McDonald's aims to expands franchise trial in China
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HONG KONG, May 6 (Reuters) - McDonald's Corp (MCD.N), the world's biggest fast-food chain operator, is looking for new franchise partners in China, expanding a six-year-old trial programme in its fastest growing market, a spokeswoman said on Thursday.
McDonald's relies heavily on franchises in more mature markets such as United States, but has almost exclusively opened self-operated stores in China since entering the market two decades ago.
The company launched a pilot franchise programme in China, but has so far limited it to three franchisees running six restaurants.
It moved to expand up the process in April, posting information on its China website inviting new franchise applicants as it accelerates a plan to double its China network to more than 2,000 outlets by 2013.
McDonald's had asked interested parties to prepare at least 2 million yuan ($293,000) to cover equipment purchases, joining fee and other expenses, a spokeswoman said. She added that the company would initially experiment with new franchisees in Jiangsu province near Shanghai.
"The whole franchising process is still on a trial run," she said in a telephone interview, declining to say how long the trial expansion would be confined to the Jiangsu.
About 80 percent of McDonald's global outlets are operated by franchisees, requiring less capital than self-operated stores.
McDonald's competes in China with Yum Brands' (YUM.N) KFC, and Ajisen (China) (0538.HK), a Hong King-listed noodle restaurant operator.
Planning to boost capital investment in the mainland by about a quarter this year, McDonald's said it expected China to be the engine of growth in Asia-Pacific over the next five years, targeting 1,300 outlets by the end of 2010. [ID:nTOE62T06J]