FORM 10-K

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

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

    FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999

                                       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)

                 Delaware                                        86-0736091
         ------------------------                            -------------------
         (State of incorporation)                             (I.R.S. Employer
                                                             Identification No.)
          The Perimeter Center
       17207 North Perimeter Drive
          Scottsdale, Arizona                                      85255
----------------------------------------                         ----------
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code: (480) 585-4500

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

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

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

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

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

     The aggregate  market value of the voting stock held by  non-affiliates  of
the Registrant as of February 15, 2000 was $1,239,961,913.

     The number of shares of the Registrant's  $.01 par value common stock as of
February 15, 2000 was 56,241,312.

                       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 10, 2000, to be filed pursuant to Regulation 14A.
<PAGE>
                                     PART I

ITEM 1. BUSINESS.

BACKGROUND

     Franchise  Finance  Corporation of America ("FFCA") is a  self-administered
real estate  investment  trust ("REIT") which provides real estate  financing to
multi-unit  operators of chain  restaurants,  convenience  stores and automotive
services and parts outlets.  FFCA offers  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. 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, 1999, FFCA had interests in approximately  5,300 properties operated by over
480  operators in  approximately  150 chains  located in 49 states and in Canada
(though  investments  in Canada are not  significant).  The common stock of FFCA
began  trading on the New York Stock  Exchange on June 29, 1994 under the symbol
"FFA".

     During  1999,  FFCA  originated  $1.36  billion  in new  mortgage  loan and
sale-leaseback investments.  This surpassed FFCA's 1998 investment level of $928
million by 46%. Aside from the growth  generated by new  restaurant  financings,
recent  investment  growth is also  attributable  to FFCA's  expansion  into the
convenience store and automotive  services and parts industries,  which together
accounted for over $918 million,  or 68% of the new  investments  in 1999.  FFCA
invested  in over  1,900  properties  during  1999,  and  cumulative  investment
activity now totals nearly $3.5 billion since the formation of FFCA as a REIT in
June 1994.

     FFCA's  increased  volume of  investment  activity  was funded from various
sources of capital. In January 1999, FFCA increased its capital by completing an
equity offering,  raising net proceeds of approximately $146 million through the
issuance of 6.7 million  shares of FFCA common  stock.  In February  1999,  FFCA
expanded its bank  borrowing  capacity by entering into a separate  one-year $75
million revolving loan facility (which FFCA chose not to renew in February 2000)
on the same terms as its existing $350 million loan  facility.  Also,  FFCA made
use of its existing loan sale  facility by selling $1 billion in mortgage  loans
to a trust in sixteen  separate  transactions  during 1999. In August 1999, FFCA
increased this committed loan sale facility from $600 million to $900 million to
accommodate  the higher level of  acquisitions  achieved in 1999.  The loan sale
facility  has since been  renewed  through  December  2000 in the amount of $600
million.  On January 14, 2000, FFCA issued $50 million in unsecured notes due in
2002, bearing interest at 8.43%, and $50 million in unsecured notes due in 2004,
bearing  interest  at 8.68%.  Proceeds of the notes were used to pay down FFCA's
revolving line of credit.

     In May and October 1999, FFCA completed its fourth and fifth securitization
transactions.  Certain  mortgage loans originated by FFCA and its affiliates and
sold into the loan sale facility,  totaling $1.1 billion,  were  securitized and

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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 in approximately 10% of the aggregate  mortgage loan principal balance
through the purchase of subordinated investment securities of the securitization
trust.

     As 1999 progressed,  the stock market's negative  perception of REITs meant
that FFCA could not rely on new equity issuances to fund its growth, even though
FFCA's  stock  outperformed  the REIT  industry.  In April 1999,  FFCA adopted a
shareholder rights plan 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 believed not to be in the best interests of the shareholders. Also
during  1999,  FFCA  explored a number of  strategic  options to  diversify  its
capital sources.  After  consideration of various options, in December 1999 FFCA
entered into a three-year loan sale agreement with  Washington  Mutual Bank, FA,
whereby  Washington  Mutual agreed to purchase  loans that FFCA  originates  and
services.  This alliance  with the nation's  ninth  largest  financial  services
company  to be  its  exclusive  provider  of  chain  store  loans  represents  a
significant  source of new capital.  FFCA  anticipates that this will reduce its
reliance  on debt and  shareholder  equity as  sources  of  capital  to fund its
continued growth. Under the loan sale agreement, Washington Mutual will purchase
mortgage loans from FFCA at the time the loans are  originated;  however,  there
can be no assurance  that  Washington  Mutual will purchase every loan that FFCA
originates.  Therefore,  while FFCA will no longer have to rely on  accumulating
large  amounts of  mortgage  loans  (using its bank lines of credit to carry the
loans)  and  selling  the  loans  through  securitization  transactions,  it may
continue to securitize loans in some cases.

     As a REIT, FFCA's tax status restricts it from taking full advantage of the
opportunities  provided by the loan sale  agreement  with  Washington  Mutual by
preventing REITs from originating and subsequently selling mortgage loans (other
than through certain  structured  securitization  transactions);  therefore,  on
January 4, 2000, FFCA established a nonqualified  REIT subsidiary,  FFCA Funding
Corporation   ("Funding  Corp."),  to  originate  mortgage  loans  for  sale  to
Washington  Mutual.  These  mortgage  loans  would be  serviced  by  FFCA.  FFCA
transferred,  among other things, its future mortgage loan origination  business
(including a transfer of certain  employees and an assignment of the  Washington
Mutual  loan sale  agreement)  to Funding  Corp.  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 Corp.  Certain executive officers of FFCA own
all of the outstanding voting common stock of Funding Corp.

     Other  events  occurring  in 1999  included  an  increase  of 8% in  FFCA's
quarterly  dividend  to $0.53  from $0.49 for the  fourth  quarter  of 1999.  In
addition,  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. The
timing of the purchases and the actual  number of common shares  purchased  will
depend on market conditions and available cash flow.

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     As of December 31, 1999,  FFCA had 159 full-time  employees and 5 part-time
employees.  FFCA has three-year employment agreements with five of its executive
officers.

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.

     Certain 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 uses interest rate agreements to hedge its exposure to changes in
          interest  rates that could affect the value of its mortgage  loans and
          investments  held for sale;  however,  there can be no assurance  that
          these  hedges will be  effective  in all cases.  FFCA only enters into
          interest rate agreements with creditworthy institutions;  however FFCA
          is exposed to the risk of credit  loss in the event of  nonperformance
          by the counterparties to the contracts.

     *    FFCA  faces  increasing   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  may have  greater  resources or
          access to capital at more competitive rates than FFCA. This increasing
          competition could negatively affect FFCA's growth.

     *    In order to  continue  to grow,  FFCA  needs  adequate  access  to the
          capital  markets.  Capital  sources  can  include  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.  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  a  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

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<PAGE>
          debt in the future at an acceptable  cost of capital.  There can be no
          assurance that FFCA will be able to raise  sufficient  capital through
          borrowings,  or the  issuance  of  debt  securities,  to  achieve  its
          investment objectives.

     *    Investment in real estate in the chain restaurant  industry as well as
          the convenience store and automotive  services and parts industries is
          subject to general economic market conditions and conditions unique to
          each  industry.  Industry  risks  include a  decrease  in  demand  for
          products,   increased  labor  costs,  increased  number  of  competing
          properties   offering  similar  products,   and  dependence  on  local
          management for the profitable  operation of the properties.  The chain
          restaurant industry is subject to the risk of changing consumer demand
          and food preferences and contaminated  food products.  The convenience
          store  industry is subject to competition  from new retail  facilities
          offering similar products in the immediate vicinity of each particular
          store and, to the extent  applicable,  the margins  available from the
          sale of gasoline and availability of gasoline supplies. The automotive
          services and parts industry is subject to technological changes in the
          production  and  maintenance  of  automobiles  and  changing  consumer
          preferences  in  transportation  options.  FFCA's success is dependent
          upon the success of these  industries  in general,  and the success of
          the specific chains and retail facilities which FFCA finances.

     *    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 asset-backed
          securities  market  specifically,  the credit quality of FFCA's loans,
          the size and  diversification of the loan pools,  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.

     *    FFCA owns subordinated interests in securitized mortgage loans and may
          acquire   additional   subordinated   securities  of  future  mortgage
          securitization transactions.  To the extent of this ownership, FFCA is
          in a "first loss" position with respect to third parties that purchase
          senior  securities in the  securitization  and has a greater risk with
          respect to its investment in the nonpayment of the mortgage  loans. 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.

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

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     *    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.

     *    Under various federal, state and local environmental laws, ordinances,
          and  regulations,  FFCA  could be liable  for the costs of  removal or
          remediation of hazardous or toxic  substances on, under,  in or near a
          chain store property. Additionally, FFCA did not perform environmental
          investigations on certain  properties  acquired from its predecessors.
          While  FFCA  has  purchased  environmental  insurance  for some of the
          properties,  the insurance may not cover all the costs associated with
          any environmental liabilities.

     *    FFCA elected to be taxed as a REIT under the Internal  Revenue Code of
          1986,  which  entitles FFCA to a deduction  for dividends  paid to its
          shareholders  when  calculating  its  taxable  income.  Although  FFCA
          intends to operate so that it will continue to qualify as a REIT,  the
          complex nature of the rules governing REITs, the ongoing importance of
          factual determinations and the possibility of future changes in FFCA's
          circumstances  preclude  any  assurance  that FFCA will qualify in any
          given year.

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

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

BUSINESS STRATEGY

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

     FFCA'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

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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, 1999,
78% of the revenues generated by the portfolio reflect  restaurant  investments,
17% reflect convenience store investments and 5% reflect automotive services and
parts  investments.  During  1999,  FFCA made a  strategic  decision to focus on
offering  mortgage loan  products,  rather than long-term  leases,  because they
provided better  shareholder  returns.  As a result,  mortgage loans represented
over 80% of FFCA's new investments in 1999 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 an  alliance  with
Washington  Mutual  Bank,  FA, the nation's  ninth  largest  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 alliance, along with FFCA's traditional capital sources,
including  the  mortgage  loan  securitization   market,  has  increased  FFCA's
financial  flexibility  while  providing an  attractive  return on equity to its
shareholders.   FFCA  will  continue  to  consider  appropriate  new  investment
opportunities in the future.

     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, 1999, FFCA had
investments in more than 5,300 locations throughout the United States and Canada
(though investments in Canada are 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 1999. These experienced multi-unit
operators  conduct  business  under  nationally or regionally  recognized  brand
names.  FFCA's  portfolio  includes over 150 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. As FFCA continues to grow,  management expects the portfolio
to continue to become more diversified. As a result, FFCA believes it is able to
achieve a better risk-adjusted return for its shareholders.

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     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
upon a  participation  in the  gross  sales  from the  properties  or  specified
contractual increases.  In addition, FFCA will purchase existing properties that
are subject to leases already in place.  The mortgage  loans  originated by FFCA
will  generally  be pooled and sold  under the  recently  negotiated  Washington
Mutual agreement with FFCA retaining the mortgage  servicing  rights.  Mortgages
also may be 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  non-performing  leases  and  loans  and  also
supervise  the  in-house  administration  of  property  dispositions  and tenant
substitutions.  FFCA has an established record of resolving  underperforming and
non-performing  leased assets,  with a current  vacancy rate of less than 1% and
the vacancy level in the portfolio  maintained at less than 2% since FFCA became
a REIT in 1994.

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.

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     *    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  tenant  or
          borrower  recourse.  Many of FFCA's  leases  and  mortgages  also have
          recourse to  guarantors  who are owners or affiliates of the tenant or
          borrower.  FFCA  reviews  tenant,  borrower  and  guarantor  financial
          strength to assess the availability of alternate sources of payment in
          the event  that cash flow from  operations  might be  insufficient  to
          provide the funds  necessary  to make lease or mortgage  payments.  In
          general,  FFCA  requires  all  properties  that are leased to the same
          multi-unit   chain   store   operator   or   its   affiliates   to  be
          cross-defaulted  and requires all mortgage  loans that are made to the
          same   multi-unit    operator   or   its   affiliates   to   be   both
          cross-collateralized and cross-defaulted.

     *    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).

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.

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     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 5,300
locations  throughout the United States and Canada (though investments in Canada
are not  significant).  During  the year ended  December  31,  1999,  78% of the
revenues generated by the portfolio reflect restaurant investments,  17% reflect
convenience  store  investments  and 5% reflect  automotive  services  and parts
investments.  FFCA's portfolio includes over 150 different chains. The following
table sets forth FFCA's  revenues  generated  from its  portfolio of chain store
properties during the year ended December 31, 1999.

                                       10
<PAGE>
                        CHAIN DIVERSIFICATION BY REVENUE
                      FOR THE YEAR ENDED DECEMBER 31, 1999
                             (AMOUNTS IN THOUSANDS)

                                                                   Percentage
                                                                       of
           Chain                                  Total Revenues*     Total
           -----                                  ---------------     -----
     Burger King                                     $ 28,323          13%
     Arby's                                            17,427           8%
     Jack in the Box                                   13,680           7%
     Hardee's                                          10,982           5%
     Wendy's                                           10,745           5%
     Quincy's                                           9,643           5%
     Pizza Hut                                          8,957           4%
     Taco Bell                                          5,445           3%
     Applebee's                                         5,114           2%
     KFC                                                4,953           2%
     Long John Silver's                                 4,690           2%
     Clark/On the Go                                    4,271           2%
     7-Eleven                                           4,085           2%
     Denny's                                            3,569           2%
     Flying J Travel Plaza                              3,435           2%
     Black-Eyed Pea                                     3,380           2%
     Fuddrucker's                                       3,174           2%
     Checker Auto Parts                                 2,747           1%
     E-Z Serve                                          2,696           1%
     Midas Muffler Shops                                2,687           1%
     Dairy Mart                                         2,679           1%
     Popeye's                                           2,543           1%
     Max & Erma's                                       2,408           1%
     Conoco                                             2,106           1%
     All other chains                                  51,296          25%
                                                     --------        ----
                     TOTALS                          $211,035         100%
                                                     ========        ====

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

     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 over 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 1999,
1998 or 1997.

                                       11
<PAGE>
INFORMATION SYSTEMS

     To enhance its  investment  evaluation and  origination,  FFCA has invested
extensively  in  information  systems that are specific to the chain  restaurant
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 recently 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  restaurant-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 non-performing assets. FFCA publishes
research on the chain restaurant industry that includes observations of industry
issues  and  trends,  areas of growth,  and the  economics  of chain  restaurant
operation.  In 1998,  FFCA first  published  its research on  convenience  store
industry  observations and trends.  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
to accommodate a higher volume of transactions. The design and implementation of
these new  systems  was  necessary  to develop a more  efficient  loan and lease
origination  system  that  would  permit  a  high  level  of  growth  in  FFCA's
origination activity while containing operating costs. In addition,  investments
in  information  systems  infrastructure  made  during  the  year,  such as high
bandwidth Internet access, position FFCA to be able to take advantage of new and
emerging technologies in communications and commerce.

     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 through  January 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.  FFCA will  continue  to monitor  the status of its  clients and
vendors for any potentially  significant  business  interruptions that may arise
from difficulties they may experience as a result of the Year 2000 issue.  Costs
incurred to date in addressing Year 2000 issues have not been material. Based on
current  estimates,  FFCA believes any additional  costs of addressing Year 2000
issues will not be material.

                                       12
<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.  Competing
participants  include banks,  insurance  companies,  finance companies,  leasing
companies  and other real estate  investment  trusts.  FFCA believes that it has
several  competitive  advantages  that enable it to be selective with respect to
its real estate investments.  FFCA's large market  capitalization  permits it to
make both large and small real estate  investments  and to obtain  capital  from
numerous  sources at  competitive  rates.  FFCA's  real estate  investments  are
comprised of properties that are diversified by industry,  chain store operator,
chain and geographic location.  Diversification reduces risk and has a favorable
impact upon FFCA's access to, and cost of,  capital.  FFCA's  "Preferred  Client
Program" is designed to offer forward  financing  commitments  and a streamlined
financing  process  for  leading  chain  store  operators  in  order to build on
long-term  business  relationships  instead of the historic industry practice of
financing real estate on an inefficient,  transaction-by-transaction basis. FFCA
believes it offers  superior  client service  resulting  from  continuity of its
management and industry specialization and knowledge.  FFCA, with the ability to
provide both  sale-leaseback  financing and mortgage  loans,  improves the chain
store operators' financing  flexibility and provides a competitive  advantage to
FFCA in providing financing opportunities.

FOODSERVICE INDUSTRY

     In 1999, the foodservice industry achieved sales of nearly $360 billion, or
3.9% of the Gross Domestic Product,  making it one of the largest sectors of the
nation's  economy as defined by the  Department  of  Commerce.  The  foodservice
industry  includes three major segments:  commercial (for example,  restaurants,
bars and taverns, lodging, food contractors and other commercial), institutional
(for  example,   colleges,   universities  and  hospitals)  and  military.   The
foodservice industry, in its ninth year of real expansion,  tracks the growth of
the U.S. economy, which is entering its 10th year of growth. Average daily sales
in the foodservice industry exceed $1 billion, and nearly half of all adults are
restaurant patrons on any given day.

     The  foodservice  industry  as a whole grew 5.2% in 1999  according  to the
National  Restaurant  Association  (NRA),  with the greatest growth in the other
commercial and the full service  restaurant  segments.  In real terms  (constant
dollars),  the industry grew 2.9%, outpacing inflation (2.2%). Overall sales for
eating places (i.e.  restaurant  industry)  increased 3.1% in real terms,  while
commercial sales for the foodservice  industry increased 3.0% in real terms. The
largest  increase in real terms for the  foodservice  industry (5.3%) was in the
other commercial  segment,  led by significant  increases in food sales at other
retail outlets,  recreation and sports events,  vending and non-store retailers.
The fastest-growing  areas of the U.S., the  Southwest/Mountain  states (such as
Arizona,  Nevada,  Colorado and Texas),  are expected to show the most growth in
restaurant   sales  (6.2%)  between  1999  and  2000,   while  the  slow-growing

                                       13
<PAGE>
Mid-Atlantic states (such as New York, New Jersey and Pennsylvania) are expected
to show only 3.8%  growth.  The  booming  economy,  coupled  with  increases  in
disposable  personal income, is contributing to the industry's growth,  which is
anticipated to reach $576.9 billion by the year 2010.  However,  projections for
the foodservice  industry would be dramatically  revised if the U.S. experienced
an economic downturn.

     In 2000,  total  industry  sales are  expected  to grow 5%, or 2.2% in real
terms.  Estimates  for real  Gross  Domestic  Product  growth in 2000 range from
3.3%-3.8%,  while  inflation,  measured  by the  Consumer  Price  Index (CPI) is
expected to remain moderate at 2.2%-2.4%.  Economists are forecasting  continued
growth and stable  prices  with no  economic  downturn  in 2000,  which would be
beneficial  for the industry.  Wholesale food prices,  however,  are expected to
increase  1.5% in 2000  (compared  to  relatively  flat growth  between 1997 and
1999), which increases the cost of doing business. Accordingly, 2000 menu prices
are anticipated to increase 2.8%. Menu prices increased 2.5% in 1999,  driven by
increasing  labor costs,  compared to a 2.2%  increase in CPI.  Labor costs rose
4.1% in 1999,  versus 4.8% in 1998, and are expected to increase another 4.5% in
2000.  Restaurants  are already  offering  $8-$9 per hour starting wages in this
tight labor market. The industry employs over 7.9 million people, or 6.1% of the
non-farm  workforce,  according  to the  Bureau  of  Labor  Statistics.  The top
challenge  in the year 2000,  according  to the NRA,  is finding  qualified  and
motivated labor. Full service operators are in a better position with their wide
menu variety to pass price  increases onto  customers.  The limited menu of most
fast food operators, as well as heavy competition and discounting,  make it more
difficult for these operators to pass along the increase.

     Expenditures  on food away from home are  replacing  purchases  for food at
home,  according  to the  Bureau of Labor  Statistics.  Growth  in the  industry
reflects  that more than 44% of total food  dollars  are spent on food away from
home,  which is  projected  to reach 53% by 2010,  compared  to 25% in 1955.  In
addition,  42% of adults  cook fewer  meals than they did just two years ago and
78% of households purchase takeout or delivery food at least once a month.

     Full service  sales  increased  6.7% between 1998 and 1999,  3.1% on a real
basis.  For 2000, full service sales are projected to increase 5.9% in total, or
3.1% in real terms.  A lack of growth in the number of restaurant  units implies
that full service  restaurants are increasing  either their average ticket sales
or customer count. The 1999 average ticket increased for both fast food and full
service operations with an average ticket per person under $10. The wide variety
of tastes and  experiences  available  at full  service  locations  are  drawing
customers  and driving  sales.  Many full  service  operators  are  beginning to
heavily target takeout food,  which would increase  customer count. In addition,
full service  operators,  who traditionally do not heavily  discount,  can raise
menu  prices  more easily  than fast food  operators.  In 1999,  fast food sales
increased 5.0% (2.3% in real dollars).  For 2000,  fast food sales are projected
to increase 4.4%,  only 1.6% in real terms.  In addition,  margins for fast food
are  expected  to be  squeezed in 2000,  with the  anticipated  increase in beef
prices and labor costs.

     Growth in the number of restaurants  has slowed in the past two years,  but
particularly in 1999 to just 0.2% versus approximately 5.0% growth in 1995, 1996
and 1997. The lack of growth is attributable to increased competition,  scarcity

                                       14
<PAGE>
of prime real  estate,  saturation  and the  capital  markets'  general  lack of
confidence in the industry. In addition,  newer concepts are growing more slowly
than others have in the 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  consolidation,  increased  competition,
increased cost of doing business,  tight labor markets and demanding  consumers.
Heightened  competition has led to a divergence in how operators  respond.  Some
companies  are  divesting  non-core  chains,  while  others  are  acquiring  new
concepts. There are an increasing number of multi-concept operators as companies
attempt to  diversify  (many  having  both fast food and casual  locations)  and
spread  costs over more  units.  Many  franchisors  own more than one concept to
offer  selections to  franchisees,  test  products in various  chains and secure
growth  for  their  company.  There  are also,  however,  several  multi-concept
operators  who have  reverted to operating  only one  concept.  Even though this
divergence exists, there appears to be a common trend - operators and restaurant
companies  are  focusing   heavily  on  their  primary  brands  and  operational
fundamentals.  Some companies are consolidating to gain economies of scale or to
increase  sales.  Consolidation  should  continue as  operators  strive to grow,
capital  is  available  and  increasing  size  offers a  meaningful  operational
advantage. Chains will continue to find ways to reduce costs, through technology
and other means.  Presenting a further challenge to the industry,  consumers are
demanding  consistency,  quality and freshness from all operators in addition to
fast, convenient service from fast food operators.

     Overall,  in 1999,  FFCA  saw very  little  new  unit  expansion.  Instead,
operators focused on operations and improving  same-store sales. While customers
ate out more,  much of the market share gains attained by chains were largely at
the expense of other chains. In addition,  the industry is learning to cope with
one of its major challenges - the labor shortage. Operators are increasing their
use of technology  and  developing  innovative  ways to retain workers and limit
employee  turnover.  Many  restaurant  companies have realized that the economic
boom, which has caused the labor shortage,  is also responsible for the increase
in disposable  personal income.  If the unemployment rate were to rise and labor
became abundant,  disposable personal income would decrease,  resulting in lower
industry sales.

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 $216  billion,  which  equates to 2.5% of Gross
Domestic Product. This industry total encompasses  convenience store ("c-store")
merchandise,  c-stores selling gasoline,  and gasoline sold apart from c-stores.
The growth in the convenience store and petroleum marketing industry has largely
been driven by six factors:  1) disposable  personal income; 2) increased desire
for  convenience;  3) increased  travel;  4) increased number of vehicles on the
road;  5) trends in the industry  designed to increase  c-store  demand;  and 6)
price increases in key categories.

                                       15
<PAGE>
     C-store operators and marketers are becoming stronger retailers in response
to changes in the marketplace.  Operators are using consumer research techniques
and scanned data to  understand  their  customer  base.  This  understanding  is
enhancing their  merchandising and marketing skills and focusing their attention
on meeting  consumer  needs.  Recent  changes  in the  industry  include:  image
improvements,  brand  differentiation  focus,  improved customer service, a wide
variety of ancillary  services  offered and tested,  technology  improvements to
enhance and  expedite  service,  volatile  oil  prices,  new  location  designs,
consolidation  among large oil companies,  relationship  changes between the oil
companies  and their  distributors,  and other  channels of trade  targeting the
convenience and gasoline businesses.  With people on the move,  convenience will
play more of a part in choosing  where to shop,  and c-stores  have an advantage
over other  channels in this area.  In  addition,  with  increasing  regulation,
c-stores  may  become  the  de  facto  outlet  for  certain  products,  such  as
cigarettes.

     Many of these changes are a reaction to volatile  gasoline margins and fear
of decreased  tobacco  profits.  Falling oil prices from late 1997 to early 1999
and volatile gasoline margins have led the majors (i.e. large,  fully-integrated
oil companies such as Exxon,  Mobil, BP Amoco,  Shell,  Texaco,  and Chevron) to
consolidate and streamline refining and marketing  (downstream)  operations.  At
the retail level,  customer  service,  economies of scale,  upgraded image,  new
facilities,  ancillary services, and technology are the basis of competition, as
retailers attempt to decrease their reliance on gasoline and tobacco profits.

     Another   profound   change  in  the  c-store   marketplace  is  heightened
competition from new entrants from other retail  channels,  such as supermarkets
and mass merchandisers.  These circumstances, as well as other market pressures,
are changing the way  operators do business.  To increase  sales,  operators are
adding ancillary services such as car washes, lube shops, financial services and
expanded  foodservice.  To increase demand,  the industry is focusing on c-store
operations  to attract  new  demographic  groups  (including  women and  upscale
customers)  through  upgraded  facilities,   improved  technology,  new  service
offerings,  more competitive  merchandise prices, brand enhancement and improved
customer service.  Like most other retail sectors, the industry is becoming more
consumer-focused in the face of competition. Competition, technology, facilities
upgrades  and new  services  are  increasing  the  cost of  doing  business  and
requiring  a larger  initial  and  on-going  investment  per  store.  Government
regulation  and  labor  issues  also  contribute  to the  growing  cost of doing
business.  In 1998,  several  judgments  against  tobacco  companies  in private
lawsuits and the landmark  settlement  with the states,  which  resulted in five
wholesale price increases on cigarettes  (totaling  nearly 50%),  impacted sales
and  margins.   These   circumstances   suggest  further  company  and  operator
consolidations  to provide  increased buying power and other economies of scale.
Through  consolidation,  the  larger  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.

                                       16
<PAGE>
     At c-stores,  in-store sales increased, as did total gasoline gallons sold.
In-store sales were driven by the strong  economy,  the increase in total number
of c-stores,  increased tobacco prices and increased  foodservice  sales.  Total
c-store sales have  increased  every year since 1971,  according to the National
Association  of  Convenience  Stores,   (prior  years  were  estimated  and  not
considered).  The top  product  category  in 1998  was  cigarettes  at  28.9% of
in-store sales,  followed by foodservice at 13.9%,  beer at 12.7%,  and packaged
beverages at 12.3%.  These four categories  comprise over 67% of in-store sales.
Gross margin for foodservice at 55.2% (category  average) was the highest in the
top 10  categories,  and was  second  only to ice  over all  categories.  Within
foodservice, food prepared on site (53.2%), cold fountain drinks (60.6%) and hot
beverages  (68.5%) had gross margins at or above 50% in 1998.  For the industry,
both in-store and gasoline cents per gallon margins decreased in 1998.  Gasoline
prices reached the lowest  inflation-adjusted  level in history during the price
slump  that  lasted  from  late  1997 to early  1999.  The  decline  in price is
attributed  to the warm  winters in the past two  years,  which led to a drop in
heating  oil  demand  and  carried  over  into  gasoline  prices.  In  addition,
overproduction  and lower demand in Asia  contributed to an oversupply of crude.
Other  contributors to lower oil prices include enhanced  upstream  (exploration
and  production)   technology,   and  the  United  Nation's  raising  of  Iraq's
oil-for-food  allowance.  In February 1999,  when gasoline  prices hit inflation
adjusted historic lows, OPEC members announced their agreement to cut production
by approximately  2.7% of world supply,  and non-OPEC  producers  followed suit,
contributing  to the decrease in supply.  Refinery  fires and pipeline  problems
compounded  the decrease in supply and the  recovering  Asian and Latin American
economies  increased  demand for crude.  Gasoline prices rapidly went from their
lowest  levels in history  (inflation  adjusted) to record highs (not  inflation
adjusted) in some areas, most notably the west.  Tremendous  pressure was put on
marketers  in 1999 by rapidly  rising  gasoline  prices.  According  to industry
experts,  every  dollar  increase  in crude  prices per barrel  translates  to a
2.5-cent  increase  in retail  gasoline  prices.  Marketers  saw  their  margins
squeezed as they were  prevented  from passing along all of the wholesale  price
increase to consumers.

     Similar  to  many  other  retail  industries,  the  convenience  store  and
petroleum  marketing  industry  is  facing a  shortage  of  employees;  which is
especially  acute in areas  saturated with retail,  such as the  northeast.  The
cause of the  shortage  is the  decline in  teenagers  and the low  unemployment
level.  In addition,  OSHA's 1998 safety  guidelines  recommend  maintaining two
employees on duty at all times, and operators'  cleanliness and customer service
focus require  additional  employees.  Unemployment  remains low (around 4.3% in
mid-1999),  and  competition  for labor is high.  With the  increase in services
offered (most  prominently  foodservice),  the number of employees per store has
grown  significantly.  The industry,  which  typically  pays higher than minimum
wage,  will need to  continue  to do so to attract  employees.  Because of image
upgrades,  operators are now looking for  customer-service  oriented  employees,
which puts more pressure on operators to find qualified workers.  In the face of
the difficulty in recruiting  labor,  c-store  operators  routinely  compete for
labor and hire from one  another's  staff.  In addition,  c-store  operators are
competing with all other retail segments and with  entry-level  white collar and
technical  jobs for  employees.  With the  increasing  need for  retail  skills,
competition for quality employees is getting even steeper.

                                       17
<PAGE>
     The industry is facing new challenges as well as volatile gasoline margins.
Most  companies in the industry are changing  operations to be  competitive  and
adding services to counteract  volatile gasoline margins and tobacco's uncertain
future.  C-stores have become the prevailing channel for cigarette sales, though
with  the  price  increases  seen  in  1998,  margins  on this  category  may be
pressured.  Many additional areas are causing concern among industry executives.
The top concern is availability  of labor.  Tied for second place are government
regulation and employee  theft.  Rounding out the top 6 concerns are technology,
tobacco  legislation and competition within the industry.  Many concerns pertain
to the increasing cost of doing business: competition, attracting new employees,
upgrading  technology,  employee theft,  and looking for new sources of capital.
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 for 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  the
automotive  aftermarket  reached  $160  billion in product and service  sales in
1998,  up from $155  billion  in 1997,  based on  several  sources  of  industry
information  available.  This represents 1.8% of gross domestic product and 2.7%
of  personal  consumption  expenditures  in 1998.  Total  aftermarket  sales are
heavily  correlated with gross domestic  product,  disposable  personal  income,
vehicle  miles driven and vehicle age.  Total sales of $160 billion  encompasses
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;  and 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.  Most are owned by independent operators,  as evidenced by the fact
that the top 50 chains in the aftermarket  account for  approximately  9% of all
outlets.  On the other hand,  according to the Automotive  Parts and Accessories

                                       18
<PAGE>
Association,  general  repair  shops and service  stations  (i.e.  independents)
perform  nearly 45% of all services on light cars and trucks.  This implies that
chains are more  efficient,  capturing a large share of the market despite their
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
that prefer to repair or accessorize  their vehicle (or for a friend,  relative,
etc.)  themselves  (do-it-yourselfer  or DIYer) and those that  prefer to have a
professional work on their vehicle  (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 booming  economy and aging  population are changing many DIY
customers into DIFM customers.

     There are over 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  8% of the total  outlets in the  Service
segment.  However,  the Automotive Service Industry  Association  estimates that
chain  repair  shops  were  responsible  for 42.1% of sales,  while  independent
garages  captured  57.9% of sales.  By far, the largest group in the industry is
independent  repair shops.  The top 50 companies (in terms of units) account for
8.9% of the estimated 370,000 locations that compete in the industry. The number
of service station and garages that perform auto repair  declined  significantly
between  1980 and 1999,  slipping  from  227,000 to 148,000.  Only an  estimated
40,000  gasoline  stations  still  perform some form of  automotive  repair.  In
addition,  their 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

                                       19
<PAGE>
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  face  of 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.

     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.

     Approximately 46% of vehicle owners desert dealerships, choosing non-dealer
maintenance  options once vehicle warranties  expire,  according to J.D. Power &
Associates.   However,   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.  Dealers are exploring several new strategies to lure
customers in for service,  including freestanding  neighborhood repair shops and
convenience  services at the  dealerships.  Some dealers  began selling tires in
1999 in an  effort to keep DIFM  service  dollars  flowing  to  dealerships.  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 (as defined by both the  manufacturer  and
industry  averages),  such as higher  resale  value and giving  their  vehicle a
longer useful life. On the other hand,  neglecting regular  maintenance can cost

                                       20
<PAGE>
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 in 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.

     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,  1999,  FFCA had  interests  in  5,339  properties  consisting  of
investments in 3,386 chain restaurants, 1,637 convenience stores, 307 automotive
outlets and nine other retail properties.  FFCA's portfolio included 2,451 chain
store  properties  represented by investments in real estate  mortgage loans and
properties  subject to leases and 2,888  properties  represented  by securitized
mortgage loans in which FFCA holds a residual interest.

     Of the 2,451 properties included in FFCA's investment portfolio at December
31, 1999,  FFCA has an ownership  interest in 2,264  properties  on a fee-simple
basis in which FFCA holds title to the property  (the "owned"  properties).  The
real  estate  owned  by FFCA at  December  31,  1999  consists  of the  land and
buildings comprising each chain property, except for 17 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 30 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.

                                       21
<PAGE>
     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 95,000 square feet and from $480,000 to $1,100,000 in land acquisition
costs.  The buildings are  principally  of the current  design of the restaurant
concept and are rectangular  buildings  constructed from various combinations of
stucco,  steel, wood, brick and tile. Fast food restaurant  buildings  generally
range from 1,500 to 4,000 square feet in size,  with the larger  stores having a
greater seating capacity and equipment area. Site  preparation  varies depending
upon the area in which the fast food  restaurant  is located  and on the size of
the building and site.  Building and site preparation costs generally range from
$250,000  to  $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.  The original  investment  per new store  averages
$1,050,000 for a rural convenience store  (approximately  27% land, 39% building
and 33%  equipment)  and  $1,556,000  million  for an  urban  convenience  store
(approximately 35% land, 34% building 31% 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

                                       22
<PAGE>
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 and regulations.  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.

     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,  which 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

                                       23
<PAGE>
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,  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 financing documents require each chain store
operator to make any expenditure necessary to comply with applicable laws and as
may be required under any applicable  franchise  agreement;  therefore,  FFCA is
generally not required to make  significant  capital  expenditures in connection
with any property it financed.  Capital  expenditures  amounted to approximately
$120,000 in 1998.  There were no capital  expenditures  on properties in 1999 or
1997.

     As of February 15, 2000, FFCA owned or had financed 5,388  properties in 49
states  and Canada and all but 17 of the  properties  were being  leased or were
performing under a mortgage loan agreement. Of the nonperforming properties, two
are being actively remarketed for lease and 15 are currently held for sale after
efforts to remarket these  properties did not produce suitable  lessees.  Vacant
properties  held for sale  represent  less than one percent of FFCA's total real
estate investment portfolio.

     FFCA invests in chain store real estate  throughout the United  States.  No
one property is a principal property of FFCA,  because each property  represents
less than one 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, 1999. 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 $140 million at December 31, 1999. 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
3% located in the  Pacific  region of the  United  States to 27%  located in the
Southeast region.

     During 1999,  approximately  69% 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  2019,  with a
weighted  term of such  investments  of 13.5 years as of December 31, 1999.  Ten
percent of FFCA's  investments  in properties  subject to operating  leases have
terms that  expire in the year 2005,  11% expire in 2018 and 10% expire in 2019.
In all other  years,  expiring  leases  represent  less than 10% of total  lease
investments.  With expected continued investment activity, FFCA anticipates that
its exposure to annual lease expirations will become more diversified.

     The FFCA  corporate  headquarters  is  located at The  Perimeter  Center in
Scottsdale,  Arizona, consisting of approximately 60,000 square feet of building
on  approximately  five acres of land. The land and building  comprising  FFCA's

                                       24
<PAGE>
corporate  headquarters  were sold to an affiliate of FFCA in January 2000. FFCA
leases a portion of the  building,  with the  remaining  space  occupied  by its
affiliate.  Beginning  in December  1998,  FFCA also rents  approximately  3,300
square feet of office  space in an office  building  adjacent  to its  corporate
headquarters.  The office  space is under a  three-year  lease at  approximately
$75,000 per year plus common area expenses.

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, 1999.

                                     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 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
                                                                       =====

                                             SALES PRICES
                                        ----------------------       DIVIDENDS
     FISCAL 1998                         HIGH            LOW          DECLARED
     -----------                        -------        -------        -------
     Fourth Quarter                     $27.813        $21.750         $ .49
     Third Quarter                       28.000         22.500           .47
     Second Quarter                      28.250         24.813           .47
     First Quarter                       28.625         26.188           .47
                                                                       -----
                                                                       $1.90
                                                                       =====

                                       25
<PAGE>
     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 15,681  holders of record of FFCA's shares of common stock as of
February 15, 2000;  however,  FFCA believes the total number of  shareholders of
FFCA to be approximately 65,000 since nominees hold certain shares.

DIVIDEND REINVESTMENT PLAN

     FFCA  has  a  dividend   reinvestment   plan  (the  "Plan")   which  allows
shareholders to acquire  additional shares of FFCA common stock by automatically
reinvesting dividends. Shares are acquired pursuant to the Plan at a price equal
to 98% of the market price of such shares on the dividend payment date,  without
payment of any brokerage  commission or service charge.  Shareholders who do not
participate  in the Plan  continue  to receive  dividends,  as  declared.  As of
February 16,  2000,  shareholders  owning  approximately  6% of the  outstanding
shares participate in the Plan.

                                       26
<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, 1999.

                             SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
In thousands, except per share data           1999         1998         1997         1996         1995
                                           ----------   ----------   ----------   ----------   ----------
<S>                                        <C>          <C>          <C>          <C>          <C>
OPERATIONS DATA
  Total revenues                           $  218,475   $  169,568   $  134,988    $121,166     $102,583
  Income before gain (loss) on sale of
    property and other                        107,744       85,182       65,707      60,036       52,816
  Gain (loss) on sale of property (a)          40,983       10,535        5,471       9,899          977
  Income before extraordinary item (b)        148,727       95,717       72,897      68,539       53,793
  Net income                                  148,727       95,717       72,897      68,539       51,329
  Dividends/Distributions declared            115,275       93,004       75,004      72,846       72,471
  Earnings Per share, assuming dilution:
    Income before gain (loss) on sale
      of property and other costs          $     1.94   $     1.78   $     1.59    $   1.48     $   1.31
    Income before extraordinary item (b)   $     2.68   $     2.00   $     1.76    $   1.69     $   1.33
    Net income                             $     2.68   $     2.00   $     1.76    $   1.69     $   1.27
  Dividends/Distributions declared
   per share                               $     2.00   $     1.90   $     1.82    $   1.80     $   1.80
  Weighted average common and common
   equivalent shares outstanding               55,505       47,908       41,333      40,603       40,294

BALANCE SHEET DATA
  Real estate owned, at cost               $1,474,758   $1,274,600   $  951,305    $868,215     $794,580
  Mortgage loans receivable                    57,996       43,343       35,184      57,808      199,486
  Mortgage loans held for sale                139,703      163,172      251,622          --           --
  Note receivable from affiliate (c)               --           --           --     147,616           --
  Other investments                           199,381      127,923       82,303      37,836           --
  Total assets                              1,710,796    1,460,429    1,179,198     988,776      843,504
  Notes payable                               501,859      500,168      309,360     298,956      198,702
  Borrowings under line of credit             238,000      188,000      302,000     150,500      110,000
  Other debt                                    8,500        8,500        8,500       8,500        8,500
  Shareholders' equity                     $  903,632   $  716,434   $  522,996    $495,370     $493,817
</TABLE>

----------
(a)  Results of  operations  may be largely  impacted  by gains or losses on the
     sale of properties or as a result of  securitization  transactions.  Of the
     1999,  1998 and 1997  gain on the sale of  property,  $36.1  million,  $7.1
     million  and  $430,000,   respectively,   related  to  the   securitization
     transaction completed in that year.
(b)  Income before  extraordinary item excludes debt  extinguishment  charges of
     $2.5 million in 1995.
(c)  Note receivable from FFCA's former  affiliate,  FFCA Mortgage  Corporation,
     which was dissolved in 1997, represents mortgage loans held for sale by the
     affiliate.

                                       27
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS.

GENERAL

     Franchise  Finance  Corporation of America ("FFCA") is a  self-administered
real estate  investment  trust ("REIT") which provides real estate  financing to
multi-unit  operators of chain  restaurants,  convenience  stores and automotive
services and parts outlets.  FFCA offers  financing  through  various  products,
including  long-term real estate leases,  mortgage  loans,  equipment  loans and
construction  financing.  At December  31,  1999,  FFCA had  interests  in 5,339
properties representing approximately $1.9 billion in gross investments in chain
store properties located throughout the United States and in Canada. In addition
to this  geographic  diversification,  more  than  480  different  operators  in
approximately  150  retail  chains  comprise  the  portfolio.  FFCA's  portfolio
included 2,451 chain store properties  represented by investments in real estate
mortgage loans and properties subject to leases and 2,888 properties represented
by securitized mortgage loans in which FFCA holds a residual interest.

LIQUIDITY AND CAPITAL RESOURCES

     In 1999, FFCA originated $1.36 billion in new  sale-leaseback  and mortgage
loan investments, an increase of 46% over the $928 million invested in 1998. The
1998 investment level represented an increase of 84% over 1997's  investments of
$504 million.  With over 1,900 properties financed during 1999, FFCA's portfolio
represents over 5,300  locations  throughout the United States and in Canada and
cumulative  investment  activity  now  totals  nearly  $3.5  billion  since  the
formation  of the  REIT in June  1994.  FFCA's  rate of  investment  growth  has
increased  beginning  with  the  introduction  of its  mortgage  loan  financing
products in 1995. By 1999, mortgage loans had grown to represent over 80% of new
investments  as compared  to 48% in 1995.  Aside from  growth  generated  by new
restaurant  financings,   investment  growth  is  also  attributable  to  FFCA's
expansion  into  the  convenience  store  and  automotive   services  and  parts
industries  that accounted for 68% (over $918 million) of the  investments  made
during 1999 as compared to 46% ($426  million) in 1998 and 18% ($93  million) in
1997.  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.

     FFCA initially  funds its  investments in chain store  properties with cash
generated  from  operations  and draws on its unsecured  credit  facility.  This
revolving  credit  facility bears interest at a spread above the one-month LIBOR
rate for a weighted  average interest rate of 6.36% in 1999 as compared to 6.57%
in  1998  and  6.63%  in  1997.  The  revolving  credit  facility  is  used as a
warehousing  line for  properties  pending the  issuance of  additional  debt or
equity  securities  of FFCA.  This  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.  Borrowings  under the revolving credit facility totaled $887
million in 1999 (as  compared to $738 million in 1998 and $503 million in 1997).
During 1999, FFCA's financing  activities were also funded by cash proceeds from
securitization  transactions  ($1  billion),  including  the use of a loan  sale

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<PAGE>
facility,  and proceeds from the issuance of common stock ($154  million).  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  $85 million in 1999 (as  compared to $101 million in
1998 and $64 million in 1997), were also available to fund new investments.

     To  accommodate  FFCA's  portfolio  growth,  FFCA  increased its capital by
entering into various equity  transactions.  FFCA raised a total of $146 million
through  the sale of 6.7 million  shares of common  stock in 1999 as compared to
$183  million  raised  through  the sale of 6.9  million  shares in 1998 and $23
million raised  through the sale of 956,000  shares in 1997.  FFCA used the cash
proceeds from the sale of stock to reduce  amounts  outstanding on its revolving
credit facility.

     FFCA also accessed the debt markets by issuing  unsecured notes. In January
2000, FFCA issued $100 million in unsecured notes at a weighted average interest
rate of  8.6%.  FFCA  issued  $197.5  million  in  unsecured  notes in 1998 at a
weighted  average rate of 7.95% and $60 million in unsecured  notes in 1997 at a
weighted  average  rate of 6.2%.  FFCA's cost of debt  increased  during 1999 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.  FFCA's cost of debt
will  continue to be impacted by changes in the capital  markets and the overall
interest  rate  environment;  therefore,  the 7%  Senior  Notes  that  mature in
November 2000 may be paid off with available cash flow or refinanced  with other
debt depending, among other things, on the cost of capital.

     In order to diversify  its capital  sources,  FFCA entered into a loan sale
facility  during 1998 with a third party,  who  committed to purchase up to $600
million of loans from FFCA.  This loan sale facility  permits FFCA to sell loans
on a regular basis to a trust for an agreed-upon  advance rate. Upon the sale of
such  loans,  FFCA acts as  servicer  for the loans.  During  1999,  the maximum
commitment on this loan sale  facility was increased to $900 million.  FFCA sold
mortgage  loans  with an  aggregate  principal  balance of $1 billion in sixteen
separate  transactions  during 1999 and $264  million in 1998  through this loan
sale facility,  receiving $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 loan sale facility was renewed at a commitment level of $600 million through
December 31, 2000. As of February 16, 2000,  FFCA had $362 million  available on
this loan sale  facility  and $183  million  available  on its $350 million bank
revolving loan facility.

     Throughout  1999,  FFCA  explored a number of strategic  options to further
diversify its capital sources.  After  consideration  of various  options,  FFCA
entered into a three-year loan sale agreement with Washington Mutual Bank, FA in
December  1999,  whereby  Washington  Mutual agreed to purchase  loans that FFCA
originates and services. This alliance with the nation's ninth largest financial

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<PAGE>
services company to be its exclusive  provider of chain store loans represents a
significant  source of new capital.  FFCA  anticipates that this will reduce its
reliance  on debt and  shareholder  equity as  sources  of  capital  to fund its
continued growth. Under the loan sale agreement, Washington Mutual will purchase
mortgage loans from FFCA at the time the loans are originated;  therefore,  FFCA
will no longer need to  accumulate  large  amounts of mortgage  loans (using its
bank  lines of credit to carry the loans)  before  selling  the loans  through a
securitization transaction.

     As a REIT, FFCA's tax status restricts it from taking full advantage of the
opportunities  provided by the loan sale  agreement  with  Washington  Mutual by
preventing REITs from originating and subsequently selling mortgage loans (other
than through certain  structured  securitization  transactions);  therefore,  on
January 4, 2000, FFCA established a nonqualified  REIT subsidiary,  FFCA Funding
Corporation   ("Funding  Corp."),  to  originate  mortgage  loans  for  sale  to
Washington  Mutual.  FFCA transferred,  among other things,  its future mortgage
loan  origination  business  (including a transfer of certain  employees  and an
assignment  of the  Washington  Mutual loan sale  agreement) to Funding Corp. 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  Corp.  Certain
executive  officers of FFCA own all of the  outstanding  voting  common stock of
Funding Corp.

     At December 31,  1999,  FFCA's  outstanding  commitments  to extend  credit
aggregated  approximately $500 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)  approximately  560 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 loan
sale facility, the issuance of mortgage-backed securities through securitization
and through the transfer of the financing  commitments  to Funding Corp. for the
sale of loans to Washington Mutual.

     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 16, 2000, shareholders owning approximately 6% of the
outstanding shares of FFCA common stock participate in the dividend reinvestment
plan and dividends  reinvested during 1999 totaled $7.2 million,  as compared to
$6.1 million in 1998 and $5.8 million in 1997. For the fourth quarter, the Board
of Directors  approved  raising FFCA's  quarterly  dividend to $0.53 from $0.49.
This  dividend is payable on  February  18,  2000 to  shareholders  of record on
February 10, 2000.  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.

     Cash generated from  operations may also be used to repurchase  FFCA 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.  The timing of the
purchase and the actual number of common shares  purchased will depend on market
conditions and available cash flow.

                                       30
<PAGE>
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.  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, 1999,  FFCA had interest  rate swap  contracts  outstanding
with a notional  amount  aggregating  $26 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 2000,  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 that time,  both the gain or loss on
the  sale  of the  fixed-rate  mortgage  loans  and  the  gain  or  loss  on the
termination of the interest rate swap agreements will be measured and recognized
in the statement of operations.

     FFCA  estimates  that a  hypothetical  one  percentage  point  increase  or
decrease  in  long-term  interest  rates at December  31, 1999 would  impact the
financial  instruments  described  above and result in a change to net income of
approximately  2%.  This  sensitivity   analysis  contains  certain  simplifying
assumptions (for example,  it does not consider the impact of prepayment risk or

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<PAGE>
credit  spread  risk).  Therefore,  although  it gives an  indication  of FFCA's
exposure to interest  rate changes at December  31, 1999,  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.

YEAR 2000 STATUS

     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 through  January 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.  FFCA will  continue  to monitor  the status of its  clients and
vendors for any potentially  significant  business  interruptions that may arise
from difficulties they may experience as a result of the Year 2000 issue.  Costs
incurred to date in addressing Year 2000 issues have not been material. Based on
current  estimates,  FFCA believes any additional  costs of addressing Year 2000
issues will not be material.

RESULTS OF OPERATIONS
YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEARS ENDED DECEMBER 31, 1998 AND 1997

     FFCA had net income of $148.7 million ($2.68 per share,  assuming dilution)
in 1999 as compared to $95.7 million ($2.00 per share) in 1998 and $72.9 million
($1.76 per share) in 1997.  The  increases in net income each year resulted from
increased  revenues due to the continued growth in FFCA's real estate investment
portfolio and from increased gains on the sale of assets.  Revenues rose to $218
million in 1999 from $170 million in 1998 and $135 million in 1997. Gains on the
sale of  assets  rose to $41  million  in 1999 from $11  million  in 1998 and $5
million in 1997.

     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.  Rental revenues  represented 69% of total revenues in 1999 as
compared  to 72% in 1998  and 75% in  1997.  With  the  introduction  of  FFCA's
mortgage  financing products in 1995, the proportion of total revenues generated
by lease  financing has  decreased,  though lease  revenues  generated each year
continue to be higher than in the previous year. Most of the increases in rental
revenues each year resulted from new  investment  activity.  New  investments in
property  subject to operating leases totaled $258 million in 1999, $365 million
in 1998 and $140 million in 1997. Generally, property purchases occur throughout
the year,  resulting in weighted  average  balances for these new investments of
$129  million in 1999,  $145  million in 1998 and $43 million in 1997.  Weighted
average base lease rates on the new investments were 9.9% in 1999 as compared to
9.9% in 1998  and 9.3% in  1997.  Partially  offsetting  the  revenue  increases
generated by the new  investments  were  decreases in rent  revenues  related to
properties sold.

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<PAGE>
     Approximately  one-half of the properties in FFCA's portfolio 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 $8.3 million in 1999 as
compared to $7.9 million in 1998 and $6.7 million in 1997. The increases  relate
primarily to  increases in  individual  store-level  sales  volumes and to chain
stores whose sales levels have, for the first time, exceeded the threshold where
contingent rentals or additional interest are due. 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.

     A  growing  portion  of  FFCA's  income  relates  to  the  origination  and
subsequent sale of mortgage loans through securitization transactions.  Mortgage
interest  income  amounted  to 13% of  revenues  in 1999 as  compared  to 15% of
revenues in 1998 and 1997 (including  related party interest income in 1997 from
indirect  investments  in  mortgage  loans  through  an  unconsolidated  taxable
affiliate, FFCA Mortgage Corporation).  FFCA originated $1.1 billion in mortgage
loans in 1999, $534 million in 1998 and $362 million in 1997.  Rates achieved on
the loans  originated  during 1999  averaged  9.6% as compared to 8.9%  achieved
during 1998 and 9.2% in 1997.  This change in rates is reflective of the overall
changes in the interest rate  environment over the years. 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 through
securitization transactions.  Although FFCA no longer receives mortgage interest
income  from the  mortgages  it sold  through  securitization  transactions,  it
retains  certain  interests  through  the  purchase of  subordinated  investment
securities  that FFCA intends to hold to  maturity.  These  securities  generate
revenues that are included in "Real Estate Investment  Securities Income" in the
accompanying  financial statements and represented 14% of total revenues in 1999
as compared to 8% in 1998 and 6% in 1997. Mortgage  prepayments  represented 126
chain store  properties in 1999, 49 chain store  properties in 1998 and 60 chain
store   properties   in  1997.  A  portion  of  FFCA's   investment   portfolio,
approximating $58 million in 1999 and $43 million in 1998,  represents  mortgage
loans  receivable  that are not being held for sale.  These loans generally have
short terms or other loan  features that make them less  marketable  for sale or
securitization transactions. FFCA plans to hold these loans to maturity.

     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 5,300
locations  throughout the United States and Canada (though investments in Canada
are not  significant).  During  the year ended  December  31,  1999,  78% of the
revenues generated by the portfolio reflect restaurant investments,  17% reflect
convenience  store  investments  and 5% reflect  automotive  services  and parts
investments,  as  compared to 91%, 7% and 2%,  respectively,  in 1998.  With the
addition of the convenience  store and automotive  services and parts industries
in 1997,  FFCA's  portfolio has expanded to include over 150  different  chains,

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<PAGE>
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.  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 1999,  1998 or 1997.  As FFCA
continues to grow,  management  expects the portfolio to continue to become more
diversified.

     With the  growth  achieved  in FFCA's  real  estate  investment  portfolio,
expenses grew to $110.7 million in 1999 as compared to $84.4 million in 1998 and
$69.3 million in 1997, primarily due to increases in interest expense each year.
Interest  expense rose by $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 $742 million in 1999 from $590 million in
1998 and $470 million in 1997. 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 from 6.93% during 1997 to 7.01% during
1998 and 7.30% during 1999.

     Operating,  general and administrative expenses in 1999 included consulting
and other costs  aggregating  $2.975  million,  incurred in connection  with the
exploration  of  strategic  alternatives.  Excluding  these  non-routine  costs,
operating, general and administrative expenses for 1999 increased 24% from 1998,
as compared to 1998's  increase of 28% over 1997,  and remain  constant over the
past three years at  approximately  8% of  revenues.  The  increase in operating
expenses between 1997 and 1999 resulted primarily from the addition of personnel
needed to expand  FFCA's  line of  financial  products  and to  increase  FFCA's
investment  origination and servicing capacity.  FFCA's continued  investment in
computer  system  technology has increased the efficiency of its information and
portfolio servicing systems, which enables FFCA to expand its revenue base while
containing  operating  costs.  Property  costs,  which are primarily  related to
vacant or  underperforming  properties,  have remained  relatively  unchanged at
approximately 1% of revenues.

     During  1999,  FFCA  continued  to  originate  loans held for sale  through
securitization  transactions.  Certain  mortgage  loans  originated by FFCA, its
predecessors and affiliates  totaling $1.1 billion in 1999, $335 million in 1998
and $261  million in 1997 were  securitized  and  Secured  Franchise  Loan Trust
Certificates  were sold to  investors  through  a trust.  The  majority  of each
securitized  loan  pool was sold to  third  parties,  while  FFCA  retained  the
subordinated investment securities ranging from 9% to 12.5% of the mortgage loan
pools' balance. FFCA also retained the servicing rights on the mortgage loans it
sold.

     The retained securities, totaling $185 million and $114 million at December
31, 1999 and 1998, respectively, generated $31.1 million, $14.4 million and $7.7
million  of  revenue  in 1999,  1998 and 1997,  respectively.  The  subordinated
investment  securities  held by FFCA are the last of the securities to be repaid
from the loan pool, so that if any of the  underlying  mortgage  loans  default,

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<PAGE>
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 1% of the total mortgage loan pool balance.

     FFCA recorded net gains of $41 million on the sale of property  during 1999
as compared to $10.5  million  during  1998 and $5.5  million in 1997.  Of these
gains,  the sale of  mortgages  generated  gains  totaling  approximately  $36.1
million in 1999,  $6.2  million in 1998 and  $430,000 in 1997.  The gains on the
sale of mortgages  represent the difference  between the carrying  amount of the
mortgage loans sold and their adjusted sales price. The gains on the sale of the
mortgage   loans  were  adjusted  for  estimated   probable   losses  under  the
subordination provisions of the securitization transactions. The remaining gains
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  60% of FFCA's land and
building leases provide for purchase options and approximately one-half of these
options are currently  exercisable.  During 1999,  FFCA sold 87  properties  and
related  equipment as compared to 57  properties  sold in 1998 and 55 properties
sold in 1997; however,  only 13 properties were sold through purchase options in
1999 and only nine and 12 such properties were sold through  purchase options in
1998 and 1997, respectively. Where applicable, the lessee also has the option to
purchase  equipment at the end of the related  equipment lease term.  Generally,
the  purchase  options are  exercisable  at fair market value (but not less than
original cost in most cases). FFCA expects that the exercise of purchase options
will continue to be insignificant.

     FFCA 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  property  on the  consolidated  statements  of income for the years
ended December 31, 1999, 1998 and 1997 is net of approximately $1.6 million,  $4
million  and  $1.9  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 one percent and has remained at less than 2%
since FFCA became a REIT in 1994.

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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

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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 10, 2000, 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 10, 2000, 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 10, 2000, 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 10, 2000, to be filed pursuant to Regulation 14A.

                                     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.

                                       36
<PAGE>
     2.   FINANCIAL STATEMENT  SCHEDULES.  See Index to Financial  Statements on
          page F-1 of this Report.  All other  schedules  are omitted since they
          are not required,  are  inapplicable,  or the required  information is
          included in the financial statements or notes thereto.

     3.   EXHIBITS.

          The  following  is a complete  list of exhibits  filed as part of this
          Form 10-K. For electronic  filing  purposes only, this report contains
          Exhibit 27, the Financial Data Schedule. Exhibit numbers correspond to
          the numbers in the Exhibit Table of Item 601 of Regulation S-K.

                                       37
<PAGE>
EXHIBIT NO.                        DESCRIPTION
-----------                        -----------

3.01      Second Amended and Restated  Certificate of Incorporation of Franchise
          Finance Corporation of America (1)

3.02      Certificate  of  Designation  of  Franchise  Finance   Corporation  of
          America, classifying and designating the Series A Junior Participating
          Preferred Stock (2)

3.03      Third Amended and Restated Bylaws of Franchise Finance  Corporation of
          America *

4.01      Indenture dated as of November 21, 1995 (3)

4.02      Specimen of Common Stock Certificate (4)

4.03      Officers' Certificate relating to the 7% Senior Notes Due 2000 and the
          7-1/8%  Senior  Notes Due 2005 of  Franchise  Finance  Corporation  of
          America (5)

4.04      Officers'  Certificate  relating  to the  Medium-Term  Notes  due Nine
          Months or More from the Date of Issue of Franchise Finance Corporation
          of America (6)

4.05      Form  of  Medium-Term  Fixed  Rate  Note  and  Floating  Rate  Note of
          Franchise Finance Corporation of America (7)

4.06      Officers'  Certificate  relating to the 8.25% Senior Notes Due 2003 of
          Franchise Finance Corporation of America (8)

4.07      Rights Agreement, dated as of April 7, 1999, between Franchise Finance
          Corporation of America and Gemisys Corporation, as Rights Agent (2)

10.01     Acquisition,  Construction  and  Term  Loan  Agreement,  dated  as  of
          December 29, 1988, by and between  Franchise  Finance  Corporation  of
          America and Scottsdale Land Trust Limited Partnership (4)

10.02     Promissory Note dated December 29, 1988, executed by Franchise Finance
          Corporation  of America  in favor of  Scottsdale  Land  Trust  Limited
          Partnership in the principal amount of $8,500,000 (4)

10.03     1995 Stock Option and Incentive Plan of Franchise Finance  Corporation
          of America (9)

10.04     Amendment  No.  1 to the  1995  Stock  Option  and  Incentive  Plan of
          Franchise Finance Corporation of America (10)

10.05     Stock Purchase  Agreement  between  Franchise  Finance  Corporation of
          America and Colony Investors III, L.P. dated February 13, 1998 (11)

                                       38
<PAGE>
10.06     Master Loan Purchase Agreement, dated as of December 14, 1999, between
          FFCA Acquisition  Corporation,  as Seller and Washington  Mutual Bank,
          FA, as Purchaser (12)

10.07     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)

10.08     Amended  and  Restated  Employment  Agreement,  dated as of January 1,
          2000,  between Franchise Finance  Corporation of America and Morton H.
          Fleischer *

10.09     Amended  and  Restated  Employment  Agreement,  dated as of January 1,
          2000, between Franchise Finance Corporation of America and Christopher
          H. Volk *

10.10     Amended  and  Restated  Employment  Agreement,  dated as of January 1,
          2000,  between  Franchise  Finance  Corporation of America and John R.
          Barravecchia *

10.11     Amended  and  Restated  Employment  Agreement,  dated as of January 1,
          2000,  between Franchise Finance  Corporation of America and Dennis L.
          Ruben *

10.12     Amended  and  Restated  Employment  Agreement,  dated as of January 1,
          2000, between Franchise Finance  Corporation of America and Stephen G.
          Schmitz *

21.01     Subsidiaries of the Registrant*

23.01     Consent of Arthur Andersen LLP*

99.01     Second Amended and Restated  Credit  Agreement dated December 29, 1997
          among Franchise  Finance  Corporation of America,  Certain Lenders and
          NationsBank of Texas, N.A. (13)

99.02     First  Amendment to the Second Amended and Restated  Credit  Agreement
          among Franchise  Finance  Corporation of America,  Certain Lenders and
          NationsBank, N.A. dated as of June 30, 1998 (14)

99.03     Second Amended and Restated Sale and Servicing  Agreement  dated as of
          January 1, 2000,  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 *

99.04     Loan Purchase Agreement dated as of August 14, 1998, between FFCA Loan
          Warehouse Corporation and FFCA Acquisition Corporation (15)

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 *

                                       39
<PAGE>
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 *

99.07     Indenture  dated as of August 14, 1998,  between FFCA  Franchise  Loan
          Owner Trust 1998-1 and LaSalle National Bank. (15)

99.08     Fourth Amended and Restated Indenture Supplement,  dated as of January
          1, 2000,  between FFCA  Franchise  Loan Owner Trust 1998-1 and LaSalle
          Bank National Association f/k/a LaSalle National Bank *

99.09     Note  Purchase  Agreement  dated as of  August  14,  1998  among  FFCA
          Franchise Loan Owner Trust 1998-1, FFCA Acquisition Corporation,  FFCA
          Loan Warehouse Corporation,  and Morgan Stanley Securitization Funding
          Inc. (15)

99.10     Amendment  No. 1, dated as of October 30, 1998,  to the Note  Purchase
          Agreement   among  FFCA  Franchise  Loan  Owner  Trust  1998-1,   FFCA
          Acquisition Corporation,  FFCA Loan Warehouse Corporation,  and Morgan
          Stanley Securitization Funding Inc. *

99.11     Amendment  No. 2,  dated as of March 18,  1999,  to the Note  Purchase
          Agreement   among  FFCA  Franchise  Loan  Owner  Trust  1998-1,   FFCA
          Acquisition Corporation,  FFCA Loan Warehouse Corporation,  and Morgan
          Stanley Securitization Funding Inc. *

99.12     Amendment  No. 3, dated as of August 27,  1999,  to the Note  Purchase
          Agreement   among  FFCA  Franchise  Loan  Owner  Trust  1998-1,   FFCA
          Acquisition Corporation,  FFCA Loan Warehouse Corporation,  and Morgan
          Stanley Securitization Funding Inc. (16)

99.13     Amendment  No. 4, dated as of January  1, 2000,  to the Note  Purchase
          Agreement   among  FFCA  Franchise  Loan  Owner  Trust  1998-1,   FFCA
          Acquisition Corporation,  FFCA Loan Warehouse Corporation,  and Morgan
          Stanley Securitization Funding Inc. *

99.14     Credit  Agreement  dated as of  February  11,  1999,  among  Franchise
          Finance  Corporation  of  America,  Certain  Lenders  and  NationsBank
          N.A.(14)

99.15     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 (17)

----------
* Filed herewith.
(1)  Incorporated by reference from the  Registrant's  Quarterly  Report on Form
     10-Q for the  fiscal  quarter  ended  March  31,  1997,  as filed  with the
     Securities and Exchange Commission.
(2)  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.
(3)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  November  24,  1995,  as filed  with  the  Securities  and  Exchange
     Commission.

                                       40
<PAGE>
(4)  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.
(5)  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.
(6)  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.
(7)  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.
(8)  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.
(9)  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.
(10) 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.
(11) Incorporated by reference from the Registrant's  Annual Report on Form 10-K
     for the fiscal year ended  December 31, 1997, 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 Current Report on Form 8-K,
     dated  December  29,  1997,  as filed  with  the  Securities  and  Exchange
     Commission.
(14) Incorporated by reference from the Registrant's  Annual Report on Form 10-K
     for the fiscal year ended  December 31, 1998, as filed with the  Securities
     and Exchange Commission.
(15) 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.
(16) Incorporated by reference from the  Registrant's  Quarterly  Report on Form
     10-Q for the fiscal  quarter  ended  September  30, 1999, as filed with the
     Securities and Exchange Commission.
(17) 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 OF FORM 8-K.

     During the quarter ended December 31, 1999, FFCA filed the following report
     on Form 8-K:

     Form 8-K dated December 14, 1999,  filed  December 22, 1999,  reporting the
     Master Loan  Purchase  Agreement  entered  into  between  FFCA  Acquisition
     Corporation and Washington  Mutual Bank, FA  ("Washington  Mutual") for the
     origination  and sale of  commercial  loans to Washington  Mutual,  and the
     Servicing Agreement entered into between FFCA and Washington Mutual,  under
     Item 5, Other Events, and Item 7, Financial Statements and Exhibits.

                                       41
<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 23, 2000                    By /s/ M. H. Fleischer
                                           -------------------------------------
                                           M. H. Fleischer, 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 23, 2000                    By /s/ M. H. Fleischer
                                           -------------------------------------
                                           M. H. Fleischer, Chairman of the
                                           Board, and Chief Executive Officer


Date: March 23, 2000                    By /s/ John Barravecchia
                                           -------------------------------------
                                           John Barravecchia, Executive Vice
                                           President, Chief Financial Officer
                                           and Treasurer


Date: March 23, 2000                    By /s/ Catherine F. Long
                                           -------------------------------------
                                           Catherine F. Long, Senior Vice
                                           President-Finance and Principal
                                           Accounting Officer


Date: March 23, 2000                    By /s/ Willie R. Barnes
                                           -------------------------------------
                                           Willie R. Barnes, Director


Date: March 23, 2000                    By /s/ Kelvin L. Davis
                                           -------------------------------------
                                           Kelvin L. Davis, Director


Date: March 23, 2000                    By /s/ Kathleen H. Lucier
                                           -------------------------------------
                                           Kathleen H. Lucier, Director

                                       42
<PAGE>
Date: March 23, 2000                    By /s/ Dennis E. Mitchem
                                           -------------------------------------
                                           Dennis E. Mitchem, Director


Date: March 23, 2000                    By /s/ Louis P. Neeb
                                           -------------------------------------
                                           Louis P. Neeb, Director


Date: March 23, 2000                    By /s/ Kenneth B. Roath
                                           -------------------------------------
                                           Kenneth B. Roath, Director


Date: March 23, 2000                    By /s/ Casey J. Sylla
                                           -------------------------------------
                                           Casey J. Sylla, Director


Date: March 23, 2000                    By /s/ Christopher H. Volk
                                           -------------------------------------
                                           Christopher H. Volk, Director


Date: March 23, 2000                    By /s/ Shelby Yastrow
                                           -------------------------------------
                                           Shelby Yastrow, Director

                                       43
<PAGE>
                  INDEX TO FINANCIAL STATEMENTS AND SCHEDULES


Report of Independent Public Accountants                                     F-2

Consolidated Balance Sheets - December 31, 1999 and 1998                     F-3

Consolidated Statements of Income For The Years Ended
  December 31, 1999, 1998 and 1997                                           F-4

Consolidated Statements of Changes in Shareholders' Equity
  For The Years Ended December 31, 1999, 1998 and 1997                       F-5

Consolidated Statements of Cash Flows For The Years Ended
  December 31, 1999, 1998 and 1997                                           F-6

Notes to Consolidated Financial Statements                                   F-7

Schedule III - Schedule of Real Estate and Accumulated
  Depreciation as of December 31, 1999                                      F-17

Schedule IV - Schedule of Mortgage Loans on Real Estate
  as of December 31, 1999                                                   F-19

                                       F-1
<PAGE>
                       [LETTERHEAD OF ARTHUR ANDERSEN LLP]


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 Delaware  corporation) and subsidiaries as of
December 31, 1999 and 1998, 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, 1999. 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, 1999 and 1998, and the results of
their  operations and their cash flows for each of the three years in the period
ended  December 31, 1999, 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 24, 2000.

                                       F-2
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA

            CONSOLIDATED BALANCE SHEETS - DECEMBER 31, 1999 AND 1998
                    (Amounts in thousands except share data)

                                                        1999           1998
                                                     -----------    -----------
                                     ASSETS
Investments:
  Investments in Real Estate, at cost (Note 3):
    Land                                             $   583,033    $   496,286
    Buildings and Improvements                           871,660        759,444
    Equipment                                             20,065         18,870
                                                     -----------    -----------
                                                       1,474,758      1,274,600
    Less-Accumulated Depreciation                        205,400        185,580
                                                     -----------    -----------
       Net Real Estate Investments                     1,269,358      1,089,020

  Mortgage Loans Held for Sale (Note 4)                  139,703        163,172
  Mortgage Loans Receivable, net of allowances
    of $3,570 in 1999 and $3,600 in 1998 (Note 5)         57,996         43,343
  Real Estate Investment Securities (Note 6)             185,252        113,692
  Other Investments (Note 5)                              14,129         14,231
                                                     -----------    -----------
       Total Investments                               1,666,438      1,423,458

Cash and Cash Equivalents                                  4,757          3,881
Accounts Receivable, net of allowances
  of $1,125 in 1999 and $720 in 1998                      10,669          9,491
Other Assets (Note 11)                                    28,932         23,599
                                                     -----------    -----------

       Total Assets                                  $ 1,710,796    $ 1,460,429
                                                     ===========    ===========

                      LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
  Dividends Payable                                  $    29,739    $    24,041
  Notes Payable (Note 7)                                 501,859        500,168
  Borrowings Under Lines of Credit (Note 8)              238,000        188,000
  Mortgage Payable to Affiliate (Note 11)                  8,500          8,500
  Accrued Expenses and Other                              29,066         23,286
                                                     -----------    -----------
       Total Liabilities                                 807,164        743,995
                                                     -----------    -----------
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 56,110,776 shares in 1999 and
    49,063,133 shares in 1998                                561            491
  Capital in Excess of Par Value                         927,147        773,708
  Accumulated Other Comprehensive Income                     237             --
  Cumulative Net Income                                  446,550        297,823
  Cumulative Dividends                                  (470,863)      (355,588)
                                                     -----------    -----------
       Total Shareholders' Equity                        903,632        716,434
                                                     -----------    -----------
       Total Liabilities and Shareholders' Equity    $ 1,710,796    $ 1,460,429
                                                     ===========    ===========

                 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, 1999, 1998 AND 1997
                  (Amounts in thousands except per share data)


                                                 1999        1998        1997
                                               --------    --------    --------
Revenues:
  Rental                                       $151,193    $121,490    $101,292
  Mortgage Loan Interest                         28,769      26,118      10,987
  Real Estate Investment Securities
   Income (Note 6)                               31,073      14,350       7,680
  Investment Income and Other                     7,440       7,610       5,992
  Interest (Related Party) (Note 11)                 --          --       9,037
                                               --------    --------    --------
                                                218,475     169,568     134,988
                                               --------    --------    --------
Expenses:
  Depreciation and Amortization                  30,923      24,518      20,784
  Operating, General and Administrative          20,612      14,244      11,106
  Property Costs                                  1,884       1,778       1,641
  Interest                                       56,297      42,846      34,764
  Interest (Related Party) (Note 11)              1,015       1,000         986
                                               --------    --------    --------
                                                110,731      84,386      69,281
                                               --------    --------    --------
Income Before Gain on Sale of Property
  and Other                                     107,744      85,182      65,707

Gain on Sale of Property (Note 6)                40,983      10,535       5,471
Equity in Net Income of Affiliate (Note 11)          --          --       1,719
                                               --------    --------    --------

Net Income                                     $148,727    $ 95,717    $ 72,897
                                               ========    ========    ========

Basic Net Income Per Share                     $   2.69    $   2.01    $   1.78
                                               ========    ========    ========
Diluted Net Income Per Share                   $   2.68    $   2.00    $   1.76
                                               ========    ========    ========
Number of Common Shares Used in
  Basic Net Income Per Share                     55,346      47,554      40,968
Incremental Shares from Assumed
  Conversion of Options                             159         354         365
                                               --------    --------    --------
Number of Common Shares Used in
  Diluted Net Income Per Share (Note 2)          55,505      47,908      41,333
                                               ========    ========    ========

                 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, 1999, 1998 AND 1997
                  (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, 1996       40,564      $ 406     $553,335     $     --      $129,209    $(187,580)  $ 495,370
  Capital contributions -
    Issuance of common stock        957         10       23,297           --            --           --      23,307
    Dividend reinvestment plan      235          2        5,792           --            --           --       5,794
  Exercise of stock options          32         --          632           --            --           --         632
  Net income -                       --         --           --           --        72,897           --      72,897
  Dividends declared -
    $1.82 per share                  --         --           --           --            --      (75,004)    (75,004)
                                 ------      -----     --------     --------      --------    ---------   ---------

BALANCE, December 31, 1997       41,788        418      583,056           --       202,106     (262,584)    522,996
  Capital contributions -
    Issuance of common stock      6,939         70      182,586           --            --           --     182,656
    Dividend reinvestment plan      234          2        6,069           --            --           --       6,071
  Exercise of stock options         102          1        1,997           --            --           --       1,998
  Net income -                       --         --           --           --        95,717           --      95,717
  Dividends declared -
    $1.90 per share                  --         --           --           --            --      (93,004)    (93,004)
                                 ------      -----     --------     --------      --------    ---------   ---------

BALANCE, December 31, 1998       49,063        491      773,708           --       297,823     (355,588)    716,434
  Capital contributions -
    Issuance of common stock      6,716         67      146,087           --            --           --     146,154
    Dividend reinvestment plan      323          3        7,166           --            --           --       7,169
  Exercise of stock options           9         --          186           --            --           --         186
  Unrealized gain on securities      --         --           --          237            --           --         237
  Net income -                       --         --           --           --       148,727           --     148,727
  Dividends declared -
    $2.00 per share                  --         --           --           --            --     (115,275)   (115,275)
                                 ------      -----     --------     --------      --------    ---------   ---------

BALANCE, December 31, 1999       56,111      $ 561     $927,147     $    237      $446,550    $(470,863)  $ 903,632
                                 ======      =====     ========     ========      ========    =========   =========
</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, 1999, 1998 AND 1997
                             (Amounts in thousands)
<TABLE>
<CAPTION>
                                                       1999           1998           1997
                                                   -----------    -----------    -----------
<S>                                                <C>            <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
  Net income                                       $   148,727    $    95,717    $    72,897
  Adjustments to net income:
    Depreciation and amortization                       30,923         24,518         20,784
    Gain on sale of property                           (40,983)       (10,535)        (5,471)
    Equity in net income of affiliate                       --             --         (1,719)
    Provision for uncollectible mortgage loans           2,050          1,118            791
    Other                                                5,223          1,482         (4,153)
                                                   -----------    -----------    -----------

      Net cash provided by operating activities        145,940        112,300         83,129
                                                   -----------    -----------    -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
  Acquisition of property                             (259,102)      (366,836)      (140,218)
  Investment in mortgage loans                      (1,097,135)      (537,665)      (310,811)
  Investment in notes receivable                        (5,525)       (33,819)       (17,460)
  Proceeds from securitization transactions          1,031,243        540,372        103,975
  Proceeds from sale of property                        56,795         33,764         26,425
  Receipt of mortgage loan and note payoffs             18,523         56,415         30,198
  Collection of mortgage loan and note principal         9,989         10,601          7,520
  Collection of investment security principal            6,216          3,184          1,463
  Collection of related party notes receivable              --             --        100,706
  Purchase of investment securities                         --             --        (15,946)
  Dividend received from affiliate                          --             --          9,822
                                                   -----------    -----------    -----------

      Net cash used in investing activities           (238,996)      (293,984)      (204,326)
                                                   -----------    -----------    -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
  Dividends paid                                      (109,577)       (88,603)       (73,618)
  Proceeds from issuance of common stock               153,509        190,725         29,733
  Proceeds from bank borrowings                        887,000        738,000        503,000
  Proceeds from issuance of notes                           --        190,313         60,150
  Payment of bank borrowings                          (837,000)      (852,000)      (352,288)
  Payment of other unsecured notes                          --             --        (50,000)
                                                   -----------    -----------    -----------

      Net cash provided by financing activities         93,932        178,435        116,977
                                                   -----------    -----------    -----------
NET INCREASE (DECREASE) IN CASH AND
  CASH EQUIVALENTS                                         876         (3,249)        (4,220)

CASH AND CASH EQUIVALENTS, beginning of year             3,881          7,130         11,350
                                                   -----------    -----------    -----------

CASH AND CASH EQUIVALENTS, end of year             $     4,757    $     3,881    $     7,130
                                                   ===========    ===========    ===========
</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, 1999 AND 1998

(1)  ORGANIZATION AND OPERATION:

     Franchise  Finance  Corporation of America,  a Delaware  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  wholly-owned   subsidiaries  ("FFCA")  offer
financing  through  various  products,  including  sale-leaseback  transactions,
mortgage loans,  equipment  loans and  construction  financing.  At December 31,
1999, FFCA had interests in 5,339  properties  representing  approximately  $1.9
billion in gross  investments in chain store properties  located  throughout the
United  States  and  in  Canada   (although   investments   in  Canada  are  not
significant).  In addition to this geographic diversification,  the portfolio is
also  represented  by more than 480  different  operators in  approximately  150
retail chains. No single operator  represented over 8% of FFCA's total portfolio
revenues  during the year ended  December 31, 1999.  FFCA's  portfolio  included
2,451 chain store  properties  consisting of investments in real estate mortgage
loans and  properties  subject  to leases  and 2,888  properties  consisting  of
securitized mortgage loans in which FFCA holds a residual interest.

(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. All intercompany transactions have been eliminated.

     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  $185
million at December 31, 1999  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
1999,  excess inclusion income related to the  securitization  transactions (see
Note 6) resulted in  unrelated  business  taxable  income of $.069 per share for
FFCA's tax-exempt investors.

     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
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,  1999,  1998,  and 1997 is net of
approximately $1.6 million,  $4.0 million,  and $1.9 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, 1999.

     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.

                                       F-7
<PAGE>
     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 totaled $10.6 million and $3.7 million at December 31, 1999 and
1998, 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, 1999,  FFCA had interest  rate swap  contracts  outstanding
with a notional  amount  aggregating  $26 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 September 2000
or the loan sale or securitization transaction (which is expected to be prior to
September 2000).

     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  1.2  million and 970,000
weighted shares of common stock outstanding during 1999 and 1998,  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
stock (of which 1 million were  exercisable) at a price of $25.47 per share were
also  excluded  from the  computation  of  earnings  per share in 1999 and 1998.
Subsequent to December 31, 1999, FFCA granted options to purchase  approximately
584,000  shares of common  stock at an exercise  price of $23.50 per share,  and
issued approximately  111,000 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 generally accepted accounting  principles requires management to
make estimates and  assumptions  that affect the reported  amounts of assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues and expenses during the reporting period.  Although management believes
its estimates are reasonable, actual results could differ from those estimates.

                                       F-8
<PAGE>
     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. FFCA is currently  assessing the method to be
utilized  for  adoption  and the  impact of the  adoption  on  FFCA's  financial
statements.  It is not expected,  however,  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 a new major
topic  "Revenue  Recognition"  under Staff  Accounting  Bulletin  101.  This new
accounting  guidance,  which FFCA plans to adopt in 2000,  requires companies to
recognize  contingent  rentals as revenue when the change in the factor on which
the  contingent  lease  payment  is  based  actually  occurs.   Currently,  FFCA
recognizes  estimated contingent revenues ratably throughout the year when it is
probable  that a property  will  exceed  the sales  threshold  where  percentage
revenues are due.  Verification of the actual amount of percentage  revenues due
is received  from the operator at various  times  during the year,  based on the
operator's reporting  requirements.  The percentage revenue reported at December
31,  1999  would  not have  differed  materially  had FFCA  adopted  a policy of
deferring  recognition of contingent revenues until receiving  verification that
the property reached its sales targets.

(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 2019 with a weighted average remaining term of 13.5
years as of December 31, 1999.  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 60% of FFCA's land and building leases provide for
purchase  options and  approximately  45% 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.

     Minimum future rentals under noncancellable operating leases as of December
31, 1999, are as follows (amounts in thousands):

     Year ending December 31,
     -----------------------
             2000                                               $  150,300
             2001                                                  149,100
             2002                                                  145,100
             2003                                                  141,300
             2004                                                  137,000
             Thereafter                                          1,203,100
                                                                ----------
             Total minimum future rentals                       $1,925,900
                                                                ==========

     The above  table  assumes  that all leases  which  expire are not  renewed;
therefore,  neither  renewal  rentals nor rentals from  replacement  lessees are
included. In addition,  minimum future rentals do not include contingent rentals
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  $8.3 million in 1999, $7.9 million in
1998 and $6.7  million  in 1997  (including  $980,000,  $310,000  and  $300,000,
respectively, of contingent interest income on mortgage loans receivable).

                                       F-9
<PAGE>
(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 138 properties
comprising  $60 million in  fixed-rate  loans and $46  million in  variable-rate
loans.  The loans held for sale also include  variable-rate  construction  loans
totaling $34 million at December 31, 1999. The fixed-rate loans carry a weighted
average  interest  rate of 9.7%  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 9.5% at December
31, 1999).  Total principal and interest  payments  aggregate  approximately  $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, 1999,  FFCA held first  mortgage loans on the real property
(and related  equipment,  in many  instances) of  approximately  125  properties
represented by $30 million in participating  fixed-rate loans (net of reserve of
$3.6 million in 1999) and $28 million in  variable-rate  loans.  These loans are
held for long-term  investment.  Generally,  the fixed-rate loans carry interest
rates ranging from 10% to 13.5% per annum and mature 5 to 20 years from the date
of  origination.  In  addition,  these loans  generally  provide for  additional
interest  payments  based on a percentage of the  mortgagor's  gross sales.  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 10.8% at December 31,
1999. Approximately 30% of the outstanding mortgage balance matures in 2000, 15%
in 2001 and the remaining  principal is due in level amounts  through 2019. FFCA
also held various  secured and unsecured  notes totaling $14 million at December
31, 1999 and 1998 (net of  allowances  of $20,000 in 1999 and $460,000 in 1998).
Generally,  the notes carry  interest rates ranging from 9% to 11% per annum and
mature through 2009.

(6)  REAL ESTATE INVESTMENT SECURITIES:

     FFCA  entered  into a loan sale  facility  with a third  party in 1998 (the
maximum  committed  amount of this  facility  ranged  from $600  million to $900
million in 1998 and 1999, and it was renewed  through  December 31, 2000 at $600
million). This facility permits FFCA to sell loans on a regular basis to a trust
for an agreed upon advance rate. In sixteen separate  transactions  during 1999,
FFCA sold 1,570  loans with an  outstanding  aggregate  principal  balance of $1
billion to the trust and  received  cash  proceeds  of $862  million  plus trust
certificates  representing the remaining  15-20% of the loan sale price.  During
1998,  FFCA sold 460 loans with an outstanding  aggregate  principal  balance of
$264 million to the trust,  receiving  trust  certificates  and cash proceeds of
$225 million.  Upon sale,  the mortgage loans  receivable  were removed from the
balance sheet and a gain on the sale was recognized  for the difference  between
the carrying amount of the mortgage loans and the adjusted sales price. The sale
of mortgages generated gains totaling  approximately $36.1 million in 1999, $6.2
million in 1998 and $430,000 in 1997. Upon the sale of such loans,  FFCA acts as
servicer  for  the  loans.  The  retained  subordinated  investment  securities,
totaling  $43.5  million at December 31, 1999 and $39.3  million at December 31,
1998, 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.

     Mortgage  loans  originated  by FFCA and sold into the loan  sale  facility
described  above,  totaling $1.1 billion in 1999 and $335 million in 1998,  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  $141.7 million and $74.4 million at December 31, 1999 and
1998,  respectively,  are included in "Real Estate Investment Securities" in the
accompanying consolidated balance sheets.

                                      F-10
<PAGE>
     FFCA's real  estate  investment  securities  are  classified  as follows at
December 31, 1999 and 1998 (amounts in thousands):

                                                           1999          1998
                                                         --------      --------
     Held-to-maturity securities                         $112,041      $ 53,937
     Available-for-sale securities                         29,699        20,441
     Trading securities (trust certificates)               43,512        39,314
                                                         --------      --------
                                                         $185,252      $113,692
                                                         ========      ========

     Unrealized  holding gains and losses for trading securities are included in
earnings,  while  unrealized  holding  gains and losses  for  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  $100.5  million  in  1999  and
approximated  carrying value in 1998. At December 31, 1999, 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 14 years.

(7)  NOTES PAYABLE:

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

                                                               1999       1998
                                                             --------   --------
     7% Senior Notes due November 2000, net of unamortized
       discount of $221 in 1999 and $465 in 1998             $149,779   $149,535
     8.25% Senior Notes due 2003, net of unamortized
       discount and related costs of $5,509 in 1999
       and $6,946 in 1998                                     144,491    143,054
     7.875% Senior Notes due 2005, net of unamortized
       discount of $61 in 1999 and $71 in 1998                 49,939     49,929
     6.78% Notes due 2002                                      30,000     30,000
     7.02% Notes due 2003                                      30,000     30,000
     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
                                                             --------   --------
                                                             $501,859   $500,168
                                                             ========   ========

     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
7.73% in 1999 and 7.26% in 1998. 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,  1999,  FFCA  was in  compliance  with  its  note
covenants.

     Amortization  of debt issuance costs for the years ended December 31, 1999,
1998  and  1997  amounted  to $2.8  million,  $1.4  million  and  $1.3  million,
respectively,  which is  included  in  "Interest  Expense"  in the  accompanying
financial  statements.  The senior  unsecured  notes  issued in October 1998 are
presented net of a hedge settlement of approximately $7 million,  which is being
amortized into interest expense over the term of the notes.

(8)  BORROWINGS UNDER LINES OF CREDIT:

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

                                                               1999       1998
                                                             --------   --------
     Borrowings at 30-day LIBOR plus 1%, weighted
       average interest rate of 7.48% and 6.59% at
       December 31, 1999 and 1998, respectively              $230,000   $ 35,000
     Borrowings at LIBOR Bid Rate, weighted average
       interest rate of 6.37% at December 31, 1998                 --     47,000
     Borrowings at Base Rate, 8.50% and 7.75% at
       December 31, 1999 and 1998, respectively,
       subsequently converted to LIBOR loans                    8,000    106,000
                                                             --------   --------
                                                             $238,000   $188,000
                                                             ========   ========

                                      F-11
<PAGE>
     At December 31, 1999, FFCA had outstanding  $238 million on $425 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
6.36% in 1999 and 6.57% in 1998. These loan facilities  provide for a fee on the
unused  commitment amount of .20% per annum,  payable quarterly in arrears.  The
revolving loan  facilities  expire as follows:  $75 million  expires in February
2000 and $350 million  expires in December 2000,  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 .9 to 1, as defined.  As
of December 31, 1999, FFCA was in compliance with its debt covenants.

     Amortization  of loan fees  related  to the  facility  for the years  ended
December 31, 1999, 1998 and 1997 amounted to  approximately  $742,000,  $880,000
and $1.2 million,  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 1999 and 1998,  FFCA issued 8,092 and 29,886  shares of
restricted   stock,   respectively,    which   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 and is being
amortized  over the  vesting  period of the  stock.  Such  expense  amounted  to
$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,  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
three-year period from the date of grant. The options expire ten years after the
date of grant.

     FFCA  measures  the  compensation  cost  of its  stock  option  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):

                                                   1999       1998       1997
                                                 --------   --------   --------
     Net income:
       As reported                               $148,727   $ 95,717   $ 72,897
       Pro forma                                 $148,253   $ 94,950   $ 70,718
     Earnings per share of common stock:
       As reported:
         Basic                                   $   2.69   $   2.01   $   1.78
         Assuming dilution                       $   2.68   $   2.00   $   1.76
       Pro forma:
         Basic                                   $   2.68   $   2.00   $   1.73
         Assuming dilution                       $   2.67   $   1.98   $   1.71

     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 1999, 1998 and 1997, respectively: dividend yield
of 7.7%, 6.5%, and 6.4%; expected stock price volatility of 20.42%,  18.53%, and
18.47%;  risk-free  interest rates of 4.87%,  5.57%,  and 5.65%; and an expected
option term of seven years.

                                      F-12
<PAGE>
     As of December 31, 1999,  options  outstanding  under the plan had exercise
prices  ranging from $19.50 to $27.625 with a weighted  average price of $22.85,
and expiration  dates ranging from May 2005 to May 2009 with a weighted  average
remaining term of approximately six and one-half years.

     A summary of the status of FFCA's  stock  option and  incentive  plan as of
December 31, 1999,  1998 and 1997, and changes  during the years then ended,  is
presented below:

<TABLE>
<CAPTION>
                                              1999                     1998                     1997
                                     ----------------------   ----------------------   ----------------------
                                                  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       2,580,813     $22.79     2,425,245     $22.14     1,705,181     $20.23
Granted                                212,496     $23.71       258,003     $27.58       774,730     $26.32
Exercised                               (8,625)    $21.60      (102,435)    $19.50       (32,166)    $19.62
Cancellations                          (11,500)    $26.68       -             -          (22,500)    $24.38
                                     ---------                ---------                ---------
Outstanding, end of year             2,773,184     $22.85     2,580,813     $22.79     2,425,245     $22.14
                                     =========                =========                =========

Options exercisable, end of year     2,190,667     $22.05     1,691,130     $21.17       956,071     $20.07
                                     =========                =========                =========
Weighted average fair value of
 each option granted during year              $2.24                    $2.91                    $2.88
                                              =====                    =====                    =====
</TABLE>

     FFCA  established  a 401K Plan as a savings 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 $344,000 in 1999, $277,000
in 1998 and $256,000 in 1997.

     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 1999, 1998 or 1997.

(10) DIVIDENDS AND CAPITAL STOCK:

     FFCA declared a fourth quarter 1999 dividend of $0.53 per share, payable on
February 18, 2000, to  shareholders of record on February 10, 2000. The dividend
payments made by FFCA to its shareholders represent ordinary income of $1.96 per
share for 1999 and $1.88 per share for 1998.  Dividend  payments made by FFCA to
its  shareholders  for 1997  represent  ordinary  income  of $1.68 per share and
capital gain of $0.12 per share.

     Warrants to purchase 3,476,908 shares of FFCA common stock were outstanding
at December 31, 1999,  of which  2,476,908  shares were  exercisable.  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

                                      F-13
<PAGE>
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. The
timing of the purchases and the actual  number of common shares  purchased  will
depend on market conditions and available cash flow.

(11) RELATED PARTY TRANSACTIONS:

     INVESTMENT  IN AFFILIATE - FFCA  Mortgage  Corporation  ("Mortgage  Corp.")
operated  during  1997  to  originate  mortgage  loans  to be  held  for  future
securitization transactions.  FFCA owned all of the nonvoting preferred stock of
Mortgage Corp., and was entitled to receive 95% of any dividends declared.  FFCA
recorded 95% of Mortgage Corp.'s net income for 1997 as "Equity in Net Income of
Affiliate" in the accompanying financial statements. Mortgage Corp. had revenues
of $9.6 million,  interest expense of $9 million, gains net of other expenses of
$1.2  million  and net income of $1.8  million  in 1997,  and was  dissolved  on
December 31, 1997.

     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 on the FFCA Premises provides
for payments of interest  only, at the rate of 10% per year,  until May 2000, at
which time the entire  principal  amount is due. The loan also  provides for the
payment of additional interest upon maturity based upon the increase, if any, in
the value of the FFCA Premises,  as defined in the loan  agreement.  The loan is
secured by land and land improvements,  the FFCA Premises and the guaranty of an
affiliate. The FFCA Premises, including equipment,  amounted to $12.3 million in
1999 and $11.8 million in 1998 (net of accumulated  depreciation of $4.6 million
in 1999 and $4.1  million  in 1998) 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. Fees for such services aggregated
approximately $427,000 in 1999, $590,000 in 1998 and $1.4 million in 1997.

(12) FINANCIAL INSTRUMENTS:

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

                                      F-14
<PAGE>
     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, 1999.  The carrying  amount of the mortgage
loans held for  long-term  investment  exceeded  the  estimated  fair  values by
approximately  $800,000.  Based on  market  prices  of  similar  investments  at
December  31,  1999,  the  carrying  amount of  FFCA's  real  estate  investment
securities  exceeded its fair value by $11.5  million.  The  carrying  amount of
FFCA's long-term, fixed-rate debt exceeded its fair value by $11.7 million based
on the level of interest rates prevailing at December 31, 1999.

     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
received  approximately  $500,000 if it had  terminated  its interest  rate swap
contracts at December 31, 1999.

     The combined  fair value  differences  of these  financial  instruments  is
equivalent to an unrealized loss of approximately $100,000;  however, changes in
the unrealized  gains or losses on mortgage  loans,  the real estate  investment
securities,  fixed-rate  debt and the interest rate swap contracts do not result
in the  realization or expenditure of cash unless the  investments  are actually
sold or the debt is retired.

(13) ADDITIONAL FINANCIAL INFORMATION:

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

                                                     1999      1998      1997
                                                    -------   -------   -------
Securities and other assets resulting
 from securitization                                $81,528   $63,479   $12,094
Mortgage loans obtained as part of property sale
 proceeds, net of deferred gain                          --     1,447       997
Conversion of mortgage loans to property and
  equipment subject to operating lease                3,034        --        --
Mortgage loans received from affiliate                   --        --    46,910
Interest paid, net of amounts capitalized            52,031    38,980    32,296
Income taxes paid                                       164        98       119

     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,
1999,  FFCA's  outstanding  commitments  to  extend  credit  over the next  year
aggregated approximately $500 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 while FFCA retains
the servicing  rights on the loans sold.  Subsequent to December 31, 1999,  FFCA
assigned the  Washington  Mutual  agreement to an affiliate (see Note 15). Under
the terms of this  assignment,  FFCA will  service the loans sold to  Washington
Mutual and will guaranty the performance of its affiliate under the agreement.

                                      F-15
<PAGE>
     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, 1999. 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  $2.2  million  as of
December 31, 1999. 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.

(15) SUBSEQUENT EVENTS (Unaudited):

     On January 4, 2000, FFCA established a nonqualified  REIT subsidiary,  FFCA
Funding  Corporation  ("Funding  Corp."),  to originate mortgage loans for sale.
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   Corp.  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 Corp. Certain officers of FFCA own all of the
outstanding voting common stock of Funding Corp. In connection with the start up
of this new company,  FFCA advanced $5 million to Funding Corp. under a one-year
note agreement, with interest due monthly and principal due at maturity.

     On January 14,  2000,  FFCA issued $50  million in  unsecured  notes due in
2002,  bearing  interest at 8.43% and $50 million in unsecured notes due in 2004
bearing  interest  at 8.68%.  Proceeds of the notes were used to pay down FFCA's
revolving line of credit.

     On February 7, 2000,  FFCA  entered  into a contract  with an  affiliate to
purchase a parcel of land (3.6 acres) for approximately  $1.9 million.  The sale
is subject to the  approval,  by vote,  of the  majority of the limited  partner
interests of the affiliate.  There can be no assurances as to the final terms of
the  proposed  transaction,  that the  conditions  will be satisfied or that the
proposed transaction will be consummated.

(16) QUARTERLY FINANCIAL INFORMATION (Unaudited):

                                                Quarter Ended
                                ---------------------------------------------
                               March 31,   June 30,  September 30,  December 31,
                                -------    -------      -------       -------
                                (amounts in thousands, except per share data)
     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

     1998
     Revenues                   $39,390    $40,366      $42,983       $46,829
     Net income                  18,574     28,384       23,837        24,922
     Net income per share,
       assuming dilution           0.42       0.58         0.48          0.51
     Dividends per share        $  0.47    $  0.47      $  0.47       $  0.49

     Weighted average shares     44,060     49,026       49,236        49,276


                                      F-16
<PAGE>
                                                                    SCHEDULE III
                                                                     Page 1 of 2

                    FRANCHISE FINANCE CORPORATION OF AMERICA
              SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AS OF DECEMBER 31, 1999
                          (Dollar amounts in thousands)


<TABLE>
<CAPTION>
                                   Initial Cost to Company and
                                Gross Amount at December 31, 1999              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        330   $  82,520   $ 151,215   $   3,891   $  237,626   $  31,135   $   3,876   $  35,011
Mideast             290      82,699     124,863         658      208,220      20,314         658      20,972
Mountain            210      60,886      95,687       1,545      158,118      13,293       1,545      14,838
Northeast           139      33,395      50,663       3,358       87,416      10,010       1,492      11,502
Pacific             191      57,829      59,647         285      117,761      14,093         285      14,378
Southeast           591     149,707     206,792       3,212      359,711      53,703       3,212      56,915
Southwest           300      76,408     113,784       4,638      194,830      28,065       4,638      32,703
W.N. Central        213      39,589      69,009       2,478      111,076      16,656       2,425      19,081
                 ------   ---------   ---------   ---------   ----------   ---------   ---------   ---------

TOTAL             2,264   $ 583,033   $ 871,660   $  20,065   $1,474,758   $ 187,269   $  18,131   $ 205,400
                 ======   =========   =========   =========   ==========   =========   =========   =========
</TABLE>

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

                    FRANCHISE FINANCE CORPORATION OF AMERICA
              SCHEDULE OF REAL ESTATE AND ACCUMULATED DEPRECIATION
                             AS OF DECEMBER 31, 1999
                             (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 1999, 1998, and 1997 are summarized as follows:

                                                                    Accumulated
                                                       Cost         Depreciation
                                                   -----------      ------------
Balance, December 31, 1996                         $   868,215      $   172,941

  Acquisitions                                         140,218               --
  Cost of real estate sold                             (31,321)          (9,531)
  Cost of equipment sold                                (8,059)          (8,016)
  Construction in progress transferred to
    mortgage loans held for sale                       (15,819)              --
  Impairment loss                                       (1,929)              --
  Depreciation expense                                      --           19,869
                                                   -----------      -----------

Balance, December 31, 1997                             951,305          175,263

  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
                                                   ===========      ===========

                                      F-18
<PAGE>

                                                                     SCHEDULE IV
                                                                     Page 1 of 2

                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    SCHEDULE OF MORTGAGE LOANS ON REAL ESTATE
                             AS OF DECEMBER 31, 1999
                          (Dollar amounts in thousands)


<TABLE>
<CAPTION>
                                                                                                      Principal
                                                                                                   Amount of Loans
                                                                                                     Subject to
                                                                                Face     Carrying    Delinquent
               Original      No. of       Interest          Maturity Date     Amount of  Amount of    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       1       10.0% - 13.5%   Apr. 2002 - Aug. 2006  $  3,469   $  2,281     $     --
              $501-$1,000       1               10.5%               Jul. 2014       696        696           --
              over $1,000       3      10.06% - 11.5%  Sept. 2000 - Jul. 2018    33,929     20,331           --
                                                                               --------   --------     --------
                                                                                 38,094     23,308           --
                                                                               --------   --------     --------
Mideast        under $500               10.2% - 11.0%   Apr. 2001 - Jan. 2007     1,394        844           --
              $501-$1,000       1      10.31% - 10.5%   Jul. 2006 - Nov. 2011     1,575      1,466           --
              over $1,000       1               10.0%               Jun. 2000     1,290        618           --
                                                                               --------   --------     --------
                                                                                  4,259      2,928           --
                                                                               --------   --------     --------
Northeast      under $500              11.25% - 11.5%   Jul. 2003 - Apr. 2004       392        281          136
              $501-$1,000       2       9.72% - 11.5%  Sept. 2000 - Aug. 2019     1,330      1,306           --
              over $1,000       2               11.5%  Sept. 2003 - Nov. 2015     3,062      1,586        1,586
                                                                               --------   --------     --------
                                                                                  4,784      3,173        1,722
                                                                               --------   --------     --------
E.N. Central   under $500               8.82% - 12.0%    Aug. 2000 - May 2006     1,360        518           --
              $501-$1,000                      11.25%     May 2002 - May 2015     6,595      4,744        4,744
              over $1,000      30              12.46%              Sept. 2001     9,750      9,722           --
                                                                               --------   --------     --------
                                                                                 17,705     14,984        4,744
                                                                               --------   --------     --------
W.N. Central   under $500       1       9.25% - 13.5%  Sept. 2001 - Mar. 2019     1,603        513           --
              $501-$1,000       1               10.5%               Jan. 2009       778        599           --
                                                                               --------   --------     --------
                                                                                  2,381      1,112           --
                                                                               --------   --------     --------
Southwest      under $500       5       9.25% - 11.5%   Oct. 2002 - Mar. 2019     5,015      4,294           --
              $501-$1,000       1      8.52% - 10.87%   Apr. 2000 - Jul. 2005     1,390      1,281           --
              over $1,000       1               11.5%   Jun. 2003 - Jun. 2016     1,203        459          459
                                                                               --------   --------     --------
                                                                                  7,608      6,034          459
                                                                               --------   --------     --------
Mountain       under $500       1      8.735% - 11.5%    Feb. 2000 - May 2019     4,942      2,794           --
              $501-$1,000       2       9.25% - 14.5%   Nov. 2000 - Mar. 2019     2,554      1,774           --
                                                                               --------   --------     --------
                                                                                  7,496      4,568           --
                                                                               --------   --------     --------
Pacific        under $500              10.25% - 11.0%    Jan. 2004 - May 2005       439        348           --
              $501-$1,000       1      10.81% - 11.5%  Sept. 2002 - Nov. 2019     1,061        810           --
              over $1,000       1        9.7% - 9.93%    Jan. 2005 - May 2017     1,399        731          731
                                                                               --------   --------     --------
                                                                                  2,899      1,889          731
                                                                               --------   --------     --------
                                                                        TOTAL  $ 85,226   $ 57,996     $  7,656
                                                                               ========   ========     ========
</TABLE>

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

                    FRANCHISE FINANCE CORPORATION OF AMERICA
                    SCHEDULE OF MORTGAGE LOANS ON REAL ESTATE
                             AS OF DECEMBER 31, 1999
                             (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
          $63 million.
     (6)  Transactions  in mortgage  loans on real estate during 1999,  1998 and
          1997 are summarized as follows:

Balance, December 31, 1996                                             $ 57,808
  Additions during period:
    New mortgage loans                                                    6,760
    Deferred gain, net of gain recognized                                  (192)
    Unamortized loan fees, net of amortization                             (496)
  Deductions during period:
    Collections of principal                                             (3,217)
    Mortgage loan payoffs                                               (24,265)
    Reserve for mortgage loan losses                                     (1,214)
                                                                       --------

Balance, December 31, 1997                                               35,184
  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
                                                                       ========

                                      F-20
<PAGE>
                    FRANCHISE FINANCE CORPORATION OF AMERICA

                                  EXHIBIT INDEX

The  following is a complete  list of exhibits  filed as part of this Form 10-K.
For  electronic  filing  purposes  only,  this report  contains  Exhibit 27, the
Financial  Data  Schedule.  Exhibit  numbers  correspond  to the  numbers in the
Exhibit Table of Item 601 of Regulation S-K.

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

3.01      Second Amended and Restated  Certificate of Incorporation of Franchise
          Finance Corporation of America (1)

3.02      Certificate  of  Designation  of  Franchise  Finance   Corporation  of
          America, classifying and designating the Series A Junior Participating
          Preferred Stock (2)

3.03      Third Amended and Restated Bylaws of Franchise Finance  Corporation of
          America *

4.01      Indenture dated as of November 21, 1995 (3)

4.02      Specimen of Common Stock Certificate (4)

4.03      Officers' Certificate relating to the 7% Senior Notes Due 2000 and the
          7-1/8%  Senior  Notes Due 2005 of  Franchise  Finance  Corporation  of
          America (5)

4.04      Officers'  Certificate  relating  to the  Medium-Term  Notes  due Nine
          Months or More from the Date of Issue of Franchise Finance Corporation
          of America (6)

4.05      Form  of  Medium-Term  Fixed  Rate  Note  and  Floating  Rate  Note of
          Franchise Finance Corporation of America (7)

4.06      Officers'  Certificate  relating to the 8.25% Senior Notes Due 2003 of
          Franchise Finance Corporation of America (8)

4.07      Rights Agreement, dated as of April 7, 1999, between Franchise Finance
          Corporation of America and Gemisys Corporation, as Rights Agent (2)

10.01     Acquisition,  Construction  and  Term  Loan  Agreement,  dated  as  of
          December 29, 1988, by and between  Franchise  Finance  Corporation  of
          America and Scottsdale Land Trust Limited Partnership (4)

10.02     Promissory Note dated December 29, 1988, executed by Franchise Finance
          Corporation  of America  in favor of  Scottsdale  Land  Trust  Limited
          Partnership in the principal amount of $8,500,000 (4)

10.03     1995 Stock Option and Incentive Plan of Franchise Finance  Corporation
          of America (9)

10.04     Amendment  No.  1 to the  1995  Stock  Option  and  Incentive  Plan of
          Franchise Finance Corporation of America (10)

10.05     Stock Purchase  Agreement  between  Franchise  Finance  Corporation of
          America and Colony Investors III, L.P. dated February 13, 1998 (11)
<PAGE>
10.06     Master Loan Purchase Agreement, dated as of December 14, 1999, between
          FFCA Acquisition  Corporation,  as Seller and Washington  Mutual Bank,
          FA, as Purchaser (12)

10.07     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)

10.08     Amended  and  Restated  Employment  Agreement,  dated as of January 1,
          2000,  between Franchise Finance  Corporation of America and Morton H.
          Fleischer *

10.09     Amended  and  Restated  Employment  Agreement,  dated as of January 1,
          2000, between Franchise Finance Corporation of America and Christopher
          H. Volk *

10.10     Amended  and  Restated  Employment  Agreement,  dated as of January 1,
          2000,  between  Franchise  Finance  Corporation of America and John R.
          Barravecchia *

10.11     Amended  and  Restated  Employment  Agreement,  dated as of January 1,
          2000,  between Franchise Finance  Corporation of America and Dennis L.
          Ruben *

10.12     Amended  and  Restated  Employment  Agreement,  dated as of January 1,
          2000, between Franchise Finance  Corporation of America and Stephen G.
          Schmitz *

21.01     Subsidiaries of the Registrant*

23.01     Consent of Arthur Andersen LLP*

99.01     Second Amended and Restated  Credit  Agreement dated December 29, 1997
          among Franchise  Finance  Corporation of America,  Certain Lenders and
          NationsBank of Texas, N.A. (13)

99.02     First  Amendment to the Second Amended and Restated  Credit  Agreement
          among Franchise  Finance  Corporation of America,  Certain Lenders and
          NationsBank, N.A. dated as of June 30, 1998 (14)

99.03     Second Amended and Restated Sale and Servicing  Agreement  dated as of
          January 1, 2000,  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 *

99.04     Loan Purchase Agreement dated as of August 14, 1998, between FFCA Loan
          Warehouse Corporation and FFCA Acquisition Corporation (15)

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 *
<PAGE>
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 *

99.07     Indenture  dated as of August 14, 1998,  between FFCA  Franchise  Loan
          Owner Trust 1998-1 and LaSalle National Bank. (15)

99.08     Fourth Amended and Restated Indenture Supplement,  dated as of January
          1, 2000,  between FFCA  Franchise  Loan Owner Trust 1998-1 and LaSalle
          Bank National Association f/k/a LaSalle National Bank *

99.09     Note  Purchase  Agreement  dated as of  August  14,  1998  among  FFCA
          Franchise Loan Owner Trust 1998-1, FFCA Acquisition Corporation,  FFCA
          Loan Warehouse Corporation,  and Morgan Stanley Securitization Funding
          Inc. (15)

99.10     Amendment  No. 1, dated as of October 30, 1998,  to the Note  Purchase
          Agreement   among  FFCA  Franchise  Loan  Owner  Trust  1998-1,   FFCA
          Acquisition Corporation,  FFCA Loan Warehouse Corporation,  and Morgan
          Stanley Securitization Funding Inc. *

99.11     Amendment  No. 2,  dated as of March 18,  1999,  to the Note  Purchase
          Agreement   among  FFCA  Franchise  Loan  Owner  Trust  1998-1,   FFCA
          Acquisition Corporation,  FFCA Loan Warehouse Corporation,  and Morgan
          Stanley Securitization Funding Inc. *

99.12     Amendment  No. 3, dated as of August 27,  1999,  to the Note  Purchase
          Agreement   among  FFCA  Franchise  Loan  Owner  Trust  1998-1,   FFCA
          Acquisition Corporation,  FFCA Loan Warehouse Corporation,  and Morgan
          Stanley Securitization Funding Inc. (16)

99.13     Amendment  No. 4, dated as of January  1, 2000,  to the Note  Purchase
          Agreement   among  FFCA  Franchise  Loan  Owner  Trust  1998-1,   FFCA
          Acquisition Corporation,  FFCA Loan Warehouse Corporation,  and Morgan
          Stanley Securitization Funding Inc. *

99.14     Credit  Agreement  dated as of  February  11,  1999,  among  Franchise
          Finance  Corporation  of  America,  Certain  Lenders  and  NationsBank
          N.A.(14)

99.15     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 (17)

----------
* Filed herewith.
(1)  Incorporated by reference from the  Registrant's  Quarterly  Report on Form
     10-Q for the  fiscal  quarter  ended  March  31,  1997,  as filed  with the
     Securities and Exchange Commission.
(2)  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.
(3)  Incorporated by reference from the Registrant's Current Report on Form 8-K,
     dated  November  24,  1995,  as filed  with  the  Securities  and  Exchange
     Commission.
<PAGE>
(4)  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.
(5)  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.
(6)  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.
(7)  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.
(8)  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.
(9)  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.
(10) 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.
(11) Incorporated by reference from the Registrant's  Annual Report on Form 10-K
     for the fiscal year ended  December 31, 1997, 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 Current Report on Form 8-K,
     dated  December  29,  1997,  as filed  with  the  Securities  and  Exchange
     Commission.
(14) Incorporated by reference from the Registrant's  Annual Report on Form 10-K
     for the fiscal year ended  December 31, 1998, as filed with the  Securities
     and Exchange Commission.
(15) 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.
(16) Incorporated by reference from the  Registrant's  Quarterly  Report on Form
     10-Q for the fiscal  quarter  ended  September  30, 1999, as filed with the
     Securities and Exchange Commission.
(17) 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.