Following the recent claims by migrant workers at McDonald’s Malaysia for exploitation of human labour, according to detailed investigations by the Guardian, the world’s leading foodservice retailer has taken a bold step to quell the speculation.
McDonald’s recently sold its Malaysia and Singapore franchise to Lionhorn Pte. Ltd, who will now be the Developmental Licensee (DL). They have assumed ownership of the business in both countries from December 1, 2016.
This announcement follows a rigorous evaluation and selection process over the past year. As part of its turnaround plan announced in May 2015, McDonald’s is committed to refranchising 4,000 restaurants by the end of 2018, with the long-term goal of becoming 95 percent franchised. With this transaction, McDonald’s has now refranchised approximately 1,300 restaurants.
While financial terms of this transaction remain undisclosed, part of the ownership will include total of 390 restaurants in both countries, more than 80 percent of which were company-owned.
“This transaction marks another milestone in our company’s ongoing efforts to identify strategic partners who share our values and vision to accelerate our growth and scale across diverse markets, drive innovation and place us closer to our customers and the communities we serve,” said McDonald’s President and Chief Executive Officer Steve Easterbrook.
Under the DL structure, McDonald’s transferred its ownership interest in McDonald’s Malaysia and Singapore and granted a license to the DL, to run McDonald’s restaurant operations in these markets. How will this change of ownership impact the unsettled claims of exploited migrant labour in Malaysia, is yet to be known.
The DL partner will provide the capital necessary to support and grow the business, and will pay an initial franchise fee and an ongoing royalty to McDonald’s.
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.
“We are pleased to welcome Sheik Fahd as the Developmental Licensee for our business in Malaysia and Singapore,” said Simone Hoyle, Head of McDonald’s Asia Foundational Markets. “Sheik Fahd and Abdulrahman Alireza’s experience in running great restaurants will create brand excitement for our customers and new opportunities for our people as these markets continue to grow and develop.”
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.