McDonald’s plans to sell Malaysia, Singapore franchises

McDonald’s Corp is planning a sale of 20-year franchise rights in Malaysia and Singapore that could collectively fetch at least US$400mil, people with knowledge of the matter said.(thestar.com.my)

Suitors for the fast-food operations in the two Southeast Asian markets have begun sounding out banks for financing, said the people, who asked not to be identified because the information is private. A potential bidder is in talks with lenders for as much as US$300mil in funding, they said. McDonald’s is seeking local franchise partners to run its restaurants in Malaysia and Singapore as it pursues an international turnaround plan put in place after CEO Steve Easterbrook took over last year.

The Big Mac maker, which has a US$112bil market value, is revamping its ownership models throughout Asia, including plans to sell operations in China, Hong Kong and South Korea. McDonald’s has adopted a “development licensee model” for the two markets, a Singapore-based spokeswoman for the company said in an e-mailed response to Bloomberg queries. It is negotiating with candidates “who are committed to helping accelerate growth and innovation in Malaysia and Singapore,” she said. Unlike in its other major markets — including the U.S. — most McDonald’s outlets in Asia are company-owned.

The chain aims eventually to have 95% of its restaurants in the region under local ownership, it said in March. McDonald’s currently has more than 120 restaurants with around 9,000 employees in Singapore, according to its local website. In Malaysia, the chain runs more than 250 restaurants, its website shows.