McDonald's licensed for expansion

China Daily, September 26, 2011

McDonald's Corporation China has announced that it issued its first developmental license in August to a mainland business in a move to further expand its presence in the country.

The license was granted to Ren Jianmei, vice-president of the Kunming North Star Group that runs restaurants, hotels and retail businesses. It is aimed at increasing the number of the fast food outlets in Southwest China's Yunnan province.

"I look forward to helping expand the presence of McDonald's in Yunnan while upholding the McDonald's principles of quality, service, cleanliness and value. We will definitely contribute to this win-win partnership with extensive local resources and knowledge in Yunnan," said Ren.

The developmental license model is a form of franchising that McDonald's, one of the world's leading fast food providers, has been using for more than 30 years around the world to grow the brand. Unlike conventional McDonald's licensees, developmental licensees own or secure all assets, including property and buildings, and have the right to open new restaurants across a province or other geographical area.

McDonald's collects a royalty based on a percentage of restaurant sales. The traditional franchise method requires the franchiser to rent an outlet and sublet it to franchisees.

"McDonald's China will leverage the developmental license model to grow our brand and create opportunities for local entrepreneurs," said McDonald's China chief executive officer Kenneth Chan.

"As one of the top franchisers in the world, we believe in the value of local ownership and, as this market expands through the opening of new restaurants, it will create jobs and other economic benefits for the Yunnan province."