McDonald's sells big chunk of turf and control

mcdonalds

McDonald’s has sold a 390-restaurant territory in Singapore and Malaysia to its licensees for markets in Saudi Arabia, creating a new power base within the chain.

The buyers, Sheik Fahd and Abdulrahman Alireza, now have control over nearly 500 restaurants, with more to follow as the partners build out their territories.

Terms of the sale to Fahd and Alireza’s Lionhorn Pte. were not disclosed.

The divestiture is part of McDonald’s strategy of refranchising most of the system to franchisees, freeing cash for shareholders and business development. About 312 of the 390 restaurants sold yesterday were company-operated.

McDonald’s keeps a tight hold on ownership and control of its brand in the United States. Unlike Burger King, Pizza Hut, Wendy’s and Buffalo Wild Wings, it has never allowed a franchisee of scale to go public, for instance.

But it has been much more reliant on sizable partners abroad. Its Latin American licensee is Arcos Dorados (“Golden Arches” in Spanish), a public company, and it has worked with large retailers as partners in Asia.

The U.S.-based chain is currently shopping for a buyer of its Chinese operations.

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