FFCA extended its $600 million loan sale facility with Morgan  Stanley
Securitization  Funding Inc. (the "Morgan Stanley loan sale  facility")  through
December 2001.  FFCA made use of its existing loan sale facility by selling $357
million in mortgage loans to a trust in ten separate  transactions  during 2000.
In November 2000,  FFCA  completed its sixth  securitization  transaction  where
certain  mortgage loans originated by FFCA and sold into the Morgan Stanley loan
sale facility,  totaling $406 million,  were  securitized and Secured  Franchise
Loan Trust  Certificates  were sold to investors.  The servicing rights on these
mortgage  loans were  retained by FFCA.  FFCA also  retained  certain  interests
approximating  9% of the aggregate  mortgage loan principal  balance through the
purchase of subordinated investment securities of the securitization trust.

     The retained  securities  held by FFCA totaled $182 million at December 31,
2000. These subordinated  investment securities held by FFCA are the last of the
securities  to be repaid from the loan pools,  so that if any of the  underlying
mortgage loans default,  these securities take the first loss. Any future credit
losses in the securitized loan pool would be concentrated in these  subordinated
investment  securities retained by FFCA;  however,  FFCA originates and services
mortgage  loans  and has the  infrastructure  in  place to deal  with  potential
defaults on the  securitized  portfolio  (as it does with the mortgage  loans it
holds for  investment).  To date,  delinquencies  in the securitized  loan pools
represent less than 2% of the total mortgage loan pool balance.

     At December 31, 2000,  FFCA's combined  investment and servicing  portfolio
consisted of over $4 billion in chain store real estate  represented by mortgage
loans and properties  subject to operating  leases.  Approximately 480 different
operators representing 170 different chains operated the 6,224 properties in the
portfolio.  FFCA uses its  infrastructure to continually  monitor and administer
its  investments  to enhance the  stability of its cash flows.  FFCA's  in-house
staff inspects  underperforming  properties to assess their condition.  In-house
property management and legal services personnel administer  underperforming and
nonperforming leases and loans and also supervise the in-house administration of
property dispositions, tenant substitutions, foreclosures and bankruptcies. FFCA
has an established record of resolving  underperforming and nonperforming leased
assets and loans.  For the three years ended  December 31, 2000,  the  occupancy
rate for FFCA's  properties  has been  approximately  99%.  During 2000,  rental
revenues were negatively  impacted by a monetary  default  relating to 97 family
dining restaurants, impacting net income by $0.14 per share. FFCA terminated the
master lease on these 97  properties  on May 31, 2000.  FFCA also took a deed in
lieu of foreclosure on 15 additional  properties securing certain related loans.
As of March 1, 2001,  42 of the  restaurant  properties  have been  relet  under
long-term  leases  and lease  agreements  are in  process  for an  additional  4
properties.  Of the  remaining  properties,  9 have  been sold for a net gain of
approximately  $210,000,  26 properties  have sale  agreements in process and 31
properties are being remarketed for sale or lease.

     Other  events  occurring  in 2000  included  an  increase  of 6% in  FFCA's
quarterly  dividend  to $0.56  from $0.53 for the  fourth  quarter  of 2000.  In
addition, during the fourth quarter of 2000 FFCA purchased approximately 582,000
shares of its outstanding common stock in various open market transactions.  The
timing of future purchases and the actual number of common shares purchased,  if
any, will depend on market conditions and available cash flow.

                                       3
<PAGE>
     As of December 31, 2000,  FFCA had 180 full-time  employees and 5 part-time
employees.  FFCA has three-year employment agreements with five of its executive
officers.  FFCA entered into similar two-year  agreements with certain other key
officers  and has a  severance  plan for  certain  other  key  employees.  These
agreements generally provide compensation benefits if the employee is terminated
without cause in connection with a change in control, as defined.

FACTORS AFFECTING FUTURE OPERATING RESULTS

     FFCA's  Annual Report on Form 10-K includes  "forward  looking  statements"
within the meaning of the provisions of the Private Securities Litigation Reform
Act,  including in particular the statements about FFCA's plans,  strategies and
prospects.  Although FFCA believes that its plans,  intentions and  expectations
reflected in, or suggested by, the forward  looking  statements are  reasonable,
FFCA can give no assurance that these plans,  intentions or expectations will be
achieved.  FFCA has listed  below  important  factors  that could  cause  actual
results to differ  materially  from the forward looking  statements  included in
this Annual  Report on Form 10-K.  The factors  listed below should be carefully
considered when assessing FFCA's plans,  intentions and expectations.  Risks and
uncertainties including the following may affect FFCA's future results:

     *    FFCA invests in mortgage loans and other  financial  instruments  that
          are  subject to various  forms of market  risk such as  interest  rate
          fluctuations.  In a rising interest rate  environment,  interest rates
          may  increase to a point that demand for the  financing of real estate
          is curtailed, which could negatively impact FFCA's growth.

     *    FFCA invests in derivative financial  instruments for the sole purpose
          of providing  protection against  fluctuations in interest rates. From
          the time FFCA's  fixed-rate  mortgage loans are  originated  until the
          time they are sold through a securitization  transaction,  the company
          hedges  against  fluctuations  in  interest  rates  through the use of
          derivative  financial  instruments.  At December  31,  2000,  FFCA had
          outstanding interest rate swap contracts  aggregating $28.8 million in
          notional  amount.  FFCA  intends to  terminate  these  contracts  upon
          securitization  of the related  fixed-rate  mortgage  loans.  Based on
          prevailing  interest rates,  FFCA would have paid  approximately  $1.2
          million if it had terminated the swap contracts at December 31, 2000.

     *    FFCA faces competition from large banks, insurance companies,  finance
          companies,  leasing  companies  and  other  REITs in the  acquisition,
          financing  and leasing of  properties.  Some of these  companies  have
          greater  resources or access to capital at more competitive rates than
          FFCA,   allowing  them  to  offer  lower  rates  to  borrowers.   This
          competition could negatively affect FFCA's growth.

                                       4
<PAGE>
     *    To the extent FFCA needs access to the capital markets to fund certain
          of its  activities,  capital  sources  can include the public debt and
          equity  markets and the  asset-backed  securities  market,  as well as
          capital  sources  such as the Morgan  Stanley  loan sale  facility and
          FFCA's loan sale agreement with Washington Mutual.  FFCA is exposed to
          the risk that changes in market conditions may limit access to some of
          the capital markets,  which would adversely affect FFCA's growth.  The
          stock market's current negative perception of REITs may mean that FFCA
          cannot rely on new equity issuances as an efficient source of capital.
          Additionally,  there can be no  assurance  that FFCA  would be able to
          raise  sufficient  capital  through  issuance of equity  securities to
          achieve its growth  objectives.  In addition,  FFCA is subject to debt
          financing and  refinancing  risks,  including the ability to refinance
          debt in the future at an acceptable  cost of capital.  There can be no
          assurance  that  FFCA  will be able to  raise  sufficient  capital  at
          acceptable  rates  through   borrowings,   or  the  issuance  of  debt
          securities, to achieve its investment objectives.

     *    FFCA invests  primarily in chain  restaurant  properties,  convenience
          stores  and   automotive   services  and  parts   retail   facilities.
          Investments  in  these   properties  are  subject  to  various  risks,
          including  decreases  in demand for  products,  increased  labor costs
          (including  increases  in the  minimum  wage  or  statutorily-mandated
          benefits), changes in tax laws or environmental regulations, increases
          in the number of, and the physical condition of, competing  properties
          offering   similar  products  and  dependence  on  operators  for  the
          profitable  operation of the  properties.  Some of the risks the chain
          restaurant  industry is subject to include  changes in consumer demand
          or food preferences, and contaminated food products. Some of the risks
          applicable to the convenience  store industry are competition from new
          retail facilities  offering similar products in the immediate vicinity
          of each particular store,  changes in legislation  concerning the sale
          of tobacco  products and, to the extent  applicable,  gasoline  margin
          volatility  and the  availability  of gasoline  supplies.  Some of the
          risks of the automotive  services and parts industry are technological
          changes in the production and  maintenance of automobiles  and changes
          in consumer preferences in transportation  options.  FFCA's success is
          dependent  on the  success  of these  industries  in  general  and the
          specific chains and retail facilities which FFCA finances.

     *    Each of the chain store  facilities in which FFCA has an investment is
          operating  as part of a chain of  restaurants,  convenience  stores or
          automotive services and parts stores. The management  practices of the
          franchisors  of the  chains,  a lack of support  by such  franchisors,
          franchisee  organizations  or  third  parties,  or the  bankruptcy  or
          business discontinuation of any franchisor, franchisee organization or
          third party, may adversely affect the operating results of the related
          chain store facilities.  Likewise,  the management practices or a lack
          of support with respect to the concepts owned by the related operators
          also may adversely affect the results of operations at the chain store
          facilities of these  operators,  which could have an adverse effect on
          an operator's ability to make payments to FFCA under a lease or loan.

                                       5
<PAGE>
     *    The ability of operators to pay their  obligations to FFCA in a timely
          manner  depends  on a number  of  factors,  including  the  successful
          operation  of their  businesses.  Various  factors,  many of which are
          beyond the control of any operator,  may adversely affect the economic
          viability of a chain store facility, including:

          -    national,  regional and local economic  conditions,  which may be
               adversely affected by industry  slowdowns,  company  relocations,
               prevailing  employment  conditions  and levels of employment  and
               other factors;

          -    local real estate  conditions,  like  competition from facilities
               having businesses similar to the chain store facility;

          -    changes or weaknesses in specific industry segments;

          -    perceptions by prospective customers of the safety,  convenience,
               services and  attractiveness  of the chain store  facility and of
               the related concept;

          -    changes in demographics, consumer tastes and traffic patterns;

          -    the ability to obtain and retain capable management;

          -    retroactive  changes to building  codes,  similar  ordinances and
               other legal requirements; and

          -    increases in operating expenses.

     *    For the year ended December 31, 2000, 25% of FFCA's portfolio revenues
          were generated by FFCA's top five clients, 13% of FFCA's revenues were
          generated by operators of Burger King restaurant facilities and 36% of
          FFCA's revenues were generated by properties  located in five states--
          Texas, Florida,  Georgia, Ohio and California.  FFCA may face operator
          concentration  risk in the future  because  the  industries  that FFCA
          finances  have been  consolidating  and FFCA  typically  finances  the
          larger operators seeking to consolidate these industries. For the year
          ended December 31, 2000, 8% of FFCA's revenues came from RTM, Inc. and
          its  affiliates (a portion of which is guaranteed by Arby's,  Inc. and
          Triarc  Companies  Inc.).  RTM is the  largest  franchisee  of  Arby's
          restaurants  and the owner and  franchisor  of the Mrs.  Winner's  and
          Lee's Famous Recipe concepts. Thus, RTM as an operator, Burger King as
          a concept,  and  properties  located in the states of Texas,  Florida,
          Georgia,  Ohio and  California,  will  continue  to have a  meaningful
          impact on FFCA's revenues.

                                       6
<PAGE>
     *    FFCA has entered into a three-year loan sale agreement with Washington
          Mutual  Bank,  FA,  a  large  financial   services  company,   whereby
          Washington  Mutual agreed to purchase  loans  originated by FFCA while
          FFCA  retains  the  servicing  rights on the loans  sold.  Under  this
          agreement,  FFCA has certain limited contingent  recourse  obligations
          with  respect  to the  performance  of the  loans.  FFCA's  loan  sale
          agreement with Washington  Mutual expires  December 31, 2002. There is
          no obligation  for  Washington  Mutual to renew the  arrangement  upon
          expiration.  Moreover,  the agreement with Washington  Mutual does not
          obligate Washington Mutual to purchase all of FFCA's loans. Washington
          Mutual  may  elect  not  to  purchase   loans  from  FFCA  because  of
          concentration  issues,  underwriting  criteria,  or for other reasons.
          During 2000,  approximately half of the mortgage loans originated were
          sold to Washington Mutual. Additionally,  because Washington Mutual is
          a regulated lending  institution,  its ability to continue to purchase
          loans from FFCA may be subject  to  changes in  regulations  affecting
          these institutions.

     *    FFCA  may  continue  to   securitize   mortgage   loans  and  to  have
          responsibility for mortgage  servicing.  Several factors affect FFCA's
          ability to complete securitizations of its loans, including conditions
          in the securities markets generally,  conditions in the franchise loan
          sector of the asset-backed securities markets specifically, the credit
          quality  of  FFCA's  loans,   compliance  of  FFCA's  loans  with  the
          eligibility  requirements  established by the securitization documents
          and the absence of any material  downgrading  or withdrawal of ratings
          given to  certificates  issued  in  FFCA's  previous  securitizations.
          Volatility  in  the  credit  markets  may  impair  FFCA's  ability  to
          successfully securitize its loans in the future.

     *    FFCA owns  subordinated  interests in the loans it securitizes.  These
          interests are in a "first loss"  position  relative to the more senior
          securities sold to third parties, and accordingly carry a greater risk
          as it relates to the  nonpayment  of the loans.  At December 31, 2000,
          FFCA had  approximately  $182 million  invested in these  subordinated
          interests, which represented less than 11% of FFCA's total assets. The
          value of the  subordinated  interests,  excluding those  classified as
          held-to-maturity securities, is marked to market each calendar quarter
          with material changes in value impacting FFCA's financial  statements.
          Although no material  changes have occurred to date,  FFCA may, in the
          future, recognize changes that would result in a material reduction in
          their value on FFCA's  financial  statements.  These  reductions could
          negatively  impact FFCA's net income,  stockholders'  equity and total
          assets  in  the  future.  In  addition,  some  of  these  subordinated
          securities  are adversely  impacted by  prepayments  of the underlying
          mortgage loans;  therefore, if market conditions increase the level of
          prepayments, FFCA may be adversely impacted.

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

     *    Even though the chain store and retail facility  operators financed by
          FFCA are generally required to carry  comprehensive  liability,  fire,
          flood,  extended coverage and business interruption  insurance,  there
          are certain losses that are uninsurable. In certain circumstances FFCA
          may permit a chain store operator to self-insure  for certain types of
          losses.  An uninsured  loss could result in a loss to FFCA of both its
          capital investment and anticipated revenue from the affected property.

     *    The properties in which FFCA invests are subject to  requirements  and
          potential  liabilities under  environmental laws and regulations.  For
          example, some environmental laws impose liability upon property owners
          or  operators  for the  presence  of  hazardous  substances  on  their
          property  regardless  of  whether  the owner was  responsible  for the
          release of these substances. In addition, a property owner or operator
          may be  subject to common law  claims by third  parties  for  personal
          injury  based on  exposure to  hazardous  substances  or for  property
          damage based on environmental contamination emanating from a property.
          The costs of any required  remediation or removal of these  substances
          may be substantial  and the owner's or operator's  liability as to any
          property is generally not limited under these laws and regulations and
          could significantly  exceed the value of the property or the aggregate
          assets of the owner.

          Under  some  environmental   laws,  like  the  federal   Comprehensive
          Environmental  Response,  Compensation and Liability Act, or CERCLA, a
          lender may become liable,  as an "owner" or "operator",  for the costs
          of  responding  to a  release  or threat  of a  release  of  hazardous
          substances on or from a borrower's  property,  regardless of whether a
          previous owner or operator caused the environmental  damage.  Although
          the  Asset  Conservation,   Lender  Liability  and  Deposit  Insurance
          Protection  Act of 1996  offers  limited  protection  to lenders  from
          CERCLA  liability,  a lender  may lose the  protection  if  agents  or
          employees of the lender are deemed to have  exercised  decision-making
          control  over the  borrower's  environmental  compliance  or hazardous
          substance   handling  and  disposal   practices  or  to  have  assumed
          day-to-day  management  of the  operational  functions of the site. If
          FFCA  became  liable  under  CERCLA  for  hazardous  substances  on  a
          property, it could have an adverse effect on FFCA.

     *    Under the Resource  Conservation  and Recovery Act, the  Environmental
          Protection  Agency  ("EPA")  established  a  comprehensive  regulatory
          program  for  the   detection,   prevention  and  cleanup  of  leaking

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          underground storage tanks ("UST"). Expanded regulations enacted by the
          EPA,   which  became   generally   effective   in  1998,   established
          requirements  for (i)  installing  UST  systems,  (ii)  upgrading  UST
          systems, (iii) taking corrective action in response to releases,  (iv)
          closing  UST  systems,  (v)  keeping  appropriate  records;  and  (vi)
          maintaining evidence of financial responsibility for taking corrective
          action and  compensating  third parties for bodily injury and property
          damage  resulting from releases.  These  regulations  permit states to
          develop,   administer  and  enforce  their  own  regulatory  programs,
          incorporating  requirements  that  are at least  as  stringent  as the
          federal standards. States with programs approved by the EPA may assume
          primary  responsibility  for enforcing the national  requirements.  If
          FFCA became liable for an operator's failure to comply with applicable
          regulations governing USTs, it could have an adverse effect on FFCA.

     *    Various  federal,  state and local laws,  regulations  and  ordinances
          govern    the    removal,     encapsulation    or    disturbance    of
          asbestos-containing  materials,  or  ACMs,  when  the ACMs are in poor
          condition or during  renovation  or  demolition  of a building.  These
          laws,  as well as common  law  standards,  may  impose  liability  for
          releases of ACMs and may permit third  parties to seek  recovery  from
          owners  or  operators  of  real   properties  for  personal   injuries
          associated with the releases. Losses arising from the presence of ACMs
          are insured under FFCA's  environmental  insurance policies;  however,
          there can be no assurance that such  environmental  insurance policies
          will provide  sufficient  coverage in the event FFCA became liable for
          releases of ACMs or that the  applicable  deductibles  would prevent a
          loss to FFCA.

     *    The  environmental  due diligence that FFCA performs on a property may
          not  have  identified  or  reasonably   quantified  all  environmental
          conditions.  FFCA did not perform  environmental audits on most of the
          properties   acquired  from  its   predecessors.   In  addition,   the
          environmental  condition of a property could in the future be affected
          by actions or omissions by borrowers under FFCA's mortgage loans or by
          third  parties  unrelated to the  borrowers.  While FFCA has purchased
          environmental  insurance for many of the properties it has financed or
          acquired,  and for all of  those  that  have  USTs or  those  that are
          selling  gasoline  or  other  petroleum  products,  there  can  be  no
          assurance  that the  environmental  insurance  policies  will  provide
          sufficient  coverage  in the  event of  environmental  liability  at a
          property,  or that applicable  deductibles,  per loss  limitations and
          aggregate  coverages or exclusions from coverage may not contribute to
          a loss to investors or that the environmental insurer will pay amounts
          due under the environmental insurance policies.

     *    FFCA has elected to be taxed as a REIT under the Internal Revenue Code
          of 1986,  which entitles FFCA to a deduction for dividends paid to its
          shareholders  when  calculating  its  taxable  income.  Although  FFCA
          intends to operate so that it will continue to qualify as a REIT,  the
          complex nature of the rules governing REITs, the ongoing importance of

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<PAGE>
          factual determinations and the possibility of future changes in FFCA's
          circumstances  preclude any assurance that FFCA will qualify as a REIT
          in any given year.  FFCA's  failure to maintain  its REIT status would
          have a material adverse effect on FFCA.  Income tax treatment of REITs
          may be  modified,  prospectively  or  retroactively,  by  legislative,
          judicial or  administrative  action at any time which,  in addition to
          the direct  effects  the  changes  might  have,  could also affect the
          ability of FFCA to realize its investment objectives.

     *    FFCA is  dependent on the efforts of its  directors,  officers and key
          personnel and,  although FFCA has employment or continuity  agreements
          with certain  officers,  there can be no  assurance  that FFCA will be
          able  to  retain  these  individuals  or  would  be  able  to  recruit
          additional personnel with equivalent  experience in the event of their
          resignation.

BUSINESS STRATEGY

     FFCA's principal business objective is to maximize shareholder wealth. FFCA
seeks to enhance its operating  performance  and financial  position (i) through
continued accretive  investment  activity;  (ii) by controlling expenses through
greater operational efficiencies and economies of scale; (iii) by increasing its
use of internally generated cash flow for investments or other transactions that
strengthen  its financial  position;  and (iv) by maximizing the value of FFCA's
market  position and  infrastructure  through whole loan sale programs and other
services.  FFCA seeks to  achieve  growth in cash flow,  while  maintaining  low
portfolio investment risk, through diligent adherence to our tested underwriting
criteria, investment diversification and conservative capital structure.

     FFCA's primary business strategy is to become the dominant single financing
source for the chain store  industry.  Over time,  FFCA  developed its strategic
position  in  response to the  capital  markets  and the  changing  needs of its
customers.  When FFCA  became a REIT in 1994,  its main  focus was  providing  a
long-term  lease  product to the chain  restaurant  industry.  Then, in order to
serve those potential customers who wanted to own, rather than lease,  property,
FFCA began  providing  mortgage loan financing in 1995. To further  increase its
product flexibility, FFCA started offering variable rate mortgages and developed
a construction-financing program for its customers. As these products were being
developed, FFCA also began exploring the idea of expanding from chain restaurant
financing to address the financing needs of the convenience store and automotive
aftermarket industries. These industries were targeted by FFCA because they meet
FFCA's existing  investment criteria and the real estate they require is similar
in many respects to the locations chosen by chain  restaurants.  After extensive
research  on these  industries,  FFCA  began  financing  convenience  stores and
automotive  services  and parts  outlets in 1997.  These  industries  are now an
increasing  part of FFCA's total market.  For the year ended  December 31, 2000,
78% of the revenues generated by the portfolio reflect  restaurant  investments,
16% reflect convenience store investments and 6% reflect automotive services and
parts  investments,  as compared to the year ended  December 31, 1996 where over
99% of revenues were reflected in restaurant investments.

                                       10
<PAGE>
     During 1999 and 2000,  FFCA made a strategic  decision to focus on offering
mortgage loan  products,  rather than  long-term  leases,  because they provided
better returns.  As a result,  mortgage loans represented over 95% of FFCA's new
investments in 2000 and this trend is likely to continue. With increasing demand
for FFCA's mortgage financing products, FFCA began exploring alternative sources
of capital.  The result was a three-year  loan sale  agreement  with  Washington
Mutual Bank, FA, a large national  financial  services company,  which decreases
FFCA's  dependence  on the public  capital  markets,  both debt and  equity,  by
providing a consistent  source of capital to fund mortgage loan  products.  This
new  loan  sale  agreement,   along  with  FFCA's  traditional  capital  sources
(including  the mortgage  loan  securitization  market),  has  increased  FFCA's
financial  flexibility by facilitating FFCA's establishment of a whole loan sale
program. FFCA will continue to consider appropriate new investment opportunities
in the future, including the potential expansion of its existing whole loan sale
program to other third party participants.

     FFCA now  provides  financing  to the nation's  three  largest  chain store
industries:  restaurant,  convenience store, and automotive  aftermarket.  These
three chain store industries have so many established locations that the markets
are consolidating more often than growing through new store creation. Because of
this continuing  trend,  financing  existing store locations,  and not new store
construction,  has  accounted  for over 90% of  FFCA's  growth  in the past five
years.

     FFCA  controls  investment  risk by financing  real estate  diversified  by
geographical area, by concept and by operator. As of December 31, 2000, FFCA had
investments in more than 5,400 locations throughout the United States and Canada
(though the amount of FFCA's investments in Canada is not significant).  Much of
FFCA's new  financing  business  comes from  existing  customers.  The financing
transactions  are with  approximately  480 operators  represented  within FFCA's
investment portfolio.  Most of these are multi-unit operators,  though no single
operator  represented  more than 8% of FFCA's total portfolio  revenues in 2000.
These  experienced  multi-unit  operators  conduct  business under nationally or
regionally  recognized brand names. FFCA's portfolio includes  approximately 170
different chains, including such well-known chains as Applebee's, Arby's, Burger
King, Checker Auto Parts, Chevron,  Circle K, Citgo, Hardee's,  Jack in the Box,
Long John Silver's, Midas Muffler Shops, Pizza Hut, 7-Eleven, Taco Bell, Texaco,
Valvoline Instant Oil Change and Wendy's.

     FFCA structures its investments to enhance the stability of its cash flows.
FFCA's  sale-leaseback  transactions are generally  20-year,  triple-net leases,
which provide that the lessees are  responsible  for the payment of all property
operating expenses,  including property taxes,  maintenance and insurance costs.
Therefore,   FFCA  is  generally  not  required  to  make  significant   capital
expenditures in the properties that it owns and leases to chain store operators.
Both FFCA's sale-leaseback and mortgage financings are generally for twenty-year
terms and mortgage  products are generally fully amortizing over the term of the
loans. The sale-leaseback  transactions entered into by FFCA are retained in its
portfolio and generally provide for base rentals plus additional  payments based

                                       11
<PAGE>
upon a  participation  in the  gross  sales  from the  properties  or  specified
contractual  increases.  The mortgage loans originated by FFCA will generally be
sold upon origination under the Washington Mutual loan sale agreement, with FFCA
retaining the mortgage  servicing rights.  Mortgages also may be pooled and sold
in securitized  offerings  where FFCA retains the mortgage  servicing  rights as
well as  interests  in the  securitized  loan  pool in the form of  subordinated
securities.

     FFCA  continually  monitors and  administers its investments to enhance the
stability  of its cash  flows.  Financial  data is  regularly  collected  on the
properties financed by FFCA to determine their profitability. Lease and mortgage
payments are generally  collected by electronic  account debits on the first day
of each month. An in-house  appraisal staff inspects FFCA's properties to assess
asset  condition.  In-house  property  management and legal  services  personnel
administer underperforming and nonperforming leases and loans and also supervise
the in-house  administration  of property  dispositions,  tenant  substitutions,
foreclosures  and  bankruptcies.  FFCA has an  established  record of  resolving
underperforming  and nonperforming  assets, with a current property vacancy rate
of less than 1% and a loan delinquency rate of less than 2%.

INVESTMENT CRITERIA

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

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

     CHAIN  STORE  INVESTMENT  AMOUNT.  FFCA seeks to invest in  properties  for
amounts  that do not exceed the sum of the fair market value of the land and the
replacement cost of the building and improvements.

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

     MARKET  CONSIDERATIONS.  FFCA seeks to emphasize  investments in properties
used by chains having significant area market penetration.

     OPERATING  EXPERIENCE.  FFCA seeks to invest in  properties  of  multi-unit
chain store operators with strong operating and industry backgrounds.

     CREDIT  CONSIDERATIONS.  FFCA  seeks to  invest  in  properties  owned  and
operated by multi-unit  operators with strong overall  corporate  profitability.
FFCA's investments generally have full borrower or tenant recourse,  which means
the borrower or tenant is personally  liable for the obligation.  Many of FFCA's
mortgages  and  leases  also  have  recourse  to  guarantors  who are  owners or

                                       12
<PAGE>
affiliates  of the  borrower  or  tenant.  FFCA  reviews  borrower,  tenant  and
guarantor  financial strength to assess the availability of alternate sources of
payment in the event that cash flow from  operations  might be  insufficient  to
provide the funds necessary to make mortgage or lease payments. In general, FFCA
requires all mortgage loans that are made to the same multi-unit operator or its
affiliates to be both  cross-collateralized and cross-defaulted and requires all
properties  that are leased to the same  multi-unit  chain store operator or its
affiliates to be cross-defaulted.

     STRUCTURAL  ENHANCEMENTS.  FFCA seeks to structure  financings  to maximize
financial security by requiring,  where applicable, the use of bankruptcy-remote
entities, master leases and financial covenants.

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

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

     ENVIRONMENTAL  CONSIDERATIONS.  For each property in which it invests, FFCA
either obtains an environmental  insurance  policy from a third-party  insurance
carrier  or a Phase I  environmental  assessment,  and a Phase II  environmental
assessment or other environmental  tests, if recommended by the related Phase I.
In the case of  properties  FFCA  acquires  or  finances  that have  underground
storage tanks present,  or where other petroleum  products are being  dispensed,
FFCA always obtains environmental insurance.

CHAIN STORE PROPERTIES

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

     FFCA's revenue is generated by a real estate  investment  portfolio that is
diversified by industry, by concept, by geographical area and by operator.  FFCA
finances chain store real estate in three  industries,  representing  over 5,400
locations  throughout  the United States and Canada (though the amount of FFCA's
investments  in Canada is not  significant).  During the year ended December 31,
2000,  78%  of  the  revenues  generated  by the  portfolio  reflect  restaurant
investments, 16% reflect convenience store investments and 6% reflect automotive
services and parts  investments.  FFCA's  portfolio  includes over 170 different
chains.  The  following  table sets forth  FFCA's  revenues  generated  from its
portfolio of chain store properties during the year ended December 31, 2000.

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<PAGE>
                        CHAIN DIVERSIFICATION BY REVENUE
                      FOR THE YEAR ENDED DECEMBER 31, 2000
                             (AMOUNTS IN THOUSANDS)

                                                                  PERCENTAGE
           CHAIN                             TOTAL REVENUES*       OF TOTAL
           -----                             ---------------       --------
        Burger King                             $28,888               13%
        Arby's                                   18,180                8%
        Wendy's                                  12,034                5%
        Long John Silver's                       11,410                5%
        Hardee's                                 11,305                5%
        Jack In The Box                          11,001                5%
        Pizza Hut                                10,303                5%
        Dairy Mart                                4,997                2%
        Taco Bell                                 4,845                2%
        KFC                                       4,308                2%
        Applebee's                                4,212                2%
        7-Eleven                                  4,189                2%
        Clark/On the Go                           4,173                2%
        Quincy's                                  4,051                2%
        Checker Auto Parts                        3,869                2%
        Denny's                                   3,572                2%
        E-Z Serve                                 3,450                2%
        Fuddrucker's                              3,151                1%
        Max & Erma's                              3,018                1%
        Popeye's                                  2,980                1%
        Black Eyed Pea                            2,789                1%
        Midas Muffler Shops                       2,625                1%
        Flying J Travel Plaza                     2,372                1%
        P.F. Chang's                              2,365                1%
        Mrs. Winner's                             2,242                1%

        All other chains                         56,003               26%
                                               --------             ----
                        TOTALS                 $222,332              100%
                                               ========             ====

     * Includes  rental  revenue,  mortgage loan interest income and real estate
investment securities revenue from FFCA's chain store portfolio.

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<PAGE>
     The chain diversification  shown above does not represent  concentration of
specific  operators  under  lease or  mortgage  loan  agreements.  The  lease or
mortgage loan agreements are with approximately 480 operators represented within
FFCA's investment portfolio.  Most of these are multi-unit operators,  though no
single  operator  represented  10% or more of FFCA's  total  portfolio  revenues
during 2000, 1999 or 1998.

INFORMATION SYSTEMS

     To enhance its  investment  evaluation and  origination,  FFCA has invested
extensively  in  information  systems  that  are  specific  to the  chain  store
industry.  FFCA's databases include specific chain restaurant  location data for
over  112,000  locations  in the United  States,  and  demographic  information,
traffic  volumes  and  information   regarding   surrounding  retail  and  other
commercial  development that generate  customer  traffic.  FFCA also maintains a
database of approximately 7,000 chain restaurant industry participants,  as well
as  databases  of  restaurant-level   financial  performance  for  existing  and
prospective clients. FFCA has also developed a competitive database,  similar to
the restaurant  industry  database,  for the convenience  store industry and the
automotive  services and parts  industry.  FFCA has the ability to integrate the
information  in  its  locations,   participants  and  property-level   financial
databases in a geographic  information system that contains demographic,  retail
space,  traffic count and street information for every significant market in the
United  States.  FFCA has also collected  extensive  data  regarding  management
practices  within  the  chain  restaurant  industry,  franchisor  practices  and
industry trends.

     The  information  collected by FFCA is actively  used to assess  investment
opportunities,   measure   prospective   investment  risk,   evaluate  portfolio
performance and manage  underperforming and nonperforming assets. FFCA publishes
extensive research on the chain restaurant and convenience store industries that
include  observations  of industry issues and trends,  areas of growth,  and the
economics of chain restaurant operation. FFCA employs its client and collections
data to develop  statistical  models  that aid in the  evaluation  of  potential
investments.  FFCA  intends to  continually  develop,  improve  and use its real
estate  industry   knowledge   through  research  and  broader   application  of
information  technology to lower portfolio risk, improve performance and improve
its competitive advantage.

     FFCA  continues to invest in its  information  systems  technology.  During
1999, FFCA implemented improvements to its underwriting and origination systems.
In 2000, FFCA designed and implemented a new system for collecting and servicing
monthly payments from clients. These new systems were developed to accommodate a
high  level of  growth  in  FFCA's  origination  and  servicing  activity  while
containing operating costs. In addition to the investments in software, FFCA has
also  implemented a high  availability  Storage Area Network  solution that will
accommodate high volumes of data and provide faster access to data, resulting in
greater operational efficiencies overall.

     FFCA  encountered  no  system or  facilities-related  problems  during  the
rollover to the year 2000.  FFCA performed  extensive  system  verification  and
testing  during the period  January 1st - 3rd, and  determined  that its systems
were operating normally.  FFCA is not aware of any significant  problems related
to the Year 2000 issue and is operating on a "business as usual"  status.  Costs
incurred in addressing Year 2000 issues were not material.

                                       15
<PAGE>
COMPETITIVE CONDITIONS

     The  financing  of chain  store real  estate  for  multi-unit  chain  store
operating companies continues to be both competitive and fragmented. Competition
exists in every  geographic  market in which FFCA  seeks to  invest.  FFCA faces
competition from large banks,  insurance companies,  finance companies,  leasing
companies and other real estate investment trusts in the acquisition,  financing
and leasing of properties.  Some of these  companies  have greater  resources or
access to capital at more  competitive  rates than FFCA,  allowing them to offer
more competitive rates to borrowers.  Competition could negatively affect FFCA's
growth.   In  2001,   FFCA  plans  to  continue  to  make   investments  in  its
portfolio-servicing infrastructure to enhance its competitive position; however,
in order to continue to grow and effectively compete, FFCA also needs to enhance
its access to the capital  markets.  FFCA's  traditional  capital  sources  have
included  the public  debt and equity  markets and the  asset-backed  securities
market, as well as capital sources such as the Morgan Stanley loan sale facility
and FFCA's whole loan sale program.  By broadening  its funding  sources  beyond
these traditional channels and reducing its cost of capital,  FFCA may be better
able to face increased  levels of  competition in the future.  FFCA continues to
explore a number of strategic options to improve its competitive position.

FOODSERVICE INDUSTRY

     In 2000, the foodservice industry recorded sales of $379 billion or 3.8% of
Gross  Domestic  Product,  which  represents a 5.6% increase in sales from 1999,
according  to the  National  Restaurant  Association  ("NRA").  The  foodservice
industry  includes three major segments:  commercial (for example,  restaurants,
snack bars, bars and taverns,  lodging,  food contractors and other commercial),
noncommercial (for example, colleges,  universities and hospitals) and military.
According  to the NRA,  2000  marked  the ninth  consecutive  year of real sales
growth for the  foodservice  industry,  with  average  daily sales  exceeding $1
billion.

     In real terms (constant  dollars),  the  foodservice  industry grew 3.2% in
2000,  compared  to 2.9%  in  1999.  Overall  sales  for  eating  places  (i.e.,
restaurant  industry)  increased 3.5% in real terms,  while commercial sales for
the foodservice  industry  increased 3.4% in real terms. The largest increase in
real   terms   for   the   foodservice   industry   was   in   the   snack   and
nonalcoholic-beverage  bar segment (5.7%),  followed by full service restaurants
(4.6%).  The  fastest-growing  areas of the  U.S.,  the  Mountain  States  (like
Arizona,  Colorado  and  Montana),  are  expected  to show  the most  growth  in
restaurant  sales (8.2%)  between 2000 and 2001. The  slow-growing  Mid-Atlantic
States  (like New York,  New Jersey  and  Pennsylvania)  and East North  Central
States (like Illinois,  Michigan and Ohio) are expected to show 5.0% growth. The
positive U.S. economic  environment and increases in disposable  personal income
have  fueled  the  foodservice  industry's  growth.  If the U.S.  experiences  a
prolonged economic downturn, growth in the foodservice industry may lessen.

                                       16
<PAGE>
     In 2001,  total  foodservice  industry  sales are expected to grow 5.0%, or
2.7% in real terms.  Estimates for real gross  domestic  product  growth in 2001
range from 2.5% to 3.5%, while inflation,  measured by the consumer price index,
is expected to increase 2.8%.  Gross domestic product growth,  however,  may dip
further given growing  evidence of a recession.  Wholesale food prices increased
slightly at 0.4% in 2000, but are expected to decline 0.2% in 2001,  which would
mark the third decline in four years.  This should have a limited impact on menu
prices in 2001. Menu prices increased 2.4% in 2000,  compared to a 3.3% increase
in the consumer price index. This was the first time since 1996 that menu prices
increased  slower  than  inflation.  This trend is expected to continue in 2001,
with menu prices  forecasted  to increase  2.6%.  The increase in menu prices is
primarily  attributable  to increasing  labor costs.  The  foodservice  industry
employs over eight million people,  according to the Bureau of Labor Statistics.
The average  hourly wages for  non-supervisory  employees  within the restaurant
industry rose 4.7% in 2000,  compared to 4.3% for 1999,  while  overall  private
sector wages for non-supervisory  employees increased 3.8% in 2000. 2000 was the
fifth consecutive year restaurant  industry wages grew at a higher rate than the
overall private sector.

     One of the greatest  challenges the  foodservice  industry faces is finding
qualified and motivated labor. With the unemployment rate averaging around 4.0%,
its lowest  level in 30 years,  it is  difficult  for both full service and fast
food restaurants to find qualified and motivated labor.  Operators not only have
the  problem  of  finding  new  employees,  they  must  also  strive to keep the
employees they currently have. Many operators are faced with increasing turnover
rates and declining applicant pools.

     The  availability  of disposable  income is one of the factors that produce
growth  within the  restaurant  industry.  During 1999 and first half 2000,  gas
prices increased, reducing the amount of disposable income available to spend at
restaurants.  If  gasoline  and energy  prices  remain  steady  and the  economy
continues  to slow,  disposable  income  will  decrease  as well.  As a  result,
consumers may choose to trade down in price, eat out less frequently or eat more
meals at home. During economic  downturns this presents a higher risk for weaker
operators or restaurants with higher check averages.

     Full service sales  increased 7.1% between 1999 and 2000, or 4.6% on a real
basis.  In 2001,  full service sales are projected to increase  6.6%, or 4.0% in
real terms.  Based on revised data from NPD ReCount,  the number of full service
restaurants  grew 1.7% in 2000.  The fine dining segment grew the fastest (5.4%)
within  the full  service  sector,  while the number of  restaurants  within the
family dining  segment  decreased 3.0% in 2000. The lack of growth in the number
of units  implies  that full service  restaurants  are  increasing  either their
average  ticket  sales  or  customer  count.  The wide  variety  of  tastes  and
experiences  available  at full  service  locations  are drawing  customers  and
driving sales.  Many full service  operators are heavily targeting takeout food,
which  increases  customer  count.  In  addition,  full service  operators,  who
traditionally  do not heavily  discount,  can raise menu prices more easily than
fast food operators  can. In 2000,  fast food sales  increased  4.5%, or 2.1% in
real terms. For 2001, fast food sales are projected to increase 4.4%, or 1.8% in

                                       17
<PAGE>
real terms. It is expected that fast food margins will be squeezed in 2001, with
anticipated increases in beef and labor costs. The number of fast food locations
grew 1.3% in 2000 compared to 1.6% in 1999.  Record low unemployment  rates mean
more people are working  than ever before,  leaving  less time for  consumers to
prepare meals at home. Convenience continues to drive fast food growth.

     Growth in the number of  restaurants  has  slowed in the past three  years,
with year-to-year  growth averaging less than 1.0% in this time period.  This is
in sharp contrast to the approximate growth of 5.0% in 1995, 1996, and 1997. The
lack of  growth  is  attributable  to  rising  real  estate  prices,  increasing
competition  and  saturation,  lack of prime real estate  locations  and tighter
availability  of  capital.  In  addition,  operators  are  focused on  improving
existing  operations  and growing more slowly than in past to avoid mistakes and
problems caused by too rapid expansion.

     Despite  the  upward  trend in sales,  the  industry  is facing a number of
challenges. These challenges include increased competition, growing expectations
by consumers,  prolonged  labor  shortage  resulting in higher labor costs,  and
other rising costs of doing  business.  Heightened  competition  has led various
strategies in how operators  respond.  Many companies are seeking  opportunities
through expansion of dayparts,  (e.g. growing business in non-traditional  parts
of their operating day such as breakfast or lunch).  In addition,  Co-branding -
locating two different  concepts within a single location enables an operator to
increase sales while lowering construction and labor costs. Furthermore,  adding
a new  concept  through  acquisition  provides  an  additional  path for revenue
growth.  Although  consolidation  has slowed,  consolidation  should continue to
provide  companies with greater  economies of scale and sales growth.  Companies
will be  challenged to find ways to reduce costs  through  technology  and other
means such as conservation.  Presenting a further  challenge to the industry are
the growing  expectations  of consumers  for quality,  consistency  and customer
service, which will become a point of differentiation.

     Overall,  2000 produced  another year of growth both in sales and number of
units for the restaurant  industry.  However,  a fear of an oncoming  recession,
higher energy prices and interest rate hikes during the last half of 2000 appear
to have caused the growth of the economy to slow.  It is  uncertain  whether the
economy will accelerate from its current growth rate and whether the foodservice
industry will continue its current growth rate.

THE CONVENIENCE STORE INDUSTRY

     The convenience store and petroleum  marketing industry is defined as those
retailers  primarily  engaged in the retail sale of gasoline and/or  convenience
products.  Using various  government  and industry  sources,  FFCA estimates the
total size of the industry to be $256.6 billion,  which equates to 2.8% of gross
domestic  product.  The industry total comprises  convenience  store ("c-store")
merchandise, c-stores selling gasoline and gasoline sold apart from c-stores. In
1999, sales increased 13.1%, mainly the result of increased gasoline and tobacco
prices, as well as a 1.5% increase in gasoline gallons sold in the U.S. Overall,

                                       18
<PAGE>
in-store sales increased  15.5% over 1998,  while total gasoline sales increased
11.7%.  Retail  cigarette  prices  increased 31.0% and gasoline prices increased
9.3% in 1999,  heavily  contributing to the overall  increase in industry sales.
The continued growth in the convenience store and petroleum  marketing  industry
has been largely driven by six factors:  (1) higher disposable  personal income;
(2) desire for convenience; (3) increased travel; (4) more vehicles on the road;
(5) industry trends designed to increase c-store demand; and (6) price increases
in key categories.  Recent trends have increased the cost of gasoline, but it is
still low when adjusted for  inflation.  These  conditions,  along with the high
number of  two-income  families,  increasing  wages and lack of free  time,  are
expected  to  continue  to drive the  demand for  convenience-related  goods and
services.

     The  convenience  store and  petroleum  marketing  industry is evolving and
changing to better compete.  These changes include image improvements,  focus on
brand  differentiation,  improved customer service,  technology  improvements to
enhance and  expedite  service,  volatile  oil  prices,  new  location  designs,
consolidation  among large oil companies  (e.g.,  BP, Amoco and Arco;  Exxon and
Mobil), relationship changes between the oil companies and their branded network
and other channels of trade targeting the  convenience and gasoline  businesses.
Technology is helping operators understand their customer base and enhance their
merchandising  and marketing skills to focus their attention on meeting consumer
needs. Merger and acquisition activity is expected to continue,  but may slow in
the short term.  Production  declines,  gaining  access to  increased  reserves,
softening  the  impact  of  volatile  crude  prices  and  reducing  emphasis  on
downstream  activities  led  the  majors  (i.e.,  large,   fully-integrated  oil
companies  such as  ExxonMobil,  BP Amoco,  Shell,  Texaco) to  consolidate  and
streamline  refining  and  marketing  (downstream)  operations.   Benefits  from
economies of scale,  cost reduction and purchasing power are expected to further
fuel merger and acquisition activity.

     Heightened  competition from  non-traditional  retailers  continues to be a
challenge for the c-store industry. Competitors from other retail channels, such
as  supermarkets  and mass  merchandisers,  have both marketers and  traditional
operators  worried about declining  margins if they compete on price and revenue
erosion if they do not.  The lines  between  retail  channels  are  blurring  as
discounters   offer   grocery  items  and  oil  changes,   supermarkets   target
prescription  drug  sales and drug  stores  target  corner  locations  and offer
convenience  items.  Drug stores are  directly  targeting  c-store  customers by
adding  convenience  areas and  locating in  freestanding  buildings or shopping
center pads instead of in-line space.  C-stores,  however,  have advantages over
other channels because they occupy corner  locations,  have the ability to adapt
quickly to changes and are popular with  consumers.  In the face of competition,
operators in the industry need to invest in technology,  adapt quickly to trends
and change,  become  better  retailers  and define their brands in order to more
effectively compete.

     To increase sales,  operators are carefully adding ancillary  services such
as car washes,  lube shops,  financial  services and expanded  foodservice where
sales will be enhanced,  but not at the expense of  convenience.  In the face of

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new competition,  operators are also attempting to increase demand as opposed to
stealing market share. To increase  demand,  the industry is focusing on c-store
operations to attract new demographic groups.

     Like  most  other   retail   sectors,   the   industry  is  becoming   more
consumer-focused  in the face of fierce  competition.  Competition,  technology,
facility upgrades and new services are increasing the cost of doing business, as
are government  regulation,  OPEC and labor issues.  Productivity  increases are
necessary  to  remain  competitive,  which  include  investing  in and  adopting
technologies  such as point-of-sale  scanning and pricebooks,  inventory control
and ordering  systems,  vendor check-in  systems,  data mining and  warehousing,
computer based training,  labor scheduling systems and the Internet.  Technology
allows  operators to control  costs,  cross  merchandise  products,  develop new
services or products and improve  employee  productivity  to increase  sales and
lower product costs. Through consolidation, medium and large chains are becoming
larger and more cost efficient,  while others are refocusing on core markets and
divesting  assets  outside  those  markets,  as  well  as  closing  unprofitable
locations.  These market dynamics place even more pressure on smaller operators,
increasing their likelihood of closure or sale to larger operators.

     According to the National  Association of Convenience  Stores'  NACS/CSNEWS
Industry Databank, shoppers spent a total of $234.0 billion in c-stores in 1999,
42.6% for in-store  (foodservice  and  merchandise)  items and 57.4% in gasoline
sales.  Total  c-store  sales  include  merchandise,  food and gasoline  sold at
c-stores,  but not  gasoline  sold  apart  from  c-stores.  In-store  sales as a
percentage  of total c-store sales have  steadily  decreased  since 1986,  while
gasoline as a percentage  of total sales has steadily  increased.  This reflects
the fact that  more  c-stores  sell  gasoline  and most  marketers  now  operate
c-stores.  Total c-store sales continue to climb,  increasing  25.8% in 1999, up
from a 6.8% (restated)  increase in 1998 and a 5.0% (restated) increase in 1997.
C-store  sales are  expected to  continue to increase  over the next five years,
although at a slower annual pace - 4.5%, or 2.7% real growth.

     At c-stores, in-store sales increased 15.5% over 1998, while total gasoline
gallons  sold  increased  23.3%.  In-store  sales were  primarily  driven by the
increase  in total  number of  c-stores  and  increased  tobacco  prices,  while
gasoline gallons sold was also heavily impacted by the reported  increase in the
number of c-stores.  Total c-store sales have  increased  every year since 1971,
according to the National Association of Convenience Stores.

     The top in-store  product  category in 1999,  by a wide  margin,  was again
cigarettes at 34.9% of in-store sales, followed by foodservice at 13.6%, beer at
11.2%  and  packaged  beverages  at  11.0%.  Other  categories  decreased  as  a
percentage of sales primarily  because the increase in cigarette prices drove up
that  category's  percentage of in-store sales.  These four categories  comprise
over 70% of all in-store  sales,  while the top 10 categories  constitute 87% of
in-store  sales.  The c-store  industry is trying to  decrease  its  reliance on
tobacco and increase sales in other areas. Gross margins for foodservice was the
highest in the top 10 categories and was second only to ice over all categories.
For the industry,  in-store gross profits decreased.  The average in-store gross
margin was 30.0% of in-store  sales in 1999,  down from 31.2% in 1998 and 32% in
1997.

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<PAGE>
     Government  regulation  continues to impact the  industry,  from the EPA to
OSHA to tobacco  regulation  and beyond.  The EPA's  requirements  for  reducing
sulfur  content in gasoline and diesel will greatly impact the industry over the
next several years. OSHA's proposed ergonomics standards,  addressing repetitive
stress  injuries by employees,  could have a profound  impact on the industry as
they are fairly vague and open operators to lawsuits.  Tobacco  legislation  and
various tobacco  settlements  led to over a 50% increase in wholesale  cigarette
prices in the last two years,  affecting a large portion of the industry's sales
and profits.  C-store share of total cigarette sales increased again in 1999, as
many other retail channels have abandoned the category.  Another risk facing the
industry is the increasing feasibility of alternate fuel vehicles, and consumer,
government, automobile manufacturer and oil company focus on these technologies.

     Similar  to  many  other  retail  industries,  the  convenience  store  and
petroleum marketing industry is facing a shortage of employees. The cause of the
shortage is the decline in teenagers and the extremely low  unemployment  level.
Competition for labor is high as all retail channels  scramble to find employees
in this low-unemployment  environment. The industry, which typically pays higher
than minimum wage, needs to continue to do so to attract  employees.  Because of
image  upgrades,  operators now look for  customer-service  oriented  employees,
which puts more pressure on operators to find qualified workers.  Faced with the
difficulty of recruiting labor,  c-store  operators  routinely compete for labor
and hire from one another's staff. In addition,  c-store  operators  compete for
employees with all other retail segments and with  entry-level  white collar and
technical jobs.

     The  c-store  industry  is  facing  new  competition  and  threats  to  key
categories.  Most  companies  in the  industry  are  changing  operations  to be
competitive   and  are  looking  to   technology   to  help  improve  sales  and
profitability.  Gasoline margins have been pressured by rapidly rising crude and
wholesale prices over the past year. C-stores have become the prevailing channel
for cigarette sales,  though margins on this category are pressured.  Given this
environment,  industry executives share many areas of concern.  The top industry
concern is  availability  of labor.  Government  regulation  is a close  second.
Rounding out the top 6 are  competition  within the  industry,  employee  theft,
competition  from outside the industry and tobacco  legislation.  Many  concerns
pertain to the cost of doing  business:  competition,  attracting new employees,
employee theft,  technology and government  regulation.  Despite all the urgency
placed  on  brand  differentiation  through  facilities  and  ancillary  service
offerings,  location and customer service are still viewed to be the key success
factors of a c-store.  Convenient  location and customer  service,  coupled with
competitive  gasoline prices, are ways to generate sales. To increase the bottom
line, operators need to become more efficient,  taking advantage of economies of
scale and scope where possible.

THE AUTOMOTIVE AFTERMARKET INDUSTRY

     The  automotive  aftermarket  industry is defined as products  and services
sold  after  the   initial   purchase   of  a  new  motor   vehicle,   including
non-manufacturer  options at the time of  original  sale.  FFCA  estimates  that

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product and service  sales in the  automotive  aftermarket  were $170 billion in
1999,  up from a revised  $163  billion  in 1998,  based on  several  sources of
industry information  available.  This represents 1.8% of gross domestic product
and 2.7% of personal  consumption  expenditures  in 1999,  unchanged  from 1998.
Total  aftermarket  sales are heavily  correlated  with gross domestic  product,
disposable personal income, vehicle miles driven and vehicle age. Total sales of
$170 billion encompass  aftermarket  product sales and service (including labor)
charges for all cars,  light trucks and heavy trucks,  but does not include auto
body parts,  crash parts,  communication  equipment,  sound  accessories,  audio
equipment,  fuel and  miscellaneous  accessories or the cost of labor  performed
in-house by fleets in their own repair facilities.

     Consumers  have three basic  choices for repairing or  personalizing  their
vehicle: (1) take the vehicle to an automobile dealer; (2) select an independent
mechanic or specialty  chain;  or (3) perform the repair  themselves.  Thus, the
aftermarket  is divided into two segments  based on these  decisions:  parts and
service.  The parts segment is comprised of accessories  and  replacement  parts
that are sold to consumers who typically perform their own vehicle  maintenance.
The service segment  encompasses the sale of professionally  installed parts and
labor to consumers.  The service segment includes such functions as fluids (lube
shops),   under-the-car  (brake  shops),   under-the-hood   (tune-up  shops  and
transmission  shops),  tires,  auto body and paint,  and  combinations  of these
sectors.  Both specialty chains and dealers are included in the service segment.
Most major  chains  generally  specialize  in one  segment or the other.  In the
service segment, some locations are focusing on single services while others are
developing a menu of services to increase the average ticket per customer.

     There are  approximately  370,000  outlets that  compete in the  automotive
aftermarket,  including  automobile  dealers,  specialty and general  repair and
maintenance  shops,  parts  stores,  tire stores,  auto body and paint shops and
service  stations  and  garages.  Most are owned by  independent  operators,  as
evidenced  by the fact  that the top 50 chains in the  aftermarket  account  for
approximately 10% of all outlets,  up from 9%. This implies that chains are more
efficient,  capturing a large share of the market  despite  their having a fewer
number  of units.  Competitive  factors  in the  industry  (for  both  parts and
service)  include  location,  quality of service,  quality of  products,  price,
concept name and recognition and speed of service.

     Competitors  within the  aftermarket  include:  (1) full  service  gasoline
stations;  (2) auto dealerships;  (3) general repair garages;  (4) tire outlets;
(5)  discounters/mass  retail  merchandisers;   (6)  parts  retailers;  and  (7)
specialty repair shops. Specialty repair shops have been a driving factor behind
the growth in the aftermarket.  The specialty  service business  encompasses the
service of specific automotive needs such as mufflers, tune-ups,  transmissions,
paint and bodywork,  oil changes and auto glass.  Some companies  adopt a single
service/product line while others have expanded to multiple lines.

     Maintainers  are persons  responsible  for the repair and maintenance of an
automobile,  truck,  sport utility vehicle or van. A maintainer can be a vehicle
owner, lessee or caretaker.  There are two types of maintainers - vehicle owners
who prefer to repair or  accessorize  their vehicle (or for a friend,  relative,
etc.) themselves,  referred to as  "do-it-yourselfer"  or "DIYer," and those who

                                       22
<PAGE>
prefer  to  have  a  professional   work  on  their  vehicle,   referred  to  as
"do-it-for-me"  or "DIFM."  These two groups are not  mutually  exclusive.  Many
light DIY consumers (for example, those who change their own oil) prefer to take
their   vehicles   to  the   shop   for   more   difficult   or   time-consuming
maintenance/repairs. While DIY sales grew slowly over the past decade, purchased
services and product  sales at DIFM  establishments  increased at a faster rate.
The healthy  economy in recent years and aging  population are changing many DIY
customers into DIFM customers.

     There are  approximately  330,000  service  outlets in the U.S.,  including
specialty  repair  shops,  tire  stores  and  independent  garages  and  service
stations. The top 40 chains account for approximately 9% of the total outlets in
the service  segment.  The  Automotive  Service  Industry  Association  (now the
Automotive  Aftermarket Industry Association)  estimates that chain repair shops
were responsible for 42.1% of sales in 1998, while independent  garages captured
57.9% of sales. By far, the largest group in the industry is independent  repair
shops.  The number of service  stations  and garages  that  perform  auto repair
declined  significantly between 1980 and 2000, slipping from 227,000 to 145,000.
The market share of products installed by mechanics in light cars and trucks has
dropped as well. Most chains in this industry are comprised of small franchisees
(1-5 stores)  rather than large  franchise  operators such as those found in the
restaurant industry.  As a result,  franchisees in this industry rely heavily on
the franchisor for such services as inventory, training, site selection and even
financing.  Independent  shop owners and small  franchisees  often work in their
shops.  This  fact,  in  combination  with  the  growth  of  chains,  increasing
competition,  increasing  cost of technology  and increasing  cost of labor,  is
forcing a change in the  industry.  Chains,  especially  quick lube chains,  are
purchasing  independents.  With industry growth slowing,  many  independents are
fighting for  survival.  This has lead them to (1)  specialize  in services (for
example,  electrical  and engine  rebuilds)  that  chains  choose not to perform
because they are either too hard to estimate  correctly,  too hard to perform to
consumer's  satisfaction  or  unprofitable;  and (2) join service program groups
being created by parts warehouse distributors and jobbers.

     The service  segment is  changing  through  specialization,  consolidation,
assimilation and teaming. Most chains specialize in one or more services.  There
are no real general repair shop chains in the aftermarket.  Specialization,  the
concentration  of  efforts  in a  particular  field  or  activity,  occurs  when
companies  focus on one area of  business  rather  than  being all things to all
people.  Quick lubes are an example of chains that  specialize  in one  service,
while tune-up shops typically offer several services, including tune-ups and oil
changes. Chains specialize for many reasons including:  decreasing bay downtime,
increasing  profitability,   reducing  labor  and  increasing  brand  awareness.
Consolidation  is also  occurring  in the  mature  industry.  Larger  chains are
acquiring  smaller  chains and  independents  to increase  store size and spread
costs over more  locations.  Assimilation  of  independents  through  jobber and
warehouse  program groups is allowing  independents  to have brand awareness and
legitimacy (i.e. customer  confidence) through the program's brand name, as well
as discounts or rebates on purchases.  Teaming/co-branding  typically  occurs to
save construction costs or gain brand acceptance for a concept new to an area.

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<PAGE>
     Specialty stores, a growth area in the DIFM market, have increased business
because customers believe these outlets perform more efficient and accurate work
than  themselves  or  the  local  garage.  These  chains  have  developed  brand
awareness,  and with it, customer  expectations of quality.  Customers' trust in
specialty  stores  has  grown,  as well as trust in the gas  stations  that have
survived.  Quality is the number one factor affecting consumers' choice of where
to get their car  serviced,  according  to a Lang  Marketing  study,  with a 44%
significance  rating.  Following  quality is  convenience  at 29%, price at 14%,
service at 8% and products at 5%. Quality and convenience have both increased in
significance since 1987, with quality  increasing 5% and convenience  increasing
6%, at the expense of service and products.

     While  vehicle   owners  may  desert   dealerships,   choosing   non-dealer
maintenance  options once vehicle  warranties  expire,  extended  warranties and
automobile leasing have strengthened consumers bond with automobile dealers. The
dealer service market product share has increased  since 1990 and is expected to
continue  to increase in the  foreseeable  future,  rising from 23.1% in 1995 to
26.0% in 2000.  Dealers are  targeting  service  sales  because  while parts and
service sales  accounts for less than 20% of total dollar  sales,  they generate
nearly  50%  of  their  profits,  according  to  Lang  Marketing.   Furthermore,
automobile  manufactures believe the heightened focus they and their dealers are
placing on parts and service sales will lead to increased  customer  loyalty and
repeat  purchases.  In addition,  new car  manufacturers are adding options that
used to be exclusively sold in the aftermarket,  such as window tinting and auto
alarms, to increase sales.

     A challenge to the industry is that most  consumers have a "general lack of
desire" to have routine maintenance performed on their vehicles, and the leasing
trend is  encouraging  more of this  attitude.  Many industry  participants  are
focusing on consumer education to ensure that consumers  understand the benefits
of  performing  scheduled  maintenance,  such as higher  resale value and giving
their  vehicle a longer  useful  life.  On the other  hand,  neglecting  regular
maintenance  can cost money  through such  problems as corroded  brakes from not
changing  brake fluid,  engine  seizure from not changing the oil, and replacing
tires more often because they were not rotated.

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 store  properties.  FFCA's  leases and mortgage  loans
impose the primary obligation for regulatory  compliance on the operators of the
chain store properties.  Subject to the environmental  discussion included under
Item  2   "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 chain store  operators to comply with  applicable laws
and  regulations.  In connection  with the origination and servicing of mortgage
loans, FFCA is required to be licensed in numerous  jurisdictions and is subject
to various lending regulations.

                                       24
<PAGE>
     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.  FFCA does not
believe that its business is particularly seasonal. Item 2. PROPERTIES.

     FFCA  provides  real estate  financing  to  multi-unit  operators  of chain
restaurants,  convenience  stores and  automotive  services  and parts  outlets,
primarily through  long-term real estate leases and mortgage loan financing.  At
December 31, 2000,  FFCA had a combined  investment  and servicing  portfolio of
6,224  properties.  Of this total,  FFCA had interests in 5,487  properties  (of
which  2,448  properties  represent  FFCA's  direct  investments  in real estate
mortgage loans and properties  subject to leases and 3,039 properties  represent
securitized  mortgage  loans in which FFCA holds a  residual  interest)  and the
remaining 737 properties represent real estate mortgage loans sold to others but
still  serviced by FFCA.  FFCA's  interests in the 5,487  properties  consist of
investments in 3,499 chain restaurants, 1,634 convenience stores, 345 automotive
outlets and nine other retail properties.

     Of the 2,448 properties included in FFCA's investment portfolio at December
31,  2000,  FFCA has  fee-simple  ownership  in 2,212  properties  (the  "owned"
properties).  The real estate owned by FFCA at December 31, 2000 consists of the
land and buildings  comprising each chain  property,  except for 9 properties on
which FFCA holds title to the land only and made mortgage  loans for the related
buildings (the "hybrid  mortgages").  The properties  owned by FFCA and the land
related  to the  hybrid  mortgages  are  leased  to the  chain  operators  under
long-term net leases. The remaining properties represent mortgage loan financing
transactions  in which FFCA  generally  holds a first  mortgage  on the land and
buildings   comprising  the   properties   (the   "financed   properties").   On
approximately  25 of the financed  properties,  FFCA made mortgage loans for the
buildings and  improvements  and the borrowers lease the land from third parties
under ground leases.

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

     The land size for a typical  fast food  restaurant  generally  ranges  from
30,000 to 45,000 square feet, with original  acquisition costs generally ranging
from $300,000 to $450,000.  Full service  restaurant  land  averages  range from
40,000  to  100,000  square  feet  and  from  $480,000  to  $1,200,000  in  land
acquisition costs. Fast food restaurant  buildings generally range from 1,500 to
4,000  square  feet in size,  with the larger  stores  having a greater  seating
capacity and  equipment area. Site preparation varies depending upon the area in

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<PAGE>
which the fast food  restaurant  is located and on the size of the  building and
site.  Building and site  preparation  costs  generally  range from  $250,000 to
$725,000 for each property. Full service restaurant building averages range from
4,500 to 9,500 square feet and from $550,000 to $1.5 million in building costs.

     Convenience store sizes range from 800 square feet for a gas station with a
store that sells only the fast moving items found in a  traditional  convenience
store (tobacco,  beverages and snacks) to 5,000 square feet for a store that has
a bakery, a sit down restaurant area or a pharmacy (many of these locations also
sell  gasoline).  The typical  convenience  stores  generally range in size from
2,000 to 3,000 square feet,  although new stores  average 3,200 square feet. The
original  investment per new store averages  $1,053,000 for a rural  convenience
store  (approximately  28% land,  38% building and 34% equipment) and $1,422,000
for an urban  convenience  store  (approximately  37%  land,  33%  building  30%
equipment).

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

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

     The  properties,  which FFCA either  purchases or finances,  are subject to
certain  requirements and potential  liabilities under federal,  state and local
environmental  laws.  Certain  environmental  laws impose  liability on property
owners for the presence of hazardous  substances on their properties  regardless
of whether the owner was responsible for the release of such  substances.  Under
some environmental laws, a lender may, under certain limited  circumstances,  be
deemed to be an "owner" or "operator" of a property,  thereby imposing liability
upon such lender for the cost of  responding to a release or threat of a release
of hazardous substances on or from a borrower's property,  regardless of whether
a  previous   owner  caused  the   environmental   damage.   Federal  and  state
environmental  laws have  established  a regulatory  program for the  detection,
prevention and clean up of leaking underground storage tanks.

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<PAGE>
     FFCA's policy with respect to environmental risks, which has been in effect
since  mid-1994,  is that all  properties  which  are to be either  acquired  or
financed shall have been the subject of (a) a Phase I  environmental  assessment
which  concludes  that no further  investigation  is  necessary  (if the Phase I
assessment recommends further investigation, a Phase II environmental assessment
which  concludes  that no  remediation or further action is required) or, (b) an
environmental insurance policy from a third-party insurance carrier.  Properties
acquired  from FFCA's  predecessors  did not have  environmental  investigations
performed  either at the time FFCA acquired the properties from its predecessors
or when such properties were acquired by the predecessor  entities.  FFCA is not
currently a party to any litigation or administrative proceeding with respect to
a property's  compliance with  environmental  standards that could reasonably be
expected to have a material adverse effect upon FFCA.

     In the case of properties  to be acquired or financed in which  underground
storage  tanks are  present or gasoline or other  petroleum  products  are being
dispensed,  FFCA has  adopted  a policy  that  environmental  insurance  must be
obtained for the benefit of FFCA. Such insurance  provides  coverage for certain
environmental remediation,  compliance and clean-up costs incurred in connection
with the  presence  at, or  migration  from,  the insured  property of hazardous
materials and other pollutants, as well as liability to third parties.

     In the case of  properties  financed by FFCA through  mortgage  loans,  the
environmental insurance policy term equals the full term of the related mortgage
loan.  In the event of a loss (as defined in the  policy),  the insurer must pay
the outstanding principal balance due under the applicable mortgage loan, less a
deductible  amount.  With regard to certain of the policies that were  purchased
prior to 1999,  in the event of a loss,  the insurer  must pay the lesser of (a)
the cost of  remediation  and  other  clean-up  costs and  expenses,  or (b) the
outstanding  principal  balance due under the applicable  mortgage loan,  less a
deductible amount. In the case of properties  acquired by FFCA in sale-leaseback
or similar  transactions,  title is  acquired  in the name of a special  purpose
subsidiary  of FFCA  formed  solely for the  purpose  of  holding  title to such
properties.  The  environmental  insurance  policy  that is  issued  where  FFCA
purchases  the  property  is for a term of 20 years,  subject  to  renewals  for
ten-year  periods.  In assessing  the  environmental  risk  associated  with the
ownership  of  potentially  contaminated  real  property,  FFCA obtains from its
insurer  an  environmental  risk  assessment  upon  which it bases its  decision
whether to purchase a given  property  and the amount of coverage to obtain.  In
all instances where it is purchasing  property,  it is FFCA's policy to purchase
coverage in an amount  equal to 100% of the  worst-case  estimate of the cost of
remediation  as determined by the  environmental  insurer,  less the  deductible
amount.

     FFCA's lease and mortgage loan documents  require each chain store operator
to make any  expenditure  necessary to comply with applicable laws and as may be
required under any applicable franchise agreement;  therefore, FFCA is generally
not required to make capital  expenditures  in  connection  with any property it
finances.  There were no capital  expenditures  on  properties  in 2000 or 1999.
Capital expenditures amounted to approximately $120,000 in 1998.

     As of February 28, 2001,  FFCA owned or had  financed  approximately  6,270
properties.  All but 83 of the properties  were being leased or were  performing
under a  mortgage  loan  agreement.  These  nonperforming  properties  are being
actively remarketed for lease or sale. Vacant properties held for sale represent
approximately one percent of FFCA's total real estate investment portfolio.

                                       27
<PAGE>
     FFCA invests in chain store real estate  throughout the United  States.  No
one property is a principal property of FFCA,  because each property  represents
less than one half of one percent of FFCA's total  assets.  Reference is made to
the Schedule of Real Estate and  Accumulated  Depreciation  (Schedule III) filed
with this Report for a summary of the  geographic  diversity  of the  properties
owned by FFCA as of December 31, 2000. In addition,  FFCA has financed,  through
mortgage loans,  certain chain store  properties  located  throughout the United
States  and in  Canada  (though  investments  in  Canada  are not  significant).
Reference is made to the Schedule of Mortgage Loans on Real Estate (Schedule IV)
filed with this Report for a summary of properties financed through mortgages in
FFCA's held-to-maturity  portfolio. FFCA has also originated mortgage loans held
for sale, which total $164 million at December 31, 2000. Generally,  these loans
are first mortgage loans on the land, buildings and/or equipment of restaurants,
convenience  stores or automotive  services and parts  outlets.  The  properties
financed through these mortgage loans are geographically  diverse,  ranging from
4% located in the  Pacific  and  Northeast  regions of the United  States to 34%
located in the Southeast region to 3 properties located in Canada.

     During 2000,  approximately  68% of FFCA's  revenues were derived from real
estate investments leased to chain store operators.  The leases are generally 15
to 20 years in length with two or four five-year renewal options. The expiration
schedule of the initial terms of FFCA's  leases  extends  through  2020,  with a
weighted term of such  investments of  approximately 12 years as of December 31,
2000.  Eleven percent of FFCA's  investments in properties  subject to operating
leases  have terms that expire in the year 2005 and 2017 and 10% expire in 2019.
In all other  years,  expiring  leases  represent  less than 10% of total  lease
investments.

     The  FFCA  corporate  headquarters  is  located  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
are owned by a subsidiary of FFCA.  FFCA rents 3,300 square feet of office space
in a  building  adjacent  to its  headquarters  under a lease  at  approximately
$75,000 per year plus common area expenses.  As of January 2001,  FFCA subleased
this space through the remaining term of the lease.  In July 2000,  FFCA entered
into a 5-year  lease  agreement  for 20,000  square  feet of office  space in an
adjacent building for approximately $320,000, plus common area expenses and rent
escalation  provisions.  In September 2000, FFCA purchased a parcel of land (3.6
acres) for  approximately  $1.9  million from an  affiliate.  The land parcel is
located adjacent to FFCA's current  corporate  headquarters site and may be used
for the future expansion of FFCA's corporate headquarters.

                                       28
<PAGE>
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, 2000.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

MARKET INFORMATION

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

                                          SALES PRICES
                                       -----------------            DIVIDENDS
FISCAL 2000                            HIGH          LOW            DECLARED
-----------                            ----          ---            --------
Fourth Quarter                       $23.875       $20.063           $ .56
Third Quarter                         25.250        22.188             .53
Second Quarter                        25.250        21.688             .53
First Quarter                         24.938        22.250             .53
                                                                     -----
                                                                     $2.15

                                          SALES PRICES
                                       -----------------            DIVIDENDS
FISCAL 1999                            HIGH          LOW            DECLARED
-----------                            ----          ---            --------
Fourth Quarter                       $24.500       $20.813           $ .53
Third Quarter                         24.188        21.188             .49
Second Quarter                        25.250        20.750             .49
First Quarter                         25.563        20.125             .49
                                                                     -----
                                                                     $2.00

     Future  distributions  will be  dependent  upon cash flow from  operations,
financial position and cash requirements of FFCA. Management of FFCA anticipates
that  cash  generated  from  operations  will be  sufficient  to meet  operating
requirements  and provide  the level of  shareholder  distributions  required to
maintain its status as a REIT.

HOLDERS

     There were 14,645  holders of record of FFCA's shares of common stock as of
February 19, 2001;  however,  FFCA believes the total number of  shareholders of
FFCA to be approximately 62,000 since nominees hold certain shares.

DIVIDEND REINVESTMENT PLAN

     FFCA has a dividend  reinvestment plan which allows shareholders to acquire
additional shares of FFCA common stock by automatically  reinvesting  dividends.
Additional  shares  acquired under the plan may be newly issued shares or shares
acquired on the open market.  Shareholders  who do not  participate  in the plan
continue to receive dividends as declared. As of February 19, 2001, shareholders
owning approximately 6% of the outstanding shares participate in the plan.

                                       29
<PAGE>
ITEM 6. SELECTED FINANCIAL DATA.

     The selected financial data presented in the table below summarizes certain
consolidated financial information of FFCA and its wholly owned subsidiaries for
the five years in the period ended December 31, 2000.

                             SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
In thousands, except per share data                       2000            1999           1998           1997           1996
                                                       ----------      ----------     ----------     ----------     ----------
<S>                                                    <C>              <C>             <C>             <C>             <C>
OPERATIONS DATA
  Total revenues                                       $  232,495      $  218,475     $  169,568     $  134,988     $  121,166
  Income before gain on sale of property and other        107,607         107,744         85,182         65,707         60,036
  Gain on sale of assets (a)                               39,187          40,983         10,535          5,471          9,899
  Income before provision for income taxes                148,421         148,727         95,717         72,897         68,539
  Provision for income taxes (b)                            5,617              --             --             --             --
  Income before cumulative effect of a change in
   accounting principle                                   142,804         148,727         95,717         72,897         68,539
  Cumulative effect of implementing SAB 101(c)             (2,272)             --             --             --             --
  Net income                                              140,532         148,727         95,717         72,897         68,539
  Dividends declared                                      121,065         115,275         93,004         75,004         72,846
  Earnings per share, assuming dilution:
    Income before gain on sale of property and
     other costs                                       $     1.90      $     1.94     $     1.78     $     1.59     $     1.48
    Income before provision for income taxes           $     2.62      $     2.68     $     2.00     $     1.76     $     1.69
    Income before cumulative effect of a change in
     accounting principle                              $     2.53      $     2.68     $     2.00     $     1.76     $     1.69
    Net income                                         $     2.48      $     2.68     $     2.00     $     1.76     $     1.69
  Dividends declared per share                         $     2.15      $     2.00     $     1.90     $     1.82     $     1.80
  Weighted average common and common equivalent
   shares outstanding                                      56,554          55,505         47,908         41,333         40,603

BALANCE SHEET DATA
  Real estate owned, at cost                           $1,444,233      $1,474,758     $1,274,600     $  951,305     $  868,215
  Mortgage loans receivable                                59,588          57,996         43,343         35,184         57,808
  Mortgage loans held for sale                            163,572         139,703        163,172        251,622             --
  Note receivable from affiliate (d)                           --              --             --             --        147,616
  Other investments                                       197,549         199,381        127,923         82,303         37,836
  Total assets                                          1,700,879       1,710,796      1,460,429      1,179,198        988,776
  Notes payable                                           617,756         501,859        500,168        309,360        298,956
  Borrowings under line of credit                         106,000         238,000        188,000        302,000        150,500
  Other debt                                                   --           8,500          8,500          8,500          8,500
  Shareholders' equity                                 $  918,596      $  903,632     $  716,434     $  522,996     $  495,370
</TABLE>

----------
(a)  Results  of  operations  may be  largely  impacted  by gains on the sale of
     properties or as a result of  securitization  transactions.  Of the gain on
     the sale of assets reported in 2000,  1999, and 1998,  $9.9 million,  $36.1
     million,  and  $7.1  million,   respectively,   relates  to  securitization
     transactions  completed in those years and $24.7 million in 2000 relates to
     gains on whole loan sales.
(b)  Income taxes are specific to FFCA's taxable REIT  subsidiary,  FFCA Funding
     Corporation, formed in January 2000.
(c)  FFCA implemented the Securities and Exchange  Commission's Staff Accounting
     Bulletin 101 (SAB 101) in the fourth  quarter of 2000.  This new accounting
     principle  changes  the  timing of the  recognition  of  contingent  rental
     revenues.
(d)  Note receivable from FFCA's former  affiliate,  FFCA Mortgage  Corporation,
     which was dissolved in 1997, represents mortgage loans held for sale by the
     affiliate.

                                       30
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

GENERAL

     Franchise Finance Corporation of America is a self-administered real estate
investment  trust ("REIT")  which  provides real estate  financing to multi-unit
operators of chain restaurants,  convenience stores and automotive  services and
parts outlets.  Franchise  Finance  Corporation of America and its  subsidiaries
(collectively  "FFCA")  offer  financing  through  various  products,  including
mortgage  loans,  equipment  loans,  construction  financing and long-term  real
estate leases.  At December 31, 2000,  FFCA's combined  investment and servicing
portfolio represented 6,224 properties (including chain store loans serviced for
others). FFCA had interests in 5,487 properties representing  approximately $1.9
billion in gross  investments in chain store properties  located  throughout the
United States and in Canada (although the amount of FFCA's investments in Canada
is  not   significant).   In  addition  to  this   geographic   diversification,
approximately  480  different  operators  in  approximately  170  retail  chains
comprise the portfolio.  FFCA's investment  portfolio included 2,448 chain store
properties  represented  by  investments  in  real  estate  mortgage  loans  and
properties  subject to leases and 3,039  properties  represented  by securitized
mortgage loans in which FFCA holds a residual interest.

LIQUIDITY AND CAPITAL RESOURCES

     In 2000, FFCA originated $909 million in new real estate  financings.  With
over 900 properties financed during 2000, FFCA's cumulative  investment activity
now totals  nearly $4.4  billion  since the  formation of the REIT in June 1994.
FFCA's strategic decision to focus on offering mortgage loan products to provide
better  shareholder  returns  resulted in a three-year  loan sale agreement with
Washington  Mutual Bank, FA, effective  through December 31, 2002;  accordingly,
mortgage  loans grew to  represent  over 95% of new  investments  during 2000 as
compared to 81% in 1999 and 58% in 1998. The investment  level in 2000 decreased
33% from the $1.36 billion invested in 1999. This was due in part to the reduced
transaction  volume associated with the transition  required to implement FFCA's
whole loan sale program,  increased interest rates and a reduction in the number
of financings of large  transactions ($100 million or more). The 1999 investment
level  represented  an increase of 46% over 1998's  investments of $928 million,
due primarily to FFCA's  expansion  into the  convenience  store and  automotive
parts and service industries that began at the end of 1997.

     Under the Washington Mutual loan sale agreement,  a taxable REIT subsidiary
of FFCA  originates  loans and  simultaneously  sells them to Washington  Mutual
while FFCA retains the servicing rights on the loans sold. Under this agreement,
FFCA has certain limited  contingent  recourse  obligations  with respect to the
performance  of the  loans.  Washington  Mutual  effectively  funds the loans at
origination;  therefore FFCA does not require significant liquidity or access to
capital  to  originate  these  loans.  During  2000,  approximately  half of the
mortgage  loans  originated  were  sold  to  Washington  Mutual.   FFCA's  other
investment  activities  are funded  initially by draws on its  revolving  credit
facilities and cash generated from  operations.  At December 31, 2000,  FFCA had
$244 million  available on its bank revolving loan facility and had $530 million
available on its $600 million Morgan Stanley loan sale facility described below.
During  2000,  FFCA  renewed its $350 million  unsecured  bank credit  facility,
extending  $235  million to September  2003 and $115  million to September  2001
(with options to further extend).  This revolving credit facility bears interest
at a spread above the one-month LIBOR rate for a weighted  average interest rate
of 7.37% in 2000 as compared to 6.36% in 1999 and 6.57% in 1998.  This  facility

                                       31
<PAGE>
is used to fund mortgage  loans until a  sufficiently  large and diverse pool of
loans is  accumulated  to  warrant  the sale of the  mortgage  loans  through  a
securitization transaction or other loan sale arrangement.  Borrowings under the
revolving  credit  facility  totaled  $403  million in 2000 (as compared to $887
million  in 1999 and $738  million  in  1998).  Cash  proceeds  from the sale of
property,  the collection of mortgage loan and note  principal  payments and the
receipt  of  mortgage  loan and note  payoffs,  aggregating  approximately  $131
million in 2000 (as  compared to $85 million in 1999 and $101  million in 1998),
were also available to fund new investments.

     While FFCA primarily intends to originate mortgage loans for sale under its
whole loan sale program, it will likely continue to securitize loans. FFCA has a
$600 million loan sale facility with Morgan Stanley  Securitization Funding Inc.
(the "Morgan Stanley loan sale facility"). The Morgan Stanley loan sale facility
permits  FFCA to sell  loans on a  regular  basis to a trust,  until  the  trust
accumulates  a  sufficiently  large  pool of  loans  for sale  through  a larger
securitization  transaction.  FFCA acts as servicer for the loans following sale
to the trust.  FFCA sold mortgage loans with an aggregate  principal  balance of
$357  million  during  2000,  $1 billion  during  1999 and $264  million in 1998
through this loan sale facility,  receiving $295 million,  $862 million and $225
million, respectively, in cash proceeds plus trust certificates representing the
remaining 15%-20% of the loan sale price. The trust  certificates are held until
the  loans  are sold by the  trust  at which  time  FFCA  receives  subordinated
certificates of the subsequent  securitization  and any excess proceeds received
by the trust from the loan sale. The mortgage loans  originated by FFCA and sold
into the Morgan Stanley loan sale facility,  totaling $406 million in 2000, $1.1
billion  in 1999,  and  $335  million  in 1998,  were  securitized  and  Secured
Franchise Loan Trust  Certificates were sold to investors.  The majority of each
securitized  loan  pool was sold to  third  parties,  while  FFCA  retained  the
subordinated  investment  securities ranging from 9% to 10% of the mortgage loan
pools' balance. The amount of real estate investment securities held at December
31,  2000  decreased  from  the  amount  held at  December  31,  1999 due to the
differing  subordination  levels required for the trust certificates as compared
to the held-to-maturity certificates of the securitization transactions.

     As of January 1, 2001,  the loan sale  facility was renewed at a commitment
level of $600 million  through  December 31, 2001. As of February 16, 2001, FFCA
had $531 million available on this loan sale facility and $272 million available
on its $350 million bank revolving loan facility.

     FFCA raised a total of $146 million  through the sale of 6.7 million shares
of common stock in 1999 and $183 million  through the sale of 6.9 million shares
in 1998,  but did not  access the equity  markets in 2000.  With the  Washington
Mutual  loan  sale  agreement  in  place,  FFCA  has  reduced  its  reliance  on
shareholder equity as a source of capital to fund its continuing growth and does
not anticipate raising capital through the issuance of stock during 2001.

     FFCA  accessed the debt markets by issuing $265 million in unsecured  notes
during 2000, $150 million of which replaced the 7% Senior Notes which matured in
November  2000. The weighted  average  interest rate of the notes issued in 2000
was 8.7%.  FFCA did not access  the debt  markets  in 1999,  but  issued  $197.5
million in unsecured notes in 1998 at a weighted  average rate of 7.95%.  FFCA's
cost of debt  increased  during  2000 as  compared  to 1998,  commensurate  with
overall  changes in the interest  rate  environment.  Turbulence  in the capital
markets  during 1998 impacted  FFCA's cost of borrowings  that year,  which rose
despite prevailing lower long-term home mortgage and government  borrowing rates
during that period.  As future debt  maturities are  refinanced,  FFCA's cost of
debt will  continue to be  impacted  by changes in the  capital  markets and the
overall interest rate environment.

                                       32
<PAGE>
     FFCA faces  competition  from large  banks,  insurance  companies,  finance
companies,  leasing  companies  and other real estate  investment  trusts in the
acquisition,  financing and leasing of properties.  Some of these companies have
greater  resources  or access to  capital at more  competitive  rates than FFCA,
allowing them to offer more competitive  rates to borrowers.  Competition  could
negatively  affect  FFCA's  growth.  In 2001,  FFCA  plans to  continue  to make
investments in its portfolio-servicing infrastructure to enhance its competitive
position;  however, in order to continue to grow and effectively  compete,  FFCA
also needs to enhance  its access to the  capital  markets.  FFCA's  traditional
capital  sources  have  included  the  public  debt and equity  markets  and the
asset-backed  securities  market, as well as capital sources such as FFCA's loan
sale facility and its loan sale agreement with Washington Mutual.  Volatility in
the debt and equity markets makes these  traditional  capital  sources  somewhat
unreliable.  By broadening its funding sources beyond these traditional channels
and  reducing  its cost of capital,  FFCA may be better  able to face  increased
levels of competition in the future.

     FFCA  continues  to explore a number of  strategic  options to improve  its
competitive  position.  During 2001,  FFCA plans to explore the expansion of its
existing  whole loan sale  program to include a broad range of other third party
participants.  In  addition,  FFCA  continues  to explore the sale of  ancillary
financial services products to its customer base.  Currently,  FFCA's whole loan
sale  program  is  primarily  dependent  on  the  Washington  Mutual  loan  sale
agreement,  which  expires  December  31,  2002.  There  is  no  obligation  for
Washington  Mutual to renew  the  arrangement  upon  expiration.  Moreover,  the
agreement with Washington Mutual does not obligate Washington Mutual to purchase
all of FFCA's loans. Washington Mutual may elect not to purchase loans from FFCA
because of concentration  issues,  underwriting  criteria, or for other reasons.
Additionally,  because Washington Mutual is a regulated lending institution, its
ability to  continue  to  purchase  loans from FFCA may be subject to changes in
regulations affecting these institutions. During 2000, approximately half of the
mortgage loans originated were sold to Washington Mutual.

     Although  FFCA intends to  originate  loans for sale through its whole loan
sale program,  FFCA may continue to securitize  mortgage loans.  Several factors
affect  FFCA's  ability to  complete  securitizations  of its  loans,  including
conditions in the securities markets generally, conditions in the franchise loan
sector of the asset-backed  securities markets specifically,  the credit quality
of FFCA's loans,  compliance of FFCA's loans with the  eligibility  requirements
established  by the  securitization  documents  and the absence of any  material
downgrading  or  withdrawal of ratings  given to  certificates  issued in FFCA's
previous  securitizations.  Volatility  in the credit  markets may impair FFCA's
ability to successfully securitize its loans in the future.

     At December 31,  2000,  FFCA's  outstanding  commitments  to extend  credit
aggregated  approximately $245 million. These commitments were made to operators
who operate chain restaurants,  convenience  stores and automotive  services and
parts outlets,  to acquire or finance (subject to FFCA's customary  underwriting
procedures) over 230 chain store properties over the next year. FFCA anticipates
funding  these  specific  commitments,  and  other  investments  in chain  store
properties,  through amounts available on its bank line of credit and the Morgan
Stanley loan sale facility,  the issuance of mortgage-backed  securities through
securitization and through FFCA's whole loan sale program.

     For the fourth  quarter,  the Board of Directors  approved  raising  FFCA's
quarterly  dividend  to $0.56 from $0.53 per share.  This  dividend  was paid on
February  20, 2001 to  shareholders  of record on  February 9, 2001.  Management
anticipates  that cash  generated  from  operations  will be  sufficient to meet
operating  requirements and provide the level of shareholder  dividends required
in maintaining  FFCA's status as a REIT. FFCA has a dividend  reinvestment  plan
that  allows  shareholders  to  acquire  additional  shares  of  FFCA  stock  by
automatically  reinvesting  their quarterly  dividends.  As of February 2, 2001,

                                       33
<PAGE>
shareholders  owning  approximately 6% of the outstanding  shares of FFCA common
stock  participate in the dividend  reinvestment  plan and dividends  reinvested
during 2000 totaled $8.2  million,  as compared to $7.2 million in 1999 and $6.1
million in 1998.  Beginning  with the  dividend  paid in November of 2000,  FFCA
purchased its dividend  reinvestment  plan shares in the open market rather than
issuing new shares.  Under FFCA's dividend  reinvestment  plan, common stock for
the  accounts of plan  participants  may be  purchased  from FFCA (newly  issued
shares with a 2%  discount),  in the open market or in  negotiated  transactions
with third parties.

     In  December  1999,   FFCA's  Board  of  Directors   adopted  a  resolution
authorizing  the  repurchase of up to 7.5% of the company's  outstanding  common
stock from time to time in open  market or  privately  negotiated  transactions.
Through December 31, 2000, FFCA repurchased  582,200 shares, or 14% of the total
shares authorized to be purchased. The timing of future purchases and the actual
number of common shares purchased will depend on market conditions and available
cash flow.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

     FFCA invests in certain  financial  instruments that are subject to various
forms of  market  risk  such as  interest  rate  fluctuations,  credit  risk and
prepayment  risk.  FFCA's  primary  exposure is the risk of loss that may result
from the  potential  change in the value of its mortgage  loans and  investments
held for sale as a result of changes in interest rates.

     FFCA manages its exposure to changes in interest  rates  through the use of
interest  rate  agreements  (primarily  interest  rate  swap  contracts)  and by
matching the use of  variable-rate  and fixed-rate debt with  variable-rate  and
fixed-rate  investments.  Other than investments in chain store loans made under
its  whole  loan  sale  program,  which  are  funded  by  the  loan  buyer  upon
origination, FFCA initially funds its investments in chain store properties with
borrowings  on its  variable-rate  credit  facility.  Investments  in fixed-rate
leases are then match-funded through the issuance of fixed-rate debt. The credit
facility is also used to warehouse mortgage loans until a sufficiently large and
diverse pool is  accumulated to warrant the sale of the mortgage loans through a
securitization  transaction or other loan sale arrangement.  Generally, from the
time  fixed-rate  mortgage  loans  are  originated  until the time they are sold
through a  securitization  transaction,  FFCA  hedges  against  fluctuations  in
interest rates through the use of derivative  financial  instruments.  FFCA does
not hold or issue derivative financial instruments for speculative purposes. The
instruments used are interest rate agreements that are non-leveraged and involve
little complexity. FFCA is exposed to credit loss in the event of nonperformance
by the counterparties to the interest rate contracts.  FFCA minimizes its credit
risk on these transactions by only dealing with leading, credit-worthy financial
institutions and, therefore, does not anticipate nonperformance.

     At December 31, 2000,  FFCA had interest  rate swap  contracts  outstanding
with a notional  amount  aggregating  $28.8 million.  The notional amount serves
solely as a basis for the  calculation  of payments to be exchanged and is not a
measure  of the  exposure  of FFCA  through  its use of  derivatives.  Under the
interest  rate  swap  contracts,  two  parties  agree  to swap  payments  over a
specified  period where one party agrees to make  payments at a specified  fixed
rate and the other  party to the  contract  agrees to make  payments  based on a
floating  rate.   FFCA  intends  to  terminate  these  contracts  upon  sale  or
securitization  of the  fixed-rate  mortgage  loans in 2001,  at which time FFCA
would  generally  expect to receive  (if rates  rise) or pay (if rates  fall) an
amount equal to the present value of the  difference  between the fixed rate set
at the beginning of the interest rate swap contract and the then-current  market
fixed rate at the time of termination.

                                       34
<PAGE>
     FFCA  estimates  that a  hypothetical  one  percentage  point  increase  or
decrease  in  long-term  interest  rates at December  31, 2000 would  impact the
financial  instruments  described  above and result in a change to net income of
approximately  1%.  This  sensitivity   analysis  contains  certain  simplifying
assumptions (for example,  it does not consider the impact of prepayment risk or
credit  spread  risk).  Therefore,  although  it gives an  indication  of FFCA's
exposure to interest  rate changes at December  31, 2000,  it is not intended to
predict future results and FFCA's actual results will likely vary.

         FFCA is subject to credit risk on its  portfolio of mortgage  loans and
real estate investment securities held to maturity.  FFCA addresses its exposure
to credit risk by maintaining diversity in its portfolio by industry, geographic
area, chain and operator. In addition,  FFCA maintains disciplined  underwriting
standards and actively manages its portfolio.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 2000 COMPARED TO YEARS ENDED DECEMBER 31, 1999 AND 1998

     Revenues  rose to $232  million in 2000 from $218  million in 1999 and $170
million  in 1998  due to  increases  in  rental  revenues,  primarily  from  new
sale/leaseback properties acquired. Increased income from real estate investment
securities  also  contributed to the growth in revenues in 2000 and 1999, due to
additional  loan  securitization   transactions.   Income  before  realized  and
unrealized gains remained stable at $108 million in 2000 and 1999 as compared to
$85  million  in 1998.  FFCA had net  income of $141  million  ($2.48 per share,
assuming dilution) in 2000 as compared to $149 million ($2.68 per share) in 1999
and $96  million  ($2.00  per  share) in 1998.  The  decrease  in net income was
primarily  attributable  to income  tax  expense  on  FFCA's  new  taxable  REIT
subsidiary  and to the  cumulative  effect of a change in  accounting  principle
related to the timing of the recognition of certain contingent rental revenues.

     FFCA's primary source of revenues continues to be rental revenues generated
by its  portfolio  of chain store  properties  that are leased to operators on a
triple-net  basis.  New  investments  in property  subject to  operating  leases
totaled  $41  million in 2000,  $258  million in 1999 and $365  million in 1998.
Rental revenues  represented 68% of total revenues in 2000 as compared to 69% in
1999 and 72% in 1998.  FFCA's focus on mortgage loan financing has decreased the
amount of  sale/leaseback  properties  added to the  portfolio  during 2000 and,
accordingly,  the growth rate in rental  revenues for 2001 is likely to be lower
than 2000's  growth  rate.  Most of the  increase in rental  revenues  this year
related to rental  revenues  on  properties  acquired  in 1999 (most  properties
acquired  in 1999 did not have a full year of  revenue  reflected  until  2000).
Generally,  property purchases occur throughout the year,  resulting in weighted
average balances for new sale/leaseback investments of $26 million in 2000, $129
million in 1999 and $145 million in 1998. With FFCA's focus on originating loans
under the Washington  Mutual loan sale agreement,  investments in sale/leaseback
properties are not expected to be significant and, accordingly,  rental revenues
are not  expected  to  increase  at the same rate as they  have in prior  years.
Weighted  average base lease rates on the new investments  were 10.2% in 2000 as
compared to 9.9% in 1999 and 1998.  Partially  offsetting the revenue  increases
generated by the new  investments  were  decreases in rent  revenues  related to
properties sold.

     During 2000, rental revenues were negatively impacted by a monetary default
relating  to 97 family  dining  restaurants,  impacting  net income by $0.14 per
share.  FFCA terminated the master lease on these 97 properties on May 31, 2000.
FFCA  also  took a deed in  lieu  of  foreclosure  on 15  additional  properties

                                       35
<PAGE>
securing  certain  related  loans.  As of March 1,  2001,  42 of the  restaurant
properties  have been relet under long-term  leases and lease  agreements are in
process for an additional 4 properties. Of the remaining properties, 9 have been
sold  for  a net  gain  of  approximately  $210,000,  26  properties  have  sale
agreements in process and 31 properties are being remarketed for sale or lease.

     Approximately  one-half of the properties  owned by FFCA provide for a base
rental plus  contingent  rentals based on a percentage of the  operator's  gross
sales of the related  chain  stores.  In  addition,  a small  percentage  of the
mortgages  originated  by  FFCA  provide  for  additional  interest  based  on a
percentage  of the  operator's  gross sales of the related  chain  stores.  Such
contingent  rentals and additional  interest  aggregated $7.4 million in 2000 as
compared to $8.3 million in 1999 and $7.9 million in 1998.  The decrease in 2000
is due to the adoption of Staff Accounting Bulletin 101, "Revenue Recognition in
Financial  Statements".  This new  accounting  guidance  requires  companies  to
recognize  contingent  rentals as revenue when the change in the factor on which
the contingent lease payment is based actually occurs.  Prior to the adoption of
Staff Account  Bulletin  101,  FFCA  recognized  estimated  contingent  revenues
ratably  throughout  the year when it was probable that a property  would exceed
the sales threshold where percentage rental revenues were due, with verification
of the actual  amount of  percentage  revenues due received from the operator at
various times during the year, based on the operator's  reporting  requirements.
The impact on FFCA's  December 31, 2000 financial  statements was to delay until
2001 the  recognition of contingent  rental revenue under SAB 101 that otherwise
would have been  recognized  in 2000 under FFCA's  previous  accounting  method.
Generally,  leases  without the  contingent  rental  provision  provide for rent
increases  during the lease term based on increases in the consumer  price index
or other rent escalation features.

     Mortgage  interest income was 11% of revenues in 2000 as compared to 13% of
revenues in 1999 and 15% in 1998. FFCA originated $864 million in mortgage loans
in 2000,  $1.1  billion in 1999 and $534 million in 1998.  FFCA  received a loan
origination fee upon origination of each loan. The decrease in mortgage interest
income  in  2000  is due to a  greater  percentage  of  loans  being  sold  upon
origination,  rather than being  temporarily  held in FFCA's  portfolio  pending
securitization.  The amount of mortgage  interest income generated each year has
been  impacted  by the  amount  of loans  originated  for sale each year and the
timing of the sale of these loans.  Although  FFCA no longer  receives  mortgage
interest  income from the mortgages it sells, it receives fees for continuing to
service  the loans.  In  addition,  when loans are sold  through  securitization
transactions,  FFCA receives income from the subordinated  investment securities
that it  retains  in  connection  with  the  securitizations.  These  securities
generate  revenues  that are  included  in "Real  Estate  Investment  Securities
Income" in the  accompanying  financial  statements and represented 17% of total
revenues  in 2000 as  compared  to 14% in 1999 and 8% in 1998.  Though  mortgage
loans are generally  originated for sale or securitization,  a portion of FFCA's
investment portfolio, approximating $60 million in 2000 and $58 million in 1999,
represents  mortgage loans  receivable  that are not being held for sale.  These
loans generally have short maturities or other loan features that make them less
marketable  for sale or  securitization  transactions.  FFCA plans to hold these
loans to maturity.

                                       36
<PAGE>
     FFCA's revenue is generated by a real estate  investment  portfolio that is
diversified by industry, by concept, by geographical area and by operator.  FFCA
finances chain store real estate in three  industries,  representing  over 6,200
locations  throughout the United States and Canada (though investments in Canada
are not  significant).  During  the year ended  December  31,  2000,  78% of the
revenues generated by the portfolio reflect restaurant investments,  16% reflect
convenience  store  investments  and 6% reflect  automotive  services  and parts
investments,  as compared to 78%, 17% and 5%,  respectively,  in 1999.  With the
addition of the convenience  store and automotive  services and parts industries
in 1997,  FFCA's  portfolio has expanded to include over 170  different  chains,
including such well-known  chains as Applebee's,  Arby's,  Burger King,  Checker
Auto Parts,  Chevron,  Circle K,  Citgo,  Hardee's,  Jack in the Box,  Long John
Silver's,  Jiffy Lube, Pizza Hut, 7-Eleven, Taco Bell, Texaco, Valvoline Instant
Oil  Change  and  Wendy's.  The  lease  or  mortgage  loan  agreements  are with
approximately 480 operators represented within FFCA's investment portfolio. Most
of these are multi-unit operators,  though no single operator represented 10% or
more of FFCA's  total  portfolio  revenues  during 2000,  1999 or 1998.  As FFCA
continues to make new investments,  management expects the portfolio to continue
to become more diversified.

     With the  growth  achieved  in FFCA's  real  estate  investment  portfolio,
expenses  grew to $125  million in 2000 as compared to $111  million in 1999 and
$84  million  in 1998,  primarily  due to  increases  in  interest  expense  and
depreciation  each year.  Interest  expense rose by $5.6 million in 2000,  $13.5
million  in 1999  and $8.1  million  in 1998  due to the use of  borrowings  for
investments in chain store properties.  FFCA's weighted average debt outstanding
increased  to $766.5  million in 2000 from $742 million in 1999 and $590 million
in 1998. In addition,  FFCA's  borrowing  rate has changed over the past several
years due to changes in FFCA's mix of long-term and  short-term  debt,  together
with  overall  changes  in  the  interest  rate  environment.  FFCA's  effective
borrowing  rate  increased to 7.86% in 2000, up from 7.30% during 1999 and 7.01%
during 1998.

     Operating,  general and administrative expenses in 2000 included consulting
and other costs,  which totaled  $766,000,  related to a project that  evaluated
opportunities in providing internet-based products and services to chain stores.
In 1999,  consulting  and other costs  totaling  $2.975 million were incurred in
connection  with the  exploration  of strategic  alternatives.  Excluding  these
non-routine  costs,  operating,  general and  administrative  expenses  for 2000
increased  26% from 1999 as  compared to 1999's  increase of 24% from 1998.  The
increase in operating expenses between 1998 and 2000 resulted primarily from the
addition of personnel needed for FFCA's expanding line of financial products and
to increase FFCA's investment origination and servicing capacity.

     During 2000,  FFCA continued to sell mortgage loans through  securitization
transactions.  Certain  mortgage loans  originated by FFCA, its predecessors and
affiliates  totaling $406 million in 2000, $1.1 billion in 1999 and $335 million
in 1998 were securitized and Secured Franchise Loan Trust Certificates were sold
to investors  through a trust.  The majority of each of these  securitized  loan
pools was sold to third parties, while FFCA retained the subordinated investment
securities,  which  ranged from 9% to 10% of the mortgage  loan pools'  balance.
FFCA also  retained  the  servicing  rights on the  mortgage  loans it sold.  In
addition, during 2000 FFCA participated in a securitization sponsored by a third
party in  which  FFCA  sold 91 loans  with an  outstanding  aggregate  principal
balance of $55.6 million.

                                       37
<PAGE>
     The retained  securities  totaled $182 million and $185 million at December
31, 2000 and 1999, respectively. Income generated by retained securities totaled
$39.5  million  in 2000,  $31.1  million  in 1999 and $14.4  million  1998.  The
subordinated  investment  securities held by FFCA are the last of the securities
to be repaid  from the loan  pools,  so that if any of the  underlying  mortgage
loans default, these securities take the first loss. Any future credit losses in
the securitized loan pool would be concentrated in these subordinated investment
securities  retained by FFCA;  however,  FFCA  originates and services  mortgage
loans and has the infrastructure in place to deal with potential defaults on the
securitized  portfolio  (as it  does  with  the  mortgage  loans  it  holds  for
investment). To date, delinquencies in the securitized loan pools represent less
than 2% of the total mortgage loan pool balance.

     FFCA recorded net gains of $39 million on the sale of assets during 2000 as
compared  to $41  million  during  1999 and $10.5  million  in 1998.  FFCA began
selling  loans on a whole loan basis in January 2000,  primarily  under its loan
sale agreement with Washington Mutual,  generating gains totaling $24.7 million.
Mortgage loans sold through securitization transactions generated gains totaling
approximately  $9.9 million in 2000,  $36.1  million in 1999 and $6.2 million in
1998. The remaining gains each year represent the net effect of gains and losses
from sales of  property,  which  occur  primarily  through  the  disposition  of
underperforming  properties  and  through  the  lessee's  exercise  of  purchase
options.  Approximately  63% of FFCA's  land and  building  leases  provide  for
purchase  options  and  approximately  one-half of these  options are  currently
exercisable.  During 2000,  FFCA sold 121  properties  and related  equipment as
compared to 87 properties sold in 1999 and 57 properties sold in 1998;  however,
only 4 properties were sold through  purchase  options in 2000 and 13 and 9 such
properties were sold through  purchase  options in 1999 and 1998,  respectively.
Generally,  the purchase  options are  exercisable at fair market value (but not
less  than  original  cost  in most  cases).  Cash  proceeds  from  the  sale of
properties through the exercise of purchase options averaged  approximately 127%
of the  properties'  original cost in 2000,  129% in 1999 and 120% in 1998. FFCA
expects that the exercise of purchase options will continue to be insignificant.
Mortgage  prepayments have also been insignificant,  representing 77 chain store
properties  in 2000,  126  chain  store  properties  in 1999 and 49 chain  store
properties in 1998.

     FFCA periodically reviews its real estate portfolio for impairment whenever
events or changes in  circumstances  indicate  that the  carrying  amount of the
property may not be recoverable, such as may be the case with vacant properties.
If an impairment loss is indicated,  the loss is measured as the amount by which
the carrying  amount of the asset  exceeds the fair value of the asset.  Gain on
the sale of assets on the consolidated  statements of income for the years ended
December 31, 2000, 1999 and 1998 is net of approximately  $145,000, $1.6 million
and $4  million,  respectively,  of loss  related to vacant and  underperforming
properties.  Vacant  properties  held for sale  represent less than 1% of FFCA's
total real estate  investment  portfolio.  The vacancy level in the portfolio is
currently  at less than 1% and has  remained at less than 2% since FFCA became a
REIT in 1994.

                                       38
<PAGE>
ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

     This item is incorporated  by reference to Item 7 "Management's  Discussion
and Analysis of Financial Condition and Results of Operations - Quantitative and
Qualitative Disclosures About Market Risk".

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 9, 2001, 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 9, 2001, 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 9, 2001, 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 9, 2001, to be filed pursuant to Regulation 14A.

                                       39
<PAGE>
                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

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

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

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

     3.   EXHIBITS.

          The  following  is a complete  list of exhibits  filed as part of this
          Form 10-K.  Exhibit  numbers  correspond to the numbers in the Exhibit
          Table of Item 601 of Regulation S-K.

EXHIBIT NO.                        DESCRIPTION
-----------                        -----------

   2.01        Articles of Merger  between FFCA  Maryland  Corp.  and  Franchise
               Finance Corporation of America (1)

   2.02        Certificate  of Ownership and Merger  merging  Franchise  Finance
               Corporation of America into FFCA Maryland Corp. (1)

   3.01        The Amendment  and  Restatement  of Charter of Franchise  Finance
               Corporation  of  America is  included  in  Exhibit  2.01,  and is
               incorporated herein by reference

   3.02        Bylaws of Franchise Finance Corporation of America (1)

   4.01        Indenture dated as of November 21, 1995 (2)

   4.02        First Supplemental Indenture effective as of December 31, 2000 *

   4.03        Specimen of Common Stock Certificate (3)

   4.04        Officers'  Certificate  relating to the 7-7/8%  Senior  Notes Due
               2005 of Franchise Finance Corporation of America (4)

   4.05        Officers'  Certificate relating to the Medium-Term Notes due Nine
               Months  or More  from  the Date of  Issue  of  Franchise  Finance
               Corporation of America (5)

                                       40
<PAGE>
   4.06        Form of  Medium-Term  Fixed Rate Note and  Floating  Rate Note of
               Franchise Finance Corporation of America (6)

   4.07        Officers' Certificate relating to the 8.25% Senior Notes Due 2003
               of Franchise Finance Corporation of America (7)

   4.08        Rights  Agreement,  dated as of April 7, 1999,  between Franchise
               Finance Corporation of America and Gemisys Corporation, as Rights
               Agent (8)

   4.09        Officers' Certificate relating to the 8.75% Senior Notes Due 2010
               of Franchise Finance Corporation of America (9)

   10.01       1995  Stock  Option  and  Incentive  Plan  of  Franchise  Finance
               Corporation of America (10)

   10.02       Amendment  No. 1 to the 1995 Stock Option and  Incentive  Plan of
               Franchise Finance Corporation of America (11)

   10.03       Amendment  No. 2 to the 1995 Stock Option and  Incentive  Plan of
               Franchise Finance Corporation of America *

   10.04       Master Loan  Purchase  Agreement,  dated as of December 14, 1999,
               between FFCA  Acquisition  Corporation,  as Seller and Washington
               Mutual Bank, FA, as Purchaser (12)

   10.05       Guaranty by Franchise Finance  Corporation,  dated as of December
               14, 1999, of certain obligations of FFCA Acquisition  Corporation
               for the benefit of Washington Mutual (12)

   10.06       Amended and Restated Employment Agreement, dated as of January 1,
               2000, between Franchise Finance Corporation of America and Morton
               H. Fleischer (13)

   10.07       Amended and Restated Employment Agreement, dated as of January 1,
               2000,  between  Franchise  Finance  Corporation  of  America  and
               Christopher H. Volk (13)

   10.08       Amended and Restated Employment Agreement, dated as of January 1,
               2000,  between Franchise Finance  Corporation of America and John
               R. Barravecchia (13)

   10.09       Amended and Restated Employment Agreement, dated as of January 1,
               2000, between Franchise Finance Corporation of America and Dennis
               L. Ruben (13)

   10.10       Amended and Restated Employment Agreement, dated as of January 1,
               2000,  between  Franchise  Finance  Corporation  of  America  and
               Stephen G. Schmitz (13)

                                       41
<PAGE>
   21.01       Subsidiaries of the Registrant*

   23.01       Consent of Arthur Andersen LLP*

   99.01       Third Amended and Restated Credit Agreement dated as of September
               15, 2000 among Franchise Finance Corporation of America,  Certain
               Lenders and Bank of America, N.A. (9)

   99.02       Credit Agreement among Franchise Finance  Corporation of America,
               Certain  Lenders and Bank of America,  N.A. dated as of September
               15, 2000 (9)

   99.03       Third Amended and Restated Sale and Servicing  Agreement dated as
               of January 1, 2001, among FFCA Franchise Loan Owner Trust 1998-1,
               FFCA Loan Warehouse  Corporation,  FFCA Acquisition  Corporation,
               Franchise  Finance   Corporation  of  America  and  LaSalle  Bank
               National Association f/k/a LaSalle National Bank (1)

   99.04       Loan Purchase Agreement dated as of August 14, 1998, between FFCA
               Loan Warehouse Corporation and FFCA Acquisition Corporation (14)

   99.05       Amendment No. 1, dated as of March 18, 1999, to the Loan Purchase
               Agreement  between  FFCA  Loan  Warehouse  Corporation  and  FFCA
               Acquisition Corporation (13)

   99.06       Amendment  No.  2,  dated  as of  January  1,  2000,  to the Loan
               Purchase  Agreement  between FFCA Loan Warehouse  Corporation and
               FFCA Acquisition Corporation (13)

   99.07       Indenture  dated as of August 14, 1998,  between  FFCA  Franchise
               Loan Owner Trust 1998-1 and LaSalle National Bank. (14)

   99.08       Fifth  Amended and  Restated  Indenture  Supplement,  dated as of
               January 1, 2001,  between FFCA  Franchise Loan Owner Trust 1998-1
               and LaSalle Bank National Association f/k/a LaSalle National Bank
               (1)

   99.09       Amended and Restated Note Purchase  Agreement dated as of January
               1, 2001,  among FFCA  Franchise  Loan Owner  Trust  1998-1,  FFCA
               Acquisition  Corporation,  FFCA Loan  Warehouse  Corporation  and
               Morgan Stanley Securitization Funding Inc. (1)

   99.10       Note  Purchase  Agreement  dated  April 22,  1999,  between  FFCA
               Secured   Lending   Corporation,   and   Morgan   Stanley  &  Co.
               Incorporated, Salomon Smith Barney Inc. and Prudential Securities
               Incorporated,  as initial  purchasers of  $371,908,000  aggregate
               principal  or  notional  amount of Secured  Franchise  Loan Trust
               Certificates,  Series 1999-1,  Class A-1a, Class A-1b, Class A-2,
               Class B-1,  Class B-2, Class C-1, Class C-2, Class D-1, Class D-2
               and Class IO (15)

                                       42
<PAGE>
   99.11       Prospectus  Supplement  dated  September  18, 2001, to Prospectus
               dated April 16, 1998 (9)

----------
*    Filed herewith.
(1)  Incorporated by reference from the Registrant's  Current Report on Form 8-K
     dated  December  31,  2000,  as filed  with  the  Securities  and  Exchange
     Commission.
(2)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  November  24,  1995,  as filed  with  the  Securities  and  Exchange
     Commission.
(3)  Incorporated by reference from the Registrant's  Registration  Statement on
     Form S-4 and amendments thereto  (Registration  Number 33-65302),  as filed
     with the Securities and Exchange Commission.
(4)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  November  24,  1995,  as filed  with  the  Securities  and  Exchange
     Commission.
(5)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  February  14,  1996,  as filed  with  the  Securities  and  Exchange
     Commission.
(6)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated April 16, 1998, as filed with the Securities and Exchange Commission.
(7)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  October  27,  1998,  as  filed  with  the  Securities  and  Exchange
     Commission.
(8)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated April 7, 1999, as filed with the Securities and Exchange Commission.
(9)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  September  15,  2000,  as filed  with the  Securities  and  Exchange
     Commission.
(10) Incorporated by reference from the Registrant's  Annual Report on Form 10-K
     for the fiscal year ended  December 31, 1995, as filed with the  Securities
     and Exchange Commission.
(11) Incorporated by reference from the  Registrant's  Quarterly  Report on Form
     10-Q for the  fiscal  quarter  ended  June  30,  1999,  as  filed  with the
     Securities and Exchange Commission.
(12) Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  December  14,  1999,  as filed  with  the  Securities  and  Exchange
     Commission.
(13) Incorporated by reference from the Registrant's  Annual Report on Form 10-K
     for the fiscal year ended  December 31, 1999, as filed with the  Securities
     and Exchange Commission.
(14) Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  August  14,  1998,  as  filed  with  the   Securities  and  Exchange
     Commission.
(15) Incorporated by reference from the  Registrant's  Quarterly  Report on Form
     10-Q for the  fiscal  quarter  ended  March  31,  1999,  as filed  with the
     Securities and Exchange Commission.

     (b)  REPORTS ON FORM 8-K.

          During the quarter  ended  December  31,  2000,  FFCA did not file any
     reports on Form 8-K.

                                       43
<PAGE>
                                   SIGNATURES

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

                                        FRANCHISE FINANCE CORPORATION OF AMERICA


Date: March 9, 2001                     By /s/ M. H. Fleischer
                                           -------------------------------------
                                           M. H. Fleischer, Chairman of the
                                           Board and Chief Executive Officer

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


Date: March 9, 2001                     By /s/ M. H. Fleischer
                                           -------------------------------------
                                           M. H. Fleischer, Chairman of the
                                           Board and Chief Executive Officer


Date: March 9, 2001                     By /s/ John Barravecchia
                                           -------------------------------------
                                           John Barravecchia, Executive Vice
                                           President, Chief Financial Officer
                                           and Treasurer


Date: March 9, 2001                     By /s/ Catherine F. Long
                                           -------------------------------------
                                           Catherine F. Long, Senior Vice
                                           President-Finance and Principal
                                           Accounting Officer


Date: March 9, 2001                     By /s/ Willie R. Barnes
                                           -------------------------------------
                                           Willie R. Barnes, Director


Date: March 9, 2001                     By /s/ Kelvin L. Davis
                                           -------------------------------------
                                           Kelvin L. Davis, Director


Date: March 9, 2001                     By /s/ Kathleen H. Lucier
                                           -------------------------------------
                                           Kathleen H. Lucier, Director


Date: March 9, 2001                     By /s/ Dennis E. Mitchem
                                           -------------------------------------
                                           Dennis E. Mitchem, Director

                                       44
<PAGE>
Date: March 9, 2001                     By /s/ Louis P. Neeb
                                           -------------------------------------
                                           Louis P. Neeb, Director


Date: March 9, 2001                     By /s/ Kenneth B. Roath
                                           -------------------------------------
                                           Kenneth B. Roath, Director


Date: March 9, 2001                     By /s/ Casey J. Sylla
                                           -------------------------------------
                                           Casey J. Sylla, Director


Date: March 9, 2001                     By /s/ Christopher H. Volk
                                           -------------------------------------
                                           Christopher H. Volk, Director


Date: March 9, 2001                     By /s/ Shelby Yastrow
                                           -------------------------------------
                                           Shelby Yastrow, Director

                                       45
<PAGE>
                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES


Report of Independent Public Accountants                                   F-2

Consolidated Balance Sheets - December 31, 2000 and 1999                   F-3

Consolidated Statements of Income For The Years Ended
  December 31, 2000, 1999 and 1998                                         F-4

Consolidated Statements of Changes in Shareholders' Equity
  For The Years Ended December 31, 2000, 1999 and 1998                     F-5

Consolidated Statements of Cash Flows For The Years Ended
  December 31, 2000, 1999 and 1998                                         F-6

Notes to Consolidated Financial Statements                                 F-7

Schedule III - Schedule of Real Estate and Accumulated
  Depreciation as of December 31, 2000                                     F-18

Schedule IV - Schedule of Mortgage Loans on Real Estate
  as of December 31, 2000                                                  F-20

                                       F-1
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS

To Franchise Finance Corporation of America:

We have  audited  the  accompanying  consolidated  balance  sheets of  FRANCHISE
FINANCE  CORPORATION OF AMERICA (a Maryland  corporation) and subsidiaries as of
December 31, 2000 and 1999, 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, 2000. 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 auditing standards generally accepted
in the United States. 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, 2000 and 1999, and the results of
their  operations and their cash flows for each of the three years in the period
ended  December 31, 2000, in conformity  with  accounting  principles  generally
accepted in the United States.

Our  audits  were  made for the  purpose  of  forming  an  opinion  on the basic
financial  statements taken as a whole. The schedules listed in the index of the
financial statements are presented for purposes of complying with the Securities
and  Exchange  Commission's  rules  and are  not  part  of the  basic  financial
statements.  These  schedules  have been  subjected to the  auditing  procedures
applied in our audits of the basic  financial  statements  and, in our  opinion,
fairly 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 22, 2001

                                      F-2
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA

            CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 2000 AND 1999
                    (Amounts in thousands except share data)
<TABLE>
<CAPTION>
                                                                                           2000           1999
                                                                                        -----------    -----------
<S>                                                                                     <C>            <C>
                                     ASSETS
Investments:
  Investments in Real Estate, at cost (Note 3):
    Land                                                                                $   579,621    $   583,033
    Buildings and Improvements                                                              842,335        871,660
    Equipment                                                                                22,277         20,065
                                                                                        -----------    -----------
                                                                                          1,444,233      1,474,758
    Less-Accumulated Depreciation                                                           227,217        205,400
                                                                                        -----------    -----------
            Net Real Estate Investments                                                   1,217,016      1,269,358

  Mortgage Loans Held for Sale (Note 4)                                                     163,572        139,703
  Mortgage Loans Receivable, net of allowances of $3,050 in 2000 and
   $3,570 in 1999 (Note 5)                                                                   59,588         57,996
  Real Estate Investment Securities (Note 6)                                                181,650        185,252
  Other Investments (Note 5)                                                                 15,899         14,129
                                                                                        -----------    -----------
            Total Investments                                                             1,637,725      1,666,438

Cash and Cash Equivalents                                                                    10,681          4,757
Accrued Interest and Accounts Receivable, net of allowances of $2,705 in
 2000 and $1,125 in 1999                                                                     11,796         10,669
Mortgage Servicing Rights and Other Assets (Note 11)                                         40,677         28,238
                                                                                        -----------    -----------

            Total Assets                                                                $ 1,700,879    $ 1,710,102
                                                                                        ===========    ===========
                      LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
  Dividends Payable                                                                     $    31,347    $    29,739
  Notes Payable (Note 7)                                                                    617,756        501,165
  Borrowings Under Lines of Credit (Note 8)                                                 106,000        238,000
  Mortgage Payable to Affiliate (Note 11)                                                        --          8,500
  Accrued Expenses and Other                                                                 27,180         29,066
                                                                                        -----------    -----------

       Total Liabilities                                                                    782,283        806,470
                                                                                        -----------    -----------
Commitments and Contingent Liabilities (Note 14)

Shareholders' Equity (Notes 9 and 10):
  Preferred Stock, par value $.01 per share, 10 million shares authorized, none
   issued or outstanding                                                                         --             --
  Common Stock, par value $.01 per share, authorized 200 million shares, issued and
   outstanding 55,976,454 shares in 2000 and 56,110,776 shares in 1999                          560            561
  Capital in Excess of Par Value                                                            924,215        927,147
  Accumulated Other Comprehensive Income (Loss)                                              (1,257)           237
  Cumulative Net Income                                                                     587,082        446,550
  Cumulative Dividends                                                                     (592,004)      (470,863)
                                                                                        -----------    -----------

       Total Shareholders' Equity                                                           918,596        903,632
                                                                                        -----------    -----------

       Total Liabilities and Shareholders' Equity                                       $ 1,700,879    $ 1,710,102
                                                                                        ===========    ===========
</TABLE>
                 The accompanying notes are an integral part of
                       these consolidated balance sheets.

                                      F-3
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA

                        CONSOLIDATED STATEMENTS OF INCOME

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                  (Amounts in thousands except per share data)

<TABLE>
<CAPTION>
                                                                     2000           1999          1998
                                                                  ---------      ---------     ---------
<S>                                                               <C>            <C>           <C>
Revenues:
  Rental                                                          $ 158,331      $ 151,193     $ 121,490
  Mortgage Loan Interest                                             24,548         28,769        26,118
  Real Estate Investment Securities Income (Note 6)                  39,453         31,073        14,350
  Servicing Income and Other                                         10,163          7,440         7,610
                                                                  ---------      ---------     ---------

                                                                    232,495        218,475       169,568
                                                                  ---------      ---------     ---------
Expenses:
  Depreciation and Amortization                                      35,175         30,923        24,518
  Operating, General and Administrative                              22,903         20,612        14,244
  Property Costs                                                      3,930          1,884         1,778
  Interest                                                           62,553         56,297        42,846
  Related Party Interest (Note 11)                                      327          1,015         1,000
                                                                  ---------      ---------     ---------

                                                                    124,888        110,731        84,386
                                                                  ---------      ---------     ---------

Income Before Realized and Unrealized Gains                         107,607        107,744        85,182

Unrealized Gain on Real Estate Investment Securities                  1,627             --            --
Gain on Sale of Assets (Note 6)                                      39,187         40,983        10,535
                                                                  ---------      ---------     ---------

Income Before Income Tax Expense                                    148,421        148,727        95,717
Income Tax Expense (Note 2)                                           5,617             --            --
                                                                  ---------      ---------     ---------
Income Before Cumulative Effect of a Change in Accounting
 Principle                                                          142,804        148,727        95,717
Cumulative Effect of a Change in Accounting Principle (Note 2)       (2,272)            --            --
                                                                  ---------      ---------     ---------

Net Income                                                        $ 140,532      $ 148,727     $  95,717
                                                                  =========      =========     =========
Per Share Data:
Basic Net Income Per Share                                        $    2.49      $    2.69     $    2.01
                                                                  =========      =========     =========
Diluted Net Income Per Share                                      $    2.48      $    2.68     $    2.00
                                                                  =========      =========     =========
Number of Common Shares Used in Basic Net Income Per Share           56,371         55,346        47,554
Incremental Shares from Assumed Conversion of Options                   183            159           354
                                                                  ---------      ---------     ---------
Number of Common Shares Used in Diluted Net Income
 Per Share (Note 2)                                                  56,554         55,505        47,908
                                                                  =========      =========     =========
</TABLE>
                 The accompanying notes are an integral part of
                         these consolidated statements.

                                      F-4
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA

           CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                  (Amounts in thousands except per share data)

<TABLE>
<CAPTION>
                                                                             ACCUMULATED
                                       COMMON STOCK ISSUED     CAPITAL IN      OTHER
                                      ----------------------   EXCESS OF    COMPREHENSIVE   CUMULATIVE   CUMULATIVE
                                       SHARES        AMOUNT    PAR VALUE       INCOME       NET INCOME    DIVIDENDS      TOTAL
                                      ---------    ---------   ---------      ---------     ---------     ---------    ---------
<S>                                   <C>       <C>           <C>            <C>           <C>           <C>          <C>
BALANCE, December 31, 1997              41,788       $418       $583,056       $    --       $202,106     $(262,584)   $ 522,996
  Comprehensive income
    Net income                                                                                 95,717
       Total comprehensive income                                                                                         95,717
  Dividends declared -
    $1.90 per share                                                                                         (93,004)     (93,004)
  Issuance of common stock               6,905         69        182,479                                                 182,548
  Incentive and benefit plans               34          1            107                                                     108
  Dividend reinvestment plan               234          2          6,069                                                   6,071
  Exercise of stock options                102          1          1,997                                                   1,998
                                        ------       ----       --------       -------       --------     ---------    ---------

BALANCE, December 31, 1998              49,063        491        773,708            --        297,823      (355,588)     716,434
  Comprehensive income
    Net income                                                                                148,727
    Unrealized gain on securities                                                  237
       Total comprehensive income                                                                                        148,964
  Dividends declared -
    $2.00 per share                                                                                        (115,275)    (115,275)
  Issuance of common stock               6,700         67        145,702                                                 145,769
  Incentive and benefit plans               16                       385                                                     385
  Dividend reinvestment plan               323          3          7,166                                                   7,169
  Exercise of stock options                  9                       186                                                     186
                                        ------       ----       --------       -------       --------     ---------    ---------

BALANCE, December 31, 1999              56,111        561        927,147           237        446,550      (470,863)     903,632
  Comprehensive income
    Net income                                                                                140,532
    Unrealized loss on securities                                               (1,494)
       Total comprehensive income                                                                                        139,038
  Dividends declared -
    $2.15 per share                                                                                        (121,141)    (121,141)
  Repurchased shares                      (582)        (6)       (12,662)                                                (12,668)
  Incentive and benefit plans              118          1            902                                                     903
  Dividend reinvestment plan               282          3          6,374                                                   6,377
  Exercise of stock options                 47          1            954                                                     955
  Warrants issued                                                  1,500                                                   1,500
                                        ------       ----       --------       -------       --------     ---------    ---------

BALANCE, December 31, 2000              55,976       $560       $924,215       $(1,257)      $587,082     $(592,004)   $ 918,596
                                        ======       ====       ========       =======       ========     =========    =========
</TABLE>
                 The accompanying notes are an integral part of
                         these consolidated statements.

                                      F-5
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

              FOR THE YEARS ENDED DECEMBER 31, 2000, 1999 AND 1998
                             (Amounts in thousands)

<TABLE>
<CAPTION>
                                                                       2000             1999             1998
                                                                   -----------      -----------      -----------
<S>                                                                <C>              <C>              <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                                       $   140,532      $   148,727      $    95,717
  Adjustments to net income:
    Depreciation and amortization                                       35,175           30,923           24,518
    Gain on sale of assets                                             (39,187)         (40,983)         (10,535)
    Unrealized gain on real estate investment securities                (1,627)              --               --
    Other                                                               12,118            7,273            2,600
                                                                   -----------      -----------      -----------

          Net cash provided by operating activities                    147,011          145,940          112,300
                                                                   -----------      -----------      -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property                                              (43,183)        (259,102)        (366,836)
  Investment in mortgage loans                                        (940,956)      (1,097,135)        (537,665)
  Investment in notes receivable                                        (4,690)          (5,525)         (33,819)
  Proceeds from securitization transactions                            350,100        1,031,243          540,372
  Proceeds from whole loan sales                                       503,909               --               --
  Proceeds from sale of property                                        79,282           56,795           33,764
  Receipt of mortgage loan and note payoffs                             42,268           18,523           56,415
  Collection of mortgage loan and note principal                         9,296            9,989           10,601
  Collection of investment security principal                           14,321            6,216            3,184
                                                                   -----------      -----------      -----------

          Net cash (used) provided by investing activities              10,347         (238,996)        (293,984)
                                                                   -----------      -----------      -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid                                                      (113,157)        (102,410)         (82,532)
  Proceeds from issuance of common stock                                 1,084          146,342          184,654
  Repurchase of common stock                                           (12,668)              --               --
  Proceeds from bank borrowings                                        403,000          887,000          738,000
  Proceeds from issuance of notes                                      263,807               --          190,313
  Payment of bank borrowings                                          (535,000)        (837,000)        (852,000)
  Payment of mortgage payable to affiliate                              (8,500)              --               --
  Payment of other unsecured notes                                    (150,000)              --               --
                                                                   -----------      -----------      -----------
          Net cash (used) provided by financing activities            (151,434)          93,932          178,435
                                                                   -----------      -----------      -----------

NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS                     5,924              876           (3,249)

CASH AND CASH EQUIVALENTS, beginning of year                             4,757            3,881            7,130
                                                                   -----------      -----------      -----------

CASH AND CASH EQUIVALENTS, end of year                             $    10,681      $     4,757      $     3,881
                                                                   ===========      ===========      ===========
</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, 2000 AND 1999


(1)  ORGANIZATION AND OPERATION:

     Franchise  Finance  Corporation of America,  a Maryland  corporation,  is a
self-administered  real estate  investment trust ("REIT")  providing real estate
financing  to  chain  store  operators   (including  operators  of  restaurants,
convenience stores and automotive  service and parts stores).  Franchise Finance
Corporation  of  America  and  its  subsidiaries  (collectively,  "FFCA")  offer
financing through various  products,  including  mortgage loans,  sale-leaseback
transactions,  equipment loans and construction financing. At December 31, 2000,
FFCA had interests in 5,487 properties  representing  approximately $1.9 billion
in gross  investments in chain store  properties  located  throughout the United
States and in Canada (although the amount of FFCA's investments in Canada is not
significant).  In addition to this geographic diversification,  the portfolio is
also represented by approximately  480 different  operators in approximately 170
retail  chains.  No single  operator  contributed  more than 8% to FFCA's  total
portfolio  revenues  during the year ended  December 31, 2000.  FFCA's  combined
investment  and  servicing  portfolio  included  2,448  chain  store  properties
consisting of investments in real estate  mortgage loans and properties  subject
to leases,  3,039 properties  consisting of securitized  mortgage loans in which
FFCA holds a residual  interest and 737 properties  consisting of loans that are
owned by others but still serviced by FFCA.

(2)  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:

     CONSOLIDATION - The accompanying  consolidated financial statements include
the  accounts  of  FFCA  and its  wholly-owned  subsidiaries,  FFCA  Acquisition
Corporation (and its wholly-owned  subsidiary FFCA Loan Warehouse  Corporation),
FFCA Capital  Holding  Corporation,  FFCA Residual  Interest  Corporation,  FFCA
Secured  Assets   Corporation,   FFCA  Secured  Lending   Corporation  and  FFCA
Institutional  Advisors, Inc. The consolidated financial statements in 2000 also
include  the  accounts  of  FFCA  Funding  Corporation  ("Funding"),  which  was
established  on January 4, 2000 as a  nonqualified  REIT  subsidiary  of FFCA to
originate  mortgage  loans for sale.  All  intercompany  transactions  have been
eliminated in consolidation.

     FEDERAL  INCOME  TAXES - FFCA has  elected  to be taxed as a REIT under the
Internal Revenue Code of 1986, as amended.  As a result, FFCA generally will not
be subject to federal income  taxation at the corporate  level provided it meets
certain  tests  which,  among  other  things,  require  that its assets  consist
primarily of real estate,  its income be derived  primarily from real estate and
at least 95% of its taxable income be distributed  annually to its shareholders.
The tax basis of the net assets  exceeds  the book basis by  approximately  $195
million at December 31, 2000  because,  among other  things,  upon the merger of
FFCA with its  predecessor  companies  in 1994,  the tax basis of the assets and
liabilities was recorded based upon the value of the consideration exchanged. In
2000,  excess inclusion income related to the  securitization  transactions (see
Note 6) resulted in  unrelated  business  taxable  income of $.079 per share for
FFCA's tax-exempt investors.

     Funding is a taxable corporation that files separate tax returns from FFCA.
The income tax provision reflected in the accompanying  financial  statements is
specific to Funding, at an effective tax rate of approximately 41%. Deferred tax
assets and  liabilities  are recognized  for the estimated  future tax effect of
temporary  differences  between the financial  reporting and tax bases of assets
and  liabilities,  using  enacted  tax rates in effect for the year in which the
differences  are expected to reverse.  At December  31, 2000,  Funding has a net
deferred  tax asset of  $490,000,  which is  included  in "Other  Assets" in the
accompanying  financial  statements.  The  significant  components  of  the  net
deferred tax asset at December 31, 2000 relate to revenue recognition principles
that are different for financial and tax reporting purposes.

     REAL ESTATE - FFCA records the  acquisition  of real estate at cost,  which
includes  miscellaneous  acquisition and closing costs and capitalized interest,
where applicable.  Depreciation is computed using the straight-line  method over

                                      F-7
<PAGE>
the estimated useful life of 24 to 30 years for buildings and improvements and 7
to 8 years for equipment.  FFCA  periodically  reviews its real estate portfolio
for impairment  whenever  events or changes in  circumstances  indicate that the
carrying amount of the property may not be recoverable,  such as may be the case
with vacant properties. If an impairment loss is indicated, the loss is measured
as the amount by which the carrying  amount of the asset  exceeds the  estimated
fair value of the asset. Gain on sale of property in the consolidated statements
of  income  for the  years  ended  December  31,  2000,  1999 and 1998 is net of
$145,000,  $1.6  million and $4.0  million,  respectively,  of  impairment  loss
related to certain vacant properties.  Vacant properties held for sale represent
less than 1% of the total real estate investment portfolio at December 31, 2000.

     LOAN ORIGINATION FEES AND COSTS - FFCA generally  receives a fee related to
activities  performed  to  process a client's  request  for and  origination  of
credit.  Direct costs  associated  with these  activities are offset against the
related fees  received and the balance is deferred  and  amortized  into revenue
over the term of the related loan.  Loan  origination  fees and costs related to
mortgage loans held for sale are deferred until the related loan is sold.

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

     MORTGAGE  SERVICING  RIGHTS - Servicing  assets are created  when loans are
originated  and the  loans  are  subsequently  sold  with the  servicing  rights
retained.  Such servicing assets are amortized on a straight-line basis over the
estimated  servicing period and are assessed for impairment based on fair value.
Servicing  assets,  net of accumulated  amortization,  totaled $15.4 million and
$10.6 million at December 31, 2000 and 1999, respectively.

     DERIVATIVE   FINANCIAL   INSTRUMENTS  -  FFCA  uses  derivative   financial
instruments  to  manage  interest  rate  exposures  that  exist as a part of its
ongoing business operations. The portfolio of fixed-rate mortgage loans held for
sale has been  funded on an interim  basis by FFCA's  variable  rate bank credit
facility.  FFCA  hedges  against  fluctuations  in  interest  rates  that  could
adversely  affect the value of the mortgage loans to be sold. FFCA does not hold
or issue derivative financial instruments for speculative purposes.  The primary
instruments used are interest rate swap contracts,  which are  non-leveraged and
involve little complexity.  Under the interest rate swap contracts,  two parties
agree to swap  payments  over a specified  period where one party agrees to make
payments at a specified fixed rate and the other party to the contract agrees to
make payments based on a floating rate. FFCA terminates these contracts upon the
sale of the fixed-rate mortgage loans, at which time FFCA would generally expect
to receive (if rates rise) or pay (if rates fall) an amount equal to the present
value of the  difference  between  the fixed  rate set at the  beginning  of the
interest rate swap contract and the  then-current  market fixed rate at the time
of  termination.  At termination of the swap contract,  both the gain or loss on
the sale of the loans and the gain or loss on the  termination  of the  interest
rate  contracts are measured and  recognized  in the  statement of income.  FFCA
would  be  exposed  to  credit  loss  in  the  event  of  nonperformance  by the
counterparties to the interest rate contracts. FFCA minimizes its credit risk on
these  transactions by only dealing with  credit-worthy  financial  institutions
and,  therefore,  does not  anticipate  non-performance.  The use of  derivative
financial  instruments is monitored  through regular  communication  with senior
management and the utilization of written policies.

     At December 31, 2000,  FFCA had interest  rate swap  contracts  outstanding
with a notional  amount  aggregating  $28.8 million.  The notional amount serves
solely as a basis for the  calculation  of payments to be exchanged and is not a
measure  of the  exposure  of FFCA  through  its use of  derivatives.  Under the
contracts no cash payments  would be required until the earlier of December 2001
or a loan sale or securitization  transaction  (which is expected to be prior to
December 2001).

     RENTAL  REVENUE  RECOGNITION - FFCA leases real estate under  long-term net
leases that are  classified as operating  leases.  Rental revenue from operating
leases is recognized as it is earned.

     EARNINGS PER SHARE - Stock  options to purchase 1.8 million and 1.2 million
weighted shares of common stock outstanding during 2000 and 1999,  respectively,
were not  included in the  computation  of diluted  earnings per share for those
years,  because the options'  exercise price was greater than the average market
price  of  the  common  shares.  Warrants  issued  in  March  1998  to  purchase
approximately  1.5 million shares of common stock at a price of $31.64 per share
and  warrants  issued in December  1999 to  purchase 2 million  shares of common

                                      F-8
<PAGE>
stock (of which 1.3 million are currently  exercisable) at a price of $25.47 per
share were also excluded from the  computation of earnings per share in 2000 and
1999.  Subsequent  to  December  31,  2000,  FFCA  granted  options to  purchase
approximately  587,000 shares of common stock at an exercise price of $23.50 per
share, and issued approximately 145,000 shares of restricted stock, to employees
under  its  stock-based  compensation  plan.  Both  the  stock  options  and the
restricted stock are subject to years-of-service vesting requirements.

     USE  OF  ESTIMATES  -  The  preparation  of  the  financial  statements  in
conformity with accounting  principles  generally  accepted in the United States
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.

     COMPREHENSIVE  INCOME - Comprehensive income includes net income as well as
other  comprehensive  income.  FFCA's  other  comprehensive  income  consists of
unrealized gains and losses on available-for-sale securities.

     RECLASSIFICATIONS - Certain  reclassifications have been made to prior year
balances in order to conform to the current year presentation.

     NEW PRONOUNCEMENTS - In June 1998, the Financial Accounting Standards Board
issued  SFAS  No.  133  "Accounting  for  Derivative   Instruments  and  Hedging
Activities".  SFAS No. 133, as amended, requires companies to record derivatives
on the balance sheet as assets or liabilities,  measured at fair value. Gains or
losses  resulting  from  changes  in the  values of those  derivatives  would be
accounted  for depending on the use of the  derivative  and whether it qualifies
for hedge accounting.  This standard is effective for FFCA's fiscal year 2001 at
which  time FFCA plans to adopt it. It is not  expected  that  adoption  of this
statement  will have a  material  effect  on FFCA's  results  of  operations  or
financial condition.

     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
Accounting  Bulletin (SAB) 101, "Revenue  Recognition in Financial  Statements",
clarifying  generally accepted  accounting  principles related to accounting for
contingent rental revenues.  This new accounting  guidance requires companies to
recognize  contingent  rentals as revenue when the change in the factor on which
the contingent lease payment is based actually  occurs.  FFCA adopted SAB 101 in
the fourth  quarter of 2000 and reported a  cumulative  effect of this change in
accounting  principle totaling $2.27 million ($0.04 per diluted share). Prior to
adoption of SAB 101,  FFCA  recognized  estimated  contingent  revenues  ratably
throughout  the year when it was probable that a property would exceed the sales
threshold where  percentage  revenues were due, with  verification of the actual
amount of  percentage  revenues due received  from the operator at various times
during the year, based on the operator's reporting  requirements.  The impact on
FFCA's  December  31,  2000  financial  statements  was to delay  until 2001 the
recognition of contingent rental revenue under SAB 101 that otherwise would have
been recognized in 2000 under FFCA's previous accounting method.

(3)  INVESTMENTS IN REAL ESTATE:

     FFCA's real estate  portfolio is  comprised  of property  leased to tenants
under long-term net operating leases. The lease agreements generally provide for
base  monthly  rentals plus  additional  rentals  based on a  percentage  of the
lessees' gross sales or based on other contractual  increases in rent during the
lease term.  The terms of the leases are  generally  15 to 20 years for land and
buildings and seven or eight years for equipment (if any).  The initial terms of
FFCA's  leases extend  through 2020 with a weighted  average  remaining  term of
approximately  12 years as of  December  31,  2000.  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).  Approximately  63% of FFCA's land and
building  leases  provide for purchase  options and  approximately  44% of these
options  provide for a 90-day  option  window at various  times during the lease
term. Approximately one-half of the purchase options are currently exercisable.

     The table  below  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

                                      F-9
<PAGE>
that may be received  under the leases based upon a  percentage  of the lessee's
gross sales.  Contingent  revenues  based on the  operator's  gross sales of the
related  property  totaled  approximately  $7.4 million in 2000, $8.3 million in
1999 and $7.9  million  in 1998  (including  $903,000,  $980,000  and  $310,000,
respectively, of contingent interest income on mortgage loans receivable).

     Minimum future rentals under noncancellable operating leases as of December
31, 2000, are as follows (amounts in thousands):

         YEAR ENDING DECEMBER 31,
         -----------------------
                  2001                                        $  143,000
                  2002                                           139,200
                  2003                                           135,700
                  2004                                           131,400
                  2005                                           117,400
                  Thereafter                                     990,000
                                                              ----------
                  Total minimum future rentals                $1,656,700
                                                              ==========

(4)  MORTGAGE LOANS HELD FOR SALE:

     Mortgage loans held for sale are stated at the lower of cost or fair market
value, determined in the aggregate.  The loans represent first mortgage loans on
the real property (and related  equipment,  in many instances) of 148 properties
comprising  $63 million in  fixed-rate  loans and $49  million in  variable-rate
loans.  The loans held for sale also include  variable-rate  construction  loans
totaling $52 million at December 31, 2000. The fixed-rate loans carry a weighted
average  interest  rate of 9.9%  and  mature  5 to 20  years  from  the  date of
origination.  The  variable-rate  loans carry interest rates that adjust monthly
based on 30-day LIBOR plus a margin (average interest rate was 10.8% at December
31, 2000).  Total principal and interest payments  aggregate  approximately $1.2
million per month. The fixed-rate  mortgage loans generally prohibit  prepayment
for certain periods or condition prepayment upon receipt of prepayment penalties
or yield  maintenance  premiums from the borrower.  The  variable-rate  mortgage
loans generally have no prepayment restrictions.

(5)  OTHER MORTGAGE LOANS AND NOTES RECEIVABLE:

     At December 31, 2000,  FFCA held first  mortgage loans on the real property
(and related  equipment,  in many  instances)  of  approximately  88  properties
represented by $31 million in participating  fixed-rate loans (net of reserve of
$3.1 million in 2000) and $29 million in  variable-rate  loans.  These loans are
held for long-term  investment.  Generally,  the fixed-rate loans carry interest
rates  ranging  from  9.25% to 13.5% per annum and mature 7 to 20 years from the
date  of  origination.   In  addition,  these  loans  occasionally  provide  for
additional  interest  payments  based on a percentage of the  mortgagor's  gross
sales. The variable-rate loans carry interest rates that adjust monthly based on
30-day  LIBOR  plus a margin  and  carry an  average  interest  rate of 10.1% at
December 31, 2000. Approximately 40% of the outstanding mortgage balance matures
in 2001 and the remaining principal is due in smaller installments through 2019.
FFCA also held  various  secured and  unsecured  notes  totaling  $16 million at
December  31, 2000 and $14 million at December 31,  1999.  Generally,  the notes
carry interest rates ranging from 8% to 12% per annum and mature through 2009.

(6)  REAL ESTATE INVESTMENT SECURITIES:

     FFCA has a $600 million loan sale  facility with a third party that expires
in  December  2001.  This loan sale  facility  permits  FFCA to sell  loans on a
regular basis to a trust,  until the trust accumulates a sufficiently large pool
of loans  for sale  through  a larger  securitization  transaction.  While  FFCA
intends to originate mortgage loans through its subsidiary,  Funding,  for whole
loan sales, it will likely continue to securitize  loans.  FFCA acts as servicer
for the loans  following  the sale to the trust.  In ten  separate  transactions
during 2000, FFCA sold 410 loans with an outstanding aggregate principal balance
of $357.3  million to the trust and received  cash proceeds of $295 million plus
trust  certificates  representing  the remaining  15-20% of the loan sale price.
During  1999,  FFCA sold 1,570  loans with an  outstanding  aggregate  principal
balance  of $1  billion  to the trust,  receiving  trust  certificates  and cash
proceeds  of $862  million.  In  addition,  during 2000 FFCA  participated  in a
securitization  sponsored  by a third  party in which FFCA sold 91 loans with an
outstanding  aggregate  principal  balance  of $55.6  million.  Upon  sale,  the

                                      F-10
<PAGE>
mortgage loans  receivable were removed from the balance sheet and a gain on the
sale was  recognized  for the  difference  between  the  carrying  amount of the
mortgage  loans and the adjusted  sales price.  The sale of mortgages  generated
gains  totaling  approximately  $9.9 million in 2000,  $36.1 million in 1999 and
$6.2 million in 1998. The retained subordinated investment securities,  totaling
$12.2 million at December 31, 2000 and $43.5 million at December 31, 1999,  were
recorded by allocating the previous carrying amount of the mortgages between the
assets sold and the retained  trust  certificates,  based on their relative fair
values  and  are  included  in  "Real  Estate  Investment   Securities"  in  the
accompanying   consolidated   balance  sheets.   These  trust  certificates  are
classified  as trading  securities  and are marked to fair value on a  quarterly
basis.

     Mortgage  loans  originated  by FFCA and sold into the loan  sale  facility
described  above,  totaling $406 million in 2000 and $1.1 billion in 1999,  were
securitized  and  Secured  Franchise  Loan  Trust   Certificates  were  sold  to
investors.  Generally,  the  majority of each  securitized  loan pool is sold to
third parties,  while FFCA retains the servicing  rights on these mortgage loans
and  subordinated  investment  securities  (ranging  from  9% to  12.5%  of  the
aggregate  mortgage  loan  principal  balance).  These  subordinated  investment
securities,  totaling $169.4 million and $141.7 million at December 31, 2000 and
1999,  respectively,  are included in "Real Estate Investment Securities" in the
accompanying consolidated balance sheets.

     FFCA's real  estate  investment  securities  are  classified  as follows at
December 31, 2000 and 1999 (amounts in thousands):

                                                         2000           1999
                                                       --------       --------
      Held-to-maturity securities                      $136,968       $112,041
      Available-for-sale securities                      32,466         29,699
      Trading securities (trust certificates)            12,216         43,512
                                                       --------       --------
                                                       $181,650       $185,252
                                                       ========       ========

     Unrealized  holding gains and losses on trading  securities are included in
earnings,  while  unrealized  holding  gains and  losses  on  available-for-sale
securities are reported as other  comprehensive  income (a separate component of
shareholders'  equity). The estimated fair market value of FFCA's investments in
held-to-maturity  securities was approximately $131.2 million in 2000 and $105.5
million in 1999. At December 31, 2000,  the weighted  average  remaining term of
the held-to-maturity  securities  approximated 17 years and the weighted average
remaining term of the available-for-sale securities approximated 13 years.

(7)  NOTES PAYABLE:

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

<TABLE>
<CAPTION>
                                                                       2000           1999
                                                                     --------       --------
<S>                                                                 <C>             <C>
      7% Senior Notes paid November 2000, net of unamortized
       discount and related costs of $555 in 1999                    $     --       $149,445
      8.25% Senior Notes due 2003, net of unamortized discount
       and related costs of $4,072 in 2000 and $5,509 in 1999         145,928        144,491
      7.875% Senior Notes due 2005, net of unamortized discount
       and related costs of $349 in 2000 and $421 in 1999              49,650         49,579
      8.75% Senior Notes due 2010, net of unamortized discount
       and related costs of $472 in 2000                              149,528             --
      6.78% Notes due 2002                                             30,000         30,000
      8.43% Notes due 2002                                             50,000             --
      7.02% Notes due 2003                                             30,000         30,000
      8.68% Notes due 2004                                             50,000             --
      7.10% Notes due 2026, callable by holder in 2004                 40,000         40,000
      6.95% Notes due 2007                                             10,150         10,150
      6.86% Notes due 2007                                             17,000         17,000
      7.07% Notes due 2008                                             30,500         30,500
      8.905% Notes due 2010                                            15,000             --
                                                                     --------       --------
                                                                     $617,756       $501,165
                                                                     ========       ========
</TABLE>
                                      F-11
<PAGE>
     Interest on the notes is payable  semi-annually  in arrears with  principal
due at maturity.  The aggregate  weighted average interest rate on the notes was
7.94% in 2000 and 7.73% in 1999. With the exception of the $40 million notes due
2026, the notes may not be redeemed prior to their  respective  maturities.  The
note agreements contain certain covenants that, among other restrictions,  limit
the incurrence of additional debt if FFCA's debt exceeds 60% of total assets (as
defined in the note agreements), or if FFCA's debt service coverage is less than
1.5 to 1. As of  December  31,  2000,  FFCA  was in  compliance  with  its  note
covenants.

     Amortization  of debt issuance costs for the years ended December 31, 2000,
1999  and  1998  amounted  to $3.0  million,  $2.8  million  and  $1.4  million,
respectively,  which is  included  in  "Interest  Expense"  in the  accompanying
financial statements.

(8)  BORROWINGS UNDER LINES OF CREDIT:

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

<TABLE>
<CAPTION>
                                                                    2000         1999
                                                                  --------     --------
<S>                                                               <C>          <C>
       Borrowings at 30-day LIBOR plus 1.25% (1% in 1999)
        Weighted average interest rate of 7.89% and 7.48%
        at December 31, 2000 and 1999, respectively               $ 80,000     $230,000
       Borrowings at bank's cost of funds plus 1.25%
        Weighted average interest rate of 8.00% at
        December 31, 2000                                           25,000           --
       Borrowings at Base Rate, 9.50% and 8.50% at
        December 31, 2000 and 1999, respectively                     1,000        8,000
                                                                  --------     --------
                                                                  $106,000     $238,000
                                                                  ========     ========
</TABLE>

     At December 31, 2000, FFCA had outstanding  $106 million on $350 million in
revolving loan facilities with participating banks used to provide funds for the
acquisition or financing of chain store properties.  Interest on these unsecured
loan facilities is due in periodic  installments with a weighted average rate of
7.37% in 2000 and 6.36% in 1999. These loan facilities  provide for a fee on the
unused  commitment  amount of .225% per annum on the $235  million line and .20%
per annum on the $115 million line, payable quarterly in arrears.  The revolving
loan  facilities  expire as follows:  $235 million expires in September 2003 and
$115  million  expires  in  September  2001,  with  the  possibility  of  annual
extensions.   The  credit  agreements   contain  covenants  which,  among  other
restrictions,  require FFCA to maintain a fixed charge  coverage ratio of 2 to 1
and a debt to adjusted net worth ratio of no more than 1.2 to 1, as defined.  As
of December 31, 2000, FFCA was in compliance with its debt covenants.

     Amortization  of loan fees  related  to the  facility  for the years  ended
December 31, 2000, 1999 and 1998 amounted to  approximately  $812,000,  $742,000
and  $880,000,  respectively,  which is  included in  "Interest  Expense" in the
accompanying consolidated financial statements.

(9)  STOCK-BASED COMPENSATION PLANS:

     FFCA  shareholders  have  approved a stock option and  incentive  plan that
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. This plan reserves 4,518,804 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.  In 2000,  1999 and 1998,  FFCA issued  113,901,  8,092 and
29,886  shares  of  restricted  stock,  respectively.  These  stock  awards  are
conditioned upon years-of-service vesting requirements.  Compensation expense is
determined  by  reference  to the market price of the stock on the date of grant
(ranging from $23.50 in 2000 to $27.63 in 1998) and is being  amortized over the
vesting  period of the stock  (ranging  from three to five years).  Such expense
amounted  to  $742,000 in 2000,  $229,000  in 1999 and  $150,000 in 1998.  Stock
options  granted under the plan may be either  non-qualified  or incentive stock
options and the exercise price, determined by the committee, for incentive stock
options may not be less than the fair market value of a share of common stock on
the grant date. Options granted to FFCA's non-employee directors are immediately
exercisable,   while  the  remaining   options  vest  over  a  five-year  period
(three-year period for options issued prior to 2000) from the date of grant. The
options expire ten years after the date of grant.

                                      F-12
<PAGE>
     FFCA  measures  the  compensation  cost  of its  stock  option  grants  and
restricted  stock awards using the  intrinsic  value based method of  accounting
prescribed  in APB  Opinion  25,  "Accounting  for Stock  Issued to  Employees".
Accordingly,  no compensation  cost has been recognized for stock options issued
under the plan.  Had FFCA's  compensation  cost been  determined  using the fair
value based method of accounting prescribed by Statement of Financial Accounting
Standards No. 123, "Accounting for Stock-Based Compensation",  FFCA's net income
and  earnings  per share  would  have been  changed to the  following  pro forma
amounts (in thousands, except per share data):

                                                  2000        1999        1998
                                               ---------   ---------   ---------
     Net income:
       As reported                             $ 140,532   $ 148,727   $  95,717
       Pro forma                               $ 139,199   $ 148,253   $  94,950
     Earnings per share of common stock:
       As reported:
         Basic                                 $    2.49   $    2.69   $    2.01
         Assuming dilution                     $    2.48   $    2.68   $    2.00
       Pro forma:
         Basic                                 $    2.47   $    2.68   $    2.00
         Assuming dilution                     $    2.46   $    2.67   $    1.98

     The fair value of each option grant is estimated on the date of grant using
the  Black-Scholes  option-pricing  model with the  following  weighted  average
assumptions used for grants in 2000, 1999 and 1998, respectively: dividend yield
of 8.4%,  7.7% and 6.5%;  expected  stock price  volatility of 20.4%,  20.4% and
18.5%;  risk-free  interest  rates of 6.79%,  4.87% and 5.57%;  and an  expected
option term of seven years.

     As of December 31, 2000,  options  outstanding  under the plan had exercise
prices  ranging from $19.50 to $27.625 with a weighted  average price of $22.99,
and expiration  dates ranging from May 2005 to May 2010 with a weighted  average
remaining term of approximately six years.

     A summary of the status of FFCA's  stock  option and  incentive  plan as of
December 31, 2000,  1999 and 1998, and changes  during the years then ended,  is
presented below:

<TABLE>
<CAPTION>
                                                   2000                      1999                      1998
                                            ------------------        ------------------        ------------------
                                                        WEIGHTED                  WEIGHTED                  WEIGHTED
                                                         AVERAGE                   AVERAGE                   AVERAGE
                                                        EXERCISE                  EXERCISE                  EXERCISE
                                            SHARES       PRICE        SHARES       PRICE        SHARES       PRICE
                                            ------       -----        ------       -----        ------       -----
      <S>                                 <C>            <C>        <C>           <C>         <C>            <C>
      Outstanding, beginning of year      2,773,184      $22.85     2,580,813     $22.79      2,425,245      $22.14
      Granted                               631,675      $23.52       212,496     $23.71        258,003      $27.58
      Exercised                             (47,125)     $20.25        (8,625)    $21.60       (102,435)     $19.50
      Cancellations                         (26,685)     $25.54       (11,500)    $26.68             --          --
                                          ---------                 ---------                 ---------
      Outstanding, end of year            3,331,049      $22.99     2,773,184     $22.85      2,580,813      $22.79
                                          =========                 =========                 =========

      Options exercisable, end of year    2,560,040      $22.71     2,190,667     $22.05      1,691,130      $21.17
                                          =========                 =========                 =========

      Weighted average fair value of
       each option granted during year              $2.24                     $2.24                     $2.91
                                                    =====                     =====                     =====
</TABLE>
                                      F-13
<PAGE>
     FFCA has a 401K Plan for its employees who have been employed by FFCA for a
minimum  of  six  months.   This  plan  allows   employees  to  make  their  own
contributions through payroll deductions.  FFCA matches participating employees'
contributions  up to six  percent  of  the  participating  employees'  salaries.
Employer matching  contributions  are made in FFCA stock,  which is purchased on
the open  market,  and are  subject to  years-of-service  vesting  requirements.
Employer  contributions  totaled $404,000 in 2000, $344,000 in 1999 and $277,000
in 1998.

     In 1997, FFCA established an employee stock purchase plan. Under this plan,
employees can purchase stock through payroll  deductions at a price equal to 85%
of the fair market  value of the stock,  as defined in the  agreement.  Employee
purchases are limited to 10% of their salary each year and were not  significant
in 2000, 1999 or 1998.

(10) DIVIDENDS AND CAPITAL STOCK:

     FFCA declared a fourth quarter 2000 dividend of $0.56 per share, payable on
February 20, 2001, to  shareholders  of record on February 9, 2001. The dividend
payments made by FFCA to its shareholders represent ordinary income of $2.12 per
share for 2000 and $1.96 per share for 1999.

     Warrants to purchase 3,476,908 shares of FFCA common stock were outstanding
at December 31, 2000 and 1999,  of which  2,810,241  and  2,476,908  shares were
exercisable, respectively. A warrant representing 1,476,908 shares was issued in
March 1998 with an exercise price of $31.64 per share and expires in March 2005.
A  warrant  representing  2  million  shares  was  issued  in  December  1999 in
connection with the agreement  entered into with Washington Mutual Bank, FA (see
Note 14) with an  exercise  price of $25.47 per share and  expires  in  December
2009, or earlier, in accordance with the terms of the warrant agreement.

     In April 1999, the Board of Directors of FFCA adopted a shareholder  rights
plan.  This plan is  intended  to protect  FFCA's  shareholders  in the event of
unfair takeover tactics, or an unsolicited attempt to acquire control of FFCA in
a transaction  the Board of Directors  believes is not in the best  interests of
the  shareholders.  Under the plan,  FFCA  declared a dividend of one  preferred
share  purchase  right (a "Right") for each  outstanding  share of FFCA's common
stock,  payable to the  stockholders of record at the close of business on April
19, 1999.  Each Right entitles the  registered  holder to purchase from FFCA one
one-thousandth  of a share of  FFCA's  Series A Junior  Participating  Preferred
Stock (the "Preferred Stock") at a price of $90, subject to adjustment.

     The  Rights  are  not  exercisable   except  under   circumstances  of  the
announcement of an acquisition, tender offer or exchange offer, the consummation
of which would  result in the  ownership  by a person or group of 15% or more of
the outstanding  shares of FFCA common stock. (The Rights  beneficially owned by
the acquiring person or group will become void.) The Rights will expire on April
7, 2009,  unless  this date is advanced  or  extended,  or unless the Rights are
earlier  redeemed  or  exchanged  by FFCA.  The Board of  Directors  in its sole
discretion  may establish  the terms and  conditions  for the  redemption of the
Rights.  Until  exercised  or  exchanged,  the  Rights  have no vote and are not
entitled  to  receive  dividends;  however,  in the event of a merger or certain
other   transactions,   an  unexercised  Right  may  be  exchanged  for  certain
preferential consideration.

     Each share of Preferred  Stock would be entitled to a minimum  preferential
quarterly  dividend  payment,  a minimum  preferential  payment  in the event of
liquidation,  dissolution or winding up of FFCA, and other preferential payments
or assets in the event of any merger, consolidation or similar transaction. Each
share of Preferred  Stock will have one vote,  voting  together  with the common
stock.

     In  December  1999,   FFCA's  Board  of  Directors   adopted  a  resolution
authorizing  the  repurchase of up to 7.5% of the company's  outstanding  common
stock from time to time in open market or privately negotiated transactions.  As
of December 31, 2000,  FFCA has  repurchased  582,200 shares or 14% of the total
shares  authorized to be  purchased.  The timing of the purchases and the actual
number of common shares purchased depend on market conditions and available cash
flow.

                                      F-14
<PAGE>
(11) RELATED PARTY TRANSACTIONS:

     FFCA FUNDING  CORPORATION - FFCA  transferred  its  corporate  headquarters
building and its future mortgage loan origination business (including a transfer
of certain  employees and an assignment of the agreement with Washington  Mutual
to be its exclusive provider of chain store loans) to Funding in exchange for 10
shares of newly-issued,  nonvoting  preferred stock. The preferred stock,  which
represents all of the issued and outstanding stock of such class,  entitles FFCA
to 99% of any dividends  declared by Funding.  Five  executive  officers of FFCA
purchased all of the  outstanding  voting common stock of Funding for a total of
$975,000.  Of the $975,000 total consideration,  $50,000 was contributed in cash
and the remaining  $925,000 was in the form of promissory  notes. The promissory
notes accrued interest at a rate of 9% and were paid in full in January 2001. In
connection  with the start up of this new company in January 2000, FFCA advanced
$5 million to Funding under a one-year note agreement, with interest due monthly
and principal  due at maturity.  On January 2, 2001,  FFCA  purchased all of the
outstanding common stock of Funding for approximately $1.1 million.

     MORTGAGE  PAYABLE  TO  AFFILIATE  - 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 mortgage loan of $8.5 million on the FFCA
Premises  was paid in full in May 2000,  together  with  accrued  interest,  and
additional  interest  in the amount of $1.13  million as provided in the related
loan agreement.  In September 2000, FFCA purchased an additional  parcel of land
(3.6 acres) from the partnership for approximately $1.9 million. The land parcel
is located  adjacent to FFCA's current  corporate  headquarters  site and may be
used  for the  future  expansion  of  FFCA's  corporate  headquarters.  The FFCA
Premises,  including  equipment,  amounted  to $15.6  million  in 2000 and $12.3
million in 1999 (net of  accumulated  depreciation  of $4.1  million in 2000 and
$4.6  million in 1999) and is  included  in "Other  Assets" in the  accompanying
financial statements.

     ADMINISTRATIVE  SERVICES  AGREEMENT WITH AFFILIATES - 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.  Certain of these affiliates were
dissolved during 1999 and 2000. Fees for such services aggregated  approximately
$105,000 in 2000, $427,000 in 1999 and $590,000 in 1998.

(12) FINANCIAL INSTRUMENTS:

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

     The fair value of FFCA's  mortgage  loans is estimated by  discounting  the
future  cash flows  using the  current  interest  rates for  similar  loans with
similar  maturities  at  December  31,  2000.  The  estimated  fair value of the
mortgage loans  receivable  exceeded the carrying amount by  approximately  $5.6
million. Based on market prices of similar investments at December 31, 2000, the
carrying amount of FFCA's real estate  investment  securities  exceeded its fair
value by $5.8  million.  The fair  value of FFCA's  long-term,  fixed-rate  debt
exceeded its  carrying  amount by $13.9  million  based on the level of interest
rates  prevailing at December 31, 2000.  The fair value of FFCA's  interest rate
swap contracts is based on the theoretical  cost to unwind or terminate the swap
transactions.  FFCA  would  have  paid  approximately  $1.2  million  if it  had
terminated its interest rate swap contracts at December 31, 2000.

     The combined  fair value  differences  of these  financial  instruments  is
equivalent  to an  unrealized  loss of  approximately  $15.3  million;  however,
changes in the  unrealized  gains or losses on mortgage  loans,  the real estate
investment  securities,  fixed-rate  notes  payable and the  interest  rate swap
contracts do not result in the  realization  or  expenditure  of cash unless the
investments are actually sold or the debt is retired.

                                      F-15
<PAGE>
(13) ADDITIONAL FINANCIAL INFORMATION:

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

<TABLE>
<CAPTION>
                                                                         2000         1999        1998
                                                                         ----         ----        ----
      <S>                                                               <C>         <C>         <C>
      Securities and other assets resulting from securitization         $29,257     $81,528     $63,479
      Mortgage loans obtained as part of property sale
       proceeds, net of deferred gain                                        --          --       1,447
      Conversion of mortgage loans to property and
       equipment subject to operating lease                               9,843       3,034          --
      Interest paid, net of amounts capitalized                          55,791      52,031      38,980
      Income taxes paid                                                   5,304         164          98
</TABLE>

     Cash flows from derivative financial  instruments that are accounted for as
hedges of identifiable  transactions or events,  including  anticipatory hedges,
are  classified  in the same  category  as the cash flows  from the items  being
hedged.

(14) COMMITMENTS AND CONTINGENT LIABILITIES:

     In the normal course of business,  FFCA makes  commitments to extend credit
to meet the financing needs of its clients in the chain restaurant,  convenience
store and automotive service and parts industries.  FFCA evaluates each client's
credit and,  based on  management's  evaluation  of the client and the  proposed
property  site,  determines  the amount of credit to be extended and  collateral
obtained.  The  commitments  generally  have  fixed  expiration  dates  or other
termination  clauses and require payment of a fee by the client. At December 31,
2000,  FFCA's  outstanding  commitments  to  extend  credit  over the next  year
aggregated approximately $245 million.

     In December 1999,  FFCA entered into a three-year  loan sale agreement with
Washington  Mutual  Bank,  FA,  a  large  financial  services  company,  whereby
Washington  Mutual  agreed to  purchase  loans  originated  by FFCA  (though the
agreement does not obligate  Washington  Mutual to purchase all of FFCA's loans)
while FFCA retains the servicing rights on the loans sold. Under this agreement,
FFCA has certain limited  contingent  recourse  obligations  with respect to the
performance  of the loans;  accordingly,  FFCA records  gains on the sale of the
loans net of an estimated  liability for any losses expected under such recourse
obligations.

     FFCA acts as servicer for the  mortgage  loans it has  originated  and sold
through securitization transactions. Under the related servicing agreements, the
servicer is required to make periodic cash advances on any  nonperforming  loans
in the  securitized  loan pools,  subject to FFCA's  assessment  of the ultimate
recoverability  of the  advances.  The cash  advances  represent  principal  and
interest  payments  on the  nonperforming  loans and costs  associated  with the
protection of the related property, when necessary.

     FFCA entered into three-year  employment agreements with its five executive
officers.   Each  employment   agreement   provides  that  FFCA  is  liable  for
compensation  benefits at a rate of three times the  officer's  base salary plus
bonus, and other benefits, if an executive officer were to be terminated without
cause,  as  defined,  or if a change in  control,  as  defined,  occurs  and the
executive's  employment is terminated.  The aggregate annual  compensation under
these  agreements was  approximately  $3.2 million as of December 31, 2000. FFCA
entered into similar  two-year  agreements with certain other key officers under
which  FFCA is  liable  for  compensation  benefits  at a rate of two  times the
officer's  base salary plus bonus,  and other  benefits,  if a change in control
were to occur and the officer's  employment is terminated.  The aggregate annual
compensation  under  these  agreements  was  approximately  $1.7  million  as of
December 31, 2000. In addition,  FFCA has a severance plan for certain other key
employees  which provides that FFCA is liable for the  compensation  benefits of
such  employee  for one year if the  employee  is  terminated  without  cause in
connection with a change in control, as defined.

     FFCA also leases building space under a non-cancelable  operating lease and
certain equipment under capital lease  arrangements.  Rental payments related to
these leases are not material.

                                      F-16
<PAGE>
(15) QUARTERLY FINANCIAL INFORMATION (UNAUDITED):

                                                 QUARTER ENDED
                               -------------------------------------------------
                               MARCH 31,   JUNE 30,  SEPTEMBER 30,  DECEMBER 31,
                               ---------   --------  -------------  ------------
                                 (amounts in thousands, except per share data)
       2000
       Revenues                 $57,882    $56,316     $60,121        $58,176
       Net income                34,201     33,152      38,902         34,277
       Net income per share,
           assuming dilution       0.61       0.59        0.69           0.61
       Dividends per share      $  0.53    $  0.53     $  0.53        $  0.56

       Weighted average shares   56,466     56,580      56,704         56,466

       1999
       Revenues                 $48,520    $53,211     $59,472        $57,272
       Net income                25,459     36,458      46,328         40,482
       Net income per share,
           assuming dilution       0.48       0.65        0.83           0.72
       Dividends per share      $  0.49    $  0.49     $  0.49        $  0.53

       Weighted average shares   53,533     56,107      56,135         56,206

     FFCA adopted  Staff  Accounting  Bulletin 101 during the fourth  quarter of
2000.  Accordingly,  revenues, net income and net income per share for the first
three  quarters of 2000 have been  restated  to comply with that new  accounting
standard.   Revenues,  net  income  and  net  income  per  share,  respectively,
originally  reported  were  $58,632,  $34,951  and $0.62 in the  first  quarter,
$57,066,  $33,902 and $0.60 in the second quarter and $58,621, $37,402 and $0.66
in the third quarter.  Due to rounding,  the sum of the quarterly net income per
share amounts may not agree to the year-to-date net income per share amounts.

                                      F-17
<PAGE>
                                                                    SCHEDULE III
                                                                     Page 1 of 2

                    FRANCHISE FINANCE CORPORATION OF AMERICA
              SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AS OF DECEMBER 31, 2000
                          (Dollar amounts in thousands)

<TABLE>
<CAPTION>
                                  INITIAL COST TO COMPANY AND
                               GROSS AMOUNT AT DECEMBER 31, 2000                     ACCUMULATED DEPRECIATION
               --------------------------------------------------------------   ------------------------------------
                 NO. OF
U.S. REGION    PROPERTIES      LAND      BUILDINGS    EQUIPMENT      TOTAL      BUILDINGS    EQUIPMENT      TOTAL
-----------    ----------      ----      ---------    ---------      -----      ---------    ---------      -----
<S>                   <C>   <C>          <C>          <C>          <C>          <C>          <C>          <C>
E.N. Central       329      $ 86,031     $153,951      $ 3,841     $  243,823    $ 35,445     $ 3,831     $ 39,276
Mideast            296        86,211      128,118        1,998        216,327      23,924         835       24,759
Mountain           207        59,784       85,271        1,422        146,477      15,989       1,422       17,411
Northeast          141        35,135       49,888        3,358         88,381      11,702       2,388       14,090
Pacific            185        58,311       50,894          182        109,387      16,010         182       16,192
Southeast          566       144,068      202,558        5,389        352,015      57,702       3,181       60,883
Southwest          290        73,278      106,139        3,818        183,235      30,032       3,818       33,850
W.N. Central       198        36,803       65,516        2,269        104,588      18,523       2,233       20,756
                 -----      --------     --------      -------     ----------    --------     -------     --------

TOTAL            2,212      $579,621     $842,335      $22,277     $1,444,233    $209,327     $17,890     $227,217
                 =====      ========     ========      =======     ==========    ========     =======     ========
</TABLE>

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

                    FRANCHISE FINANCE CORPORATION OF AMERICA
              SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AS OF DECEMBER 31, 2000
                             (Amounts in thousands)

NOTES:
     (1)  The  properties   consist  of  restaurants,   convenience  stores  and
          automotive service and parts properties.
     (2)  There are no encumbrances on properties.
     (3)  The aggregate  cost for Federal  income tax purposes is  approximately
          $1.5 billion.
     (4)  Depreciation  is computed over the  estimated  useful life of 24 to 30
          years  for the  buildings  and  improvements  and 7 to 8 years for the
          equipment.
     (5)  Transactions in real estate and equipment and accumulated depreciation
          during 2000, 1999, and 1998 are summarized as follows:

                                                                    ACCUMULATED
                                                    COST            DEPRECIATION
                                                 -----------        -----------
Balance, December 31, 1997                       $  951,305           $175,263

      Acquisitions                                  367,509                 --
      Cost of real estate sold                      (36,030)            (8,877)
      Cost of equipment sold                         (4,169)            (4,156)
      Impairment loss                                (4,015)                --
      Depreciation expense                               --             23,350
                                                 ----------           --------

Balance, December 31, 1998                        1,274,600            185,580

      Acquisitions                                  260,854                 --
      Cost of real estate sold                      (57,597)            (8,202)
      Cost of equipment sold                         (1,492)            (1,492)
      Impairment loss                                (1,607)                --
      Depreciation expense                               --             29,514
                                                 ----------           --------

Balance, December 31, 1999                        1,474,758            205,400

      Acquisitions                                   55,694                 --
      Cost of real estate sold                      (84,317)            (9,437)
      Cost of equipment sold                         (1,757)            (1,682)
      Impairment loss                                  (145)                --
      Depreciation expense                               --             32,936
                                                 ----------           --------

Balance, December 31, 2000                       $1,444,233           $227,217
                                                 ==========           ========

                                      F-19
<PAGE>
                                                                     SCHEDULE IV
                                                                     Page 1 of 2

                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    SCHEDULE OF MORTGAGE LOANS ON REAL ESTATE
                             AS OF DECEMBER 31, 2000
                          (Dollar amounts in thousands)
<TABLE>
<CAPTION>
                                                                                                            PRINCIPAL AMOUNT OF
                                                                                        FACE     CARRYING     LOANS SUBJECT TO
                  ORIGINAL     NO. OF       INTEREST             MATURITY DATE        AMOUNT OF  AMOUNT OF  DELINQUENT PRINCIPAL
U.S. REGION     LOAN AMOUNT  PROPERTIES    RATE RANGE                RANGE            MORTGAGES  MORTGAGES      OR INTEREST
-----------     -----------  ----------    ----------                -----            ---------  ---------      -----------
<S>             <C>          <C>         <C>                 <C>                      <C>       <C>             <C>
Southeast        under $500      18       10.0% - 13.50%      Apr. 2002 - Jul. 2019   $  7,524   $  6,302          $   --
                $501-$1,000      12       9.25% - 11.10%      Jul. 2014 - Jul. 2019      7,836      7,696              --
                over $1,000       2      10.20% - 11.10%     Sept. 2001 - Jul. 2006     25,345      7,005              23
                                                                                      --------   --------          ------
                                                                                        40,705     21,003              23
                                                                                      --------   --------          ------

Mideast          under $500               10.2% - 11.00%      Apr. 2001 - Jan. 2007      1,464        680              --
                $501-$1,000       4       9.25% - 11.20%      Jul. 2006 - Jul. 2019      3,655      3,334              62
                over $1,000                       11.70%                  Oct. 2004      1,300      1,257              --
                                                                                      --------   --------          ------
                                                                                         6,419      5,271              62
                                                                                      --------   --------          ------

Northeast        under $500       1      11.50% - 11.70%      Jul. 2001 - Mar. 2007        552        436              --
                $501-$1,000       1       9.72% - 11.50%      Nov. 2015 - Aug. 2019      1,330      1,295              --
                over $1,000       2               11.50%     Sept. 2015 - Nov. 2015      3,062      1,996           1,429
                                                                                      --------   --------          ------
                                                                                         4,944      3,727           1,429
                                                                                      --------   --------          ------

E.N. Central     under $500               8.82% - 12.00%      Apr. 2001 - June 2007      1,961        922              --
                $501-$1,000       1       11.0% - 11.25%      Oct. 2002 - Oct. 2015      2,226        416              96
                over $1,000      26       9.75% - 12.70%     Sept. 2001 - Jun. 2024     12,915     11,000              --
                                                                                      --------   --------          ------
                                                                                        17,102     12,338              96
                                                                                      --------   --------          ------

W.N. Central     under $500       2       9.25% - 11.00%       May 2010 - Jan. 2020      1,043        809               4
                $501-$1,000       3       9.25% - 13.50%      Sep. 2002 - Jan. 2020      2,693      1,958              --
                                                                                      --------   --------          ------
                                                                                         3,736      2,767               4
                                                                                      --------   --------          ------

Southwest        under $500       8       9.25% - 11.70%      Nov. 2001 - Jul. 2019      6,151      5,099              --
                $501-$1,000       4       8.52% - 11.76%      Aug. 2000 - Oct. 2019      3,143      2,885              --
                over $1,000       1                9.63%                 Aug. 2019       1,039      1,043              --
                                                                                      --------   --------          ------
                                                                                        10,333      9,027              --
                                                                                      --------   --------          ------

Mountain         under $500       2       8.74% - 11.65%       Aug. 2001 - May 2019      4,118      2,244              --
                $501-$1,000       1       9.25% - 14.50%      Mar. 2001 - Mar. 2019      2,536      1,227              --
                                                                                      --------   --------          ------
                                                                                         6,654      3,471              --
                                                                                      --------   --------          ------

Pacific          under $500              10.25% - 11.00%       Jan. 2004 - May 2005        440        288              --
                $501-$1,000       1      11.50% - 11.70%     Sept. 2002 - Nov. 2019      1,061        705              --
                over $1,000       1                9.93%                   May 2017      1,399        991             173
                                                                                      --------   --------          ------
                                                                                         2,900      1,984             173
                                                                                      --------   --------          ------

                                                                        TOTAL         $ 92,793   $ 59,588          $1,787
                                                                                      ========   ========          ======
</TABLE>
                                      F-20
<PAGE>
                                                                     SCHEDULE IV
                                                                     Page 2 of 2

                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    SCHEDULE OF MORTGAGE LOANS ON REAL ESTATE
                             AS OF DECEMBER 31, 2000
                             (Amounts in thousands)

NOTES:
     (1)  Generally,  loans are first  mortgages on the land,  buildings  and/or
          equipment of restaurants,  convenience  stores and automotive  service
          and parts properties.
     (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
          $64 million.
     (6)  Transactions  in mortgage  loans on real estate during 2000,  1999 and
          1998 are summarized as follows:


Balance, December 31, 1997                                             $ 35,184
  Additions during period:
      New mortgage loans                                                 22,948
      Recognition of deferred gain, net of additional
        deferred gains in 1998                                              750
      Net loan fees recognized                                              496
  Deductions during period:
      Collections of principal                                           (1,741)
      Mortgage loan payoffs                                             (13,176)
      Reserve for mortgage loan losses                                   (1,118)
                                                                       --------

Balance, December 31, 1998                                               43,343
  Additions during period:
      New mortgage loans                                                 31,152
      Recognition of deferred gain, net of additional
        deferred gains in 1999                                              333
  Deductions during period:
      Collections of principal                                           (2,906)
      Mortgage loan payoffs                                             (10,175)
      Reserve for mortgage loan losses                                     (644)
      Foreclosures                                                       (3,107)
                                                                       --------

Balance, December 31, 1999                                               57,996
  Additions during period:
      New mortgage loans                                                 43,684
      Recognition of deferred gain, net of additional
        deferred gains in 2000                                              384
      Reversal of loan loss reserves                                      1,560
  Deductions during period:
      Collections of principal                                           (5,961)
      Mortgage loan payoffs                                             (23,122)
      Reserve for mortgage loan losses                                   (1,181)
      Foreclosures                                                      (13,772)
                                                                       --------

Balance, December 31, 2000                                             $ 59,588
                                                                       ========

                                      F-21
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA

                                  EXHIBIT INDEX

The  following is a complete  list of exhibits  filed as part of this Form 10-K.
Exhibit  numbers  correspond  to the numbers in the Exhibit Table of Item 601 of
Regulation S-K.

EXHIBIT NO.                           DESCRIPTION
-----------                           -----------
   2.01        Articles of Merger  between FFCA  Maryland  Corp.  and  Franchise
               Finance Corporation of America (1)

   2.02        Certificate  of Ownership and Merger  merging  Franchise  Finance
               Corporation of America into FFCA Maryland Corp. (1)

   3.01        The Amendment  and  Restatement  of Charter of Franchise  Finance
               Corporation  of  America is  included  in  Exhibit  2.01,  and is
               incorporated herein by reference

   3.02        Bylaws of Franchise Finance Corporation of America (1)

   4.01        Indenture dated as of November 21, 1995 (2)

   4.02        First Supplemental Indenture effective as of December 31, 2000 *

   4.03        Specimen of Common Stock Certificate (3)

   4.04        Officers'  Certificate  relating to the 7-7/8%  Senior  Notes Due
               2005 of Franchise Finance Corporation of America (4)

   4.05        Officers'  Certificate relating to the Medium-Term Notes due Nine
               Months  or More  from  the Date of  Issue  of  Franchise  Finance
               Corporation of America (5)

   4.06        Form of  Medium-Term  Fixed Rate Note and  Floating  Rate Note of
               Franchise Finance Corporation of America (6)

   4.07        Officers' Certificate relating to the 8.25% Senior Notes Due 2003
               of Franchise Finance Corporation of America (7)

   4.08        Rights  Agreement,  dated as of April 7, 1999,  between Franchise
               Finance Corporation of America and Gemisys Corporation, as Rights
               Agent (8)

   4.09        Officers' Certificate relating to the 8.75% Senior Notes Due 2010
               of Franchise Finance Corporation of America (9)

   10.01       1995  Stock  Option  and  Incentive  Plan  of  Franchise  Finance
               Corporation of America (10)

   10.02       Amendment  No. 1 to the 1995 Stock Option and  Incentive  Plan of
               Franchise Finance Corporation of America (11)
<PAGE>
   10.03       Amendment  No. 2 to the 1995 Stock Option and  Incentive  Plan of
               Franchise Finance Corporation of America *

   10.04       Master Loan  Purchase  Agreement,  dated as of December 14, 1999,
               between FFCA  Acquisition  Corporation,  as Seller and Washington
               Mutual Bank, FA, as Purchaser (12)

   10.05       Guaranty by Franchise Finance  Corporation,  dated as of December
               14, 1999, of certain obligations of FFCA Acquisition  Corporation
               for the benefit of Washington Mutual (12)

   10.06       Amended and Restated Employment Agreement, dated as of January 1,
               2000, between Franchise Finance Corporation of America and Morton
               H. Fleischer (13)

   10.07       Amended and Restated Employment Agreement, dated as of January 1,
               2000,  between  Franchise  Finance  Corporation  of  America  and
               Christopher H. Volk (13)

   10.08       Amended and Restated Employment Agreement, dated as of January 1,
               2000,  between Franchise Finance  Corporation of America and John
               R. Barravecchia (13)

   10.09       Amended and Restated Employment Agreement, dated as of January 1,
               2000, between Franchise Finance Corporation of America and Dennis
               L. Ruben (13)

   10.10       Amended and Restated Employment Agreement, dated as of January 1,
               2000,  between  Franchise  Finance  Corporation  of  America  and
               Stephen G. Schmitz (13)

   21.01       Subsidiaries of the Registrant*

   23.01       Consent of Arthur Andersen LLP*

   99.01       Third Amended and Restated Credit Agreement dated as of September
               15, 2000 among Franchise Finance Corporation of America,  Certain
               Lenders and Bank of America, N.A. (9)

   99.02       Credit Agreement among Franchise Finance  Corporation of America,
               Certain  Lenders and Bank of America,  N.A. dated as of September
               15, 2000 (9)

   99.03       Third Amended and Restated Sale and Servicing  Agreement dated as
               of January 1, 2001, among FFCA Franchise Loan Owner Trust 1998-1,
               FFCA Loan Warehouse  Corporation,  FFCA Acquisition  Corporation,
               Franchise  Finance   Corporation  of  America  and  LaSalle  Bank
               National Association f/k/a LaSalle National Bank (1)
<PAGE>
   99.04       Loan Purchase Agreement dated as of August 14, 1998, between FFCA
               Loan Warehouse Corporation and FFCA Acquisition Corporation (14)

   99.05       Amendment No. 1, dated as of March 18, 1999, to the Loan Purchase
               Agreement  between  FFCA  Loan  Warehouse  Corporation  and  FFCA
               Acquisition Corporation (13)

   99.06       Amendment  No.  2,  dated  as of  January  1,  2000,  to the Loan
               Purchase  Agreement  between FFCA Loan Warehouse  Corporation and
               FFCA Acquisition Corporation (13)

   99.07       Indenture  dated as of August 14, 1998,  between  FFCA  Franchise
               Loan Owner Trust 1998-1 and LaSalle National Bank. (14)

   99.08       Fifth  Amended and  Restated  Indenture  Supplement,  dated as of
               January 1, 2001,  between FFCA  Franchise Loan Owner Trust 1998-1
               and LaSalle Bank National Association f/k/a LaSalle National Bank
               (1)

   99.09       Amended and Restated Note Purchase  Agreement dated as of January
               1, 2001,  among FFCA  Franchise  Loan Owner  Trust  1998-1,  FFCA
               Acquisition  Corporation,  FFCA Loan  Warehouse  Corporation  and
               Morgan Stanley Securitization Funding Inc. (1)

   99.10       Note  Purchase  Agreement  dated  April 22,  1999,  between  FFCA
               Secured   Lending   Corporation,   and   Morgan   Stanley  &  Co.
               Incorporated, Salomon Smith Barney Inc. and Prudential Securities
               Incorporated,  as initial  purchasers of  $371,908,000  aggregate
               principal  or  notional  amount of Secured  Franchise  Loan Trust
               Certificates,  Series 1999-1,  Class A-1a, Class A-1b, Class A-2,
               Class B-1,  Class B-2, Class C-1, Class C-2, Class D-1, Class D-2
               and Class IO (15)

   99.11       Prospectus  Supplement  dated  September  18, 2001, to Prospectus
               dated April 16, 1998 (9)

----------
*    Filed herewith.
(1)  Incorporated by reference from the Registrant's  Current Report on Form 8-K
     dated  December  31,  2000,  as filed  with  the  Securities  and  Exchange
     Commission.
(2)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  November  24,  1995,  as filed  with  the  Securities  and  Exchange
     Commission.
(3)  Incorporated by reference from the Registrant's  Registration  Statement on
     Form S-4 and amendments thereto  (Registration  Number 33-65302),  as filed
     with the Securities and Exchange Commission.
(4)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  November  24,  1995,  as filed  with  the  Securities  and  Exchange
     Commission.
(5)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  February  14,  1996,  as filed  with  the  Securities  and  Exchange
     Commission.
(6)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated April 16, 1998, as filed with the Securities and Exchange Commission.
(7)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  October  27,  1998,  as  filed  with  the  Securities  and  Exchange
     Commission.
(8)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated April 7, 1999, as filed with the Securities and Exchange Commission.
(9)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  September  15,  2000,  as filed  with the  Securities  and  Exchange
     Commission.
(10) Incorporated by reference from the Registrant's  Annual Report on Form 10-K
     for the fiscal year ended  December 31, 1995, as filed with the  Securities
     and Exchange Commission.
<PAGE>
(11) Incorporated by reference from the  Registrant's  Quarterly  Report on Form
     10-Q for the  fiscal  quarter  ended  June  30,  1999,  as  filed  with the
     Securities and Exchange Commission.
(12) Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  December  14,  1999,  as filed  with  the  Securities  and  Exchange
     Commission.
(13) Incorporated by reference from the Registrant's  Annual Report on Form 10-K
     for the fiscal year ended  December 31, 1999, as filed with the  Securities
     and Exchange Commission.
(14) Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  August  14,  1998,  as  filed  with  the   Securities  and  Exchange
     Commission.
(15) Incorporated by reference from the  Registrant's  Quarterly  Report on Form
     10-Q for the  fiscal  quarter  ended  March  31,  1999,  as filed  with the
     Securities and Exchange Commission.