McDonald's agrees to franchise 80% of its Chinese operations
Fast food giant McDonald's has struck a deal to franchise 80% of its restaurants in China, with state-owned investment firm Citic and US private equity firm Carlyle Group taking control of the stores.
In a deal worth up to $2.1bn, McDonald's 2,000 restaurants in China will come under the control of Citic, with both the Illinois giant and Carlyle retaining a stake in the operations.
Citic will have a 52% stake in the new operations, with Carlyle owning 28% and McDonald's the lowest share of 20%.
The move comes part of a global restructuring from the Golden Arches company which was announced in March of last year, with the aim of streamlining many of its major markets.
Major competitor Yum Brands, whose main brands include KFC and Pizza Hut, is also initiating plans to streamline its Chinese restaurants as Western companies face competition from smaller local rivals.
According to the Wall Street Journal, around one-third of the McDonald's restaurants in China are already franchised, and under the terms of the deal the remainder will also be franchised.
Citing people familiar with the matter, the WSJ reported that the US company's share of total sales will be 6%, with royalty fees increasing throughout the 20-year length of the agreement.
McDonald's share price finished 0.89% higher on Friday, while Carlyle Group was 2.15% higher at the close.