KUALA LUMPUR, 2 Dec 2016:
McDonald’s Corp today said it had sold the franchise rights for its restaurants in Singapore and Malaysia to Saudi Arabia’s Lionhorn Pte Ltd as part of a plan to move away from direct ownership in Asia.
The fast-food chain said it transferred its ownership interest in 390 restaurants, more than 80% of which were company-owned, on Dec 1 to Lionhorn.
Lionhorn is led by Sheik Fahd and Abdulrahman Alireza, who are franchisees for nearly 100 McDonald’s restaurants in the western and southern regions of Saudi Arabia.
McDonald’s did not disclose the financial terms of the deal.
Reuters had reported in October that McDonald’s was nearing a deal worth up to US$400 million to franchise the outlets to Reza group – which also owns and operates McDonald’s outlets in the western and southern regions of Saudi Arabia.
The Lionhorn deal is in line with McDonald’s plans to bring in partners in Asia as it switches to a less capital-intensive franchise model.
The company said it has now franchised about 1,300 outlets as a part of its target to become 95% franchised by the end of 2018.
In a statement, McDonald’s said Lionhorn is led by Sheik Fahd and Abdulrahman Alireza, who bring 20 years of experience as the DL for the nearly 100 McDonald’s restaurants in the Western and Southern regions of Saudi Arabia.
“This transaction marks another milestone in our company’s ongoing efforts to identify strategic partners, who share our values, vision to accelerate growth and scale across diverse markets as well as drive innovation.
“It places us closer to our customers and the communities we serve,” said McDonald’s president and chief executive officer Steve Easterbrook.
Leading the day-to-day management of the Malaysia and Singapore markets, respectively, will be local operating partners Azmir Jaafar and Kenneth Chan – both of whom previously held senior leadership positions at McDonald’s and together possess over 40 years of experience.
“Local leadership and market knowledge will be key to driving business success in Malaysia and Singapore,” said Azmir, operating partner and managing director at McDonald’s Malaysia.
As part of its turnaround plan announced in May of 2015, McDonald’s said it is committed to refranchising 4,000 restaurants by end-2018 with the long-term goal of becoming 95% franchised.
With this transaction, McDonald’s has now refranchised about 1,300 restaurants.