McDonald's Corp (NYSE: MCD) has allowed franchising in Shanghai and Shenzhen to step up its business in the most developed cities of the world's fastest growing major economy, Yicai.com reported.

The Golden Arch said it opened franchising in China's two richest cities on December 10, 2013. The move came as the company's revenue and earnings turned out worse than expected after being hit hard by sluggish global economic recovery.

Last year's bird flu outbreak in China has taken its toll on Yum! Brands Inc's (NYSE: YUM) KFC business in the country, but had a limited impact on McDonald's. Industry watchers say McDonald's is taking advantage of KFC's setbacks to gain a greater market share.

On the other hand, franchising will help offset slower organic growth and reduce operating risks, a marketing strategist told Yicai.

McDonald's first allowed franchising in China in 2010 in Jiangsu, Fujian, Sichuan and part of Guangdong provinces. It currently operates around 4,000 restaurants in the country.

Up to 80% of McDonald's 32,000-plus global locations are franchises.


 

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