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Johannesburg - McDonald's Corp is considering handing control of its South African operations to a local partner by appointing a "developmental licensee", its senior official said in a statement obtained on Thursday.
"We are not able to take full advantage of the opportunities before us in South Africa and have been looking at alternative ways to achieve the best results for the market," said Peter Bush, the firm's divisional president in the Pacific and Africa in a statement dated June 9.
McDonald's Corp, which operates 123 restaurants across South Africa, has been using the developmental licensee structure for about 20 years. Under that structure, McDonald's collects royalties from a local company that invests its own capital to expand the brand in a country or market.
That would allow McDonald's, to focus its resources on the markets where it sees the biggest opportunities for growth.
Famous Brands, which said this week it was in undisclosed talks that could affect its share, sparked speculation that it could be bidding for the licence.
But McDonald's South Africa's managing director Greg Solomon dismissed the rumours, saying that Famous Brands' announcement was coincidental.
"I can categorically say we're absolutely not talking to Famous Brands," he told Reuters.
No one at Famous Brands was immediately available to comment.
Quinton Ivan, analyst at Coronation Asset Management, said Famous Brands was unlikely to be a buyer or be interested in McDonalds because it did not fit within its portfolio.
"Famous Brands is positioning itself towards the higher end of the market, and McDonald's products are cheap ... I don't think it will fit within its portfolio," he said.
Solomon said the company was looking at local partners that had "the financial means" to grow the business and understood the culture of the market.
He said the process of selecting a partner could take up to six months, and that if an entity or individual was found the licence would be valid for 20 years.
- Reuters