Behind McDonald's hasty purchase of Israeli franchise
Behind McDonald's hasty purchase of Israeli franchise
Fearing a boycott, the global chain approached Omri Padan to acquire the 225 branches his Alonyal company established in Israel since 1993. The deal was signed within just two months
New details about the McDonald's deal in which it acquired the Israeli franchise reveal that it was a quick transaction, completed in just two months. Calcalist learned that the Americans proposed to Alonyal to purchase the branches in Israel at the beginning of February, and by early April, the deal was already signed. With the decision to acquire the company in Israel, McDonald's Global recruited a local media consultant to accompany the process, anticipating media scrutiny over the decision in light of the ongoing boycott it is facing in various countries.
The impetus for the transaction came from McDonald's Global, which offered to buy Alonyal from Omri Padan, the company's CEO and owner of the franchise in Israel. The Americans had an option in the contract with Padan to purchase the franchises at any time, and they chose to exercise it now, with McDonald's coming under pressure after Padan, like many Israeli businessmen, donated free meals to IDF soldiers. This led to threats of boycotts by pro-Palestinians in the Middle East and other regions, resulting in a sales slowdown. The purchase of the franchise by the global company is seen by industry sources as a response to the war's negative impact on revenues.
McDonald's aims to regain control of the Israeli chain's operations and potentially cease donations to the IDF to safeguard its image and finances.
International franchising agreements typically include clauses prohibiting brand involvement in conflicts that could damage the brand's reputation, such as political or security issues. While it's likely that Alonyal also has such a clause, Padan may have taken some liberties with the interpretation of the clause.
Despite McDonald's Israel's profitability, with annual revenue estimated at NIS 1.5 million ($309 million), McDonald's Global is primarily concerned with maintaining its image and brand strength worldwide. Even if the chain were to exit Israel, which seems unlikely, it would have minimal impact on its global operations.
