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Talks are circulating around that McDonald's Corp. might end up giving away the franchise rights for its stores in Malaysia and Singapore to the Saudi Arabian company, Reza Group. The deal will supposedly close at $400 million, which will be funded by the Malaysian bank, CIMB. For now, the bank refuses to disclose any information and is keeping mum about the subject.
Why would McDonald's choose to hand over the rights to Reza? For one, Reza Food Services Co. Ltd has had prior dealings with the company – this is the franchisee to the chain of McDonald’s restaurants in the southern and western area of Saudi Arabia, which could be the reason why McDonald's is confident about the deal.
The sources say that McDonald's is now looking to have a less capital-intensive model for its Asian market. However, the company does not want to give away the rights to buyout firms, fearing that these would eventually cash out of the business after a few years. Instead, it wanted to look for partners who would take the restaurant seriously and their perfect candidates would either have to be one of the local tycoons or family-owned businesses. It just so happened that Reza Group made it to their list of criteria.
While the CIMB refuses to talk, there’s now news that the deal will be sealed using the Malaysian ringgit and Singaporean dollar. McDonalds has not yet released an official statement but if the news is true, this is expected to take effect by the end of the year.
If there really is a deal, then the Reza group may have struck gold. McDonald’s is already gaining fans in Singapore where it is now offering sponsored diploma courses for its employees. It makes up for great marketing which the Reza could choose to continue if they want to keep the employees happy.