McDonald’s caused a stir in Hong Kong, when it announced plans to sell eight of its most expensive properties. That reaction was nothing compared with its subsequent announcement that it would be selling all of its 23 owned retail locations in the region, valued at almost $400 million. Was McDonald’s abandoning Hong Kong?

Not quite. At the same time it indicated its intentions to divest its own operations, it announced plans to sign long-term leases in the exact same locations, such that each store could continue operations while undergoing a change in ownership, from McDonald’s corporate to local affiliates. This strategic option, known as a sale-leaseback deal, usually gets adopted by businesses that need more liquidity. Seeking access to more cash, they trade off their property investments and thus gain more flexibility to spend.

But that explanation seems questionable when it comes to McDonald’s, which would not be characterized as cash-poor or debt-laden. Thus, observers have predicted that, with the substantial revenue the corporation can generate from the sales of these expensive locations, it will undertake wider reinvestments into expanding its local footprint. That is, ironically, the divestment might mark the beginning of McDonald’s expansion in Hong Kong, though this prediction remains speculation for now.

McDonald’s reportedly already has sold several of the original eight offerings, including two locations in the coveted Kennedy Town and Mong Kok neighborhoods. Collectively, both properties cover about 14,000 square feet and fetched almost $24 million. The buyer responsible for both transactions was said to be the same person.

Discussion Questions

1. Why might McDonald’s have chosen this particular moment to convert its holdings into leases?
2. What additional factors should an international corporation take into consideration when making a decision about franchises in other countries?

Sources: “McDonald’s Sells Kennedy Town, Mong Kok Shops for HK$180 Million,” The Standard (HK), November 11, 2025; “McDonald’s to Sell 8 Hong Kong Retail Spaces Valued at $153 Million, JLL Says,” Reuters, July 28, 2025; Shawna Kwan and Venus Feng, “McDonald’s Seeks to Sell $153 Million in Hong Kong Store Space,” Bloomberg, July 28, 2025.