McDonald's

McDonald's to Refranchise 1,500 Restaurants

2 min read

McDonald's has a plan to boost its slipping profits: refranchising.

The burger chain announced Wednesday plans to sell at least 1,500 company-owned restaurants to franchisees by the end of 2016. The restaurants affected will be primarily outside the United States, in the Asia/Pacific region, the Middle East, Africa and Europe.

The refranchising boost will reflect a more than 50 percent increase in refranchising activity compared with McDonald's prior three-year period.

Related: Fast-Food Breakfast Buzz Boosts Egg Whites' Prices

Currently, over 80 percent of McDonald's restaurants worldwide are franchised. However, international franchise activity lags behind the U.S. Refranchising 1,500 of the over 14,800 international McDonald's will represent a huge jump in this effort.

McDonald's has struggled recently to keep up with the competition. In April, the chain announced that first quarter profits came in at $1.2 billion – a 5.2 percent drop from 2013, and short of analysts' predictions. 

Refranchising is a common way for franchises to boost net income. Earlier this year, Burger King finished a refranchising push that resulted in a 99 percent growth in income in 2013. Wendy's is also in the process of reducing corporate stores, in a refranchising effort that spans 415 restaurants.  

Related: Midlife Crisis? Ronald McDonald Gets a Makeover, Joins Twitter

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