McDonald’s announced Thursday that it would buy all 225 franchised restaurants in Israel, thereby taking direct control.
The company said in a press release that it had reached an agreement with Alonyal, the franchisee that has managed its Israeli reporting for 30 years.
The Israeli invasion was launched after the October 7 terrorist attacks, when Hamas militants killed around 1,200 Israelis and took more than 250 hostages.
Since then, more than 33,000 Palestinians have been killed in Israeli bombardments, according to the Hamas-run health ministry in Gaza.
In October, the McDonald’s franchisee in Israel sparked controversy by offering thousands of free meals to Israel Defense Forces personnel participating in the conflict.
Although McDonald’s does not have a formal position on the war, some observers saw it as a sign that McDonald’s was siding with Israel.
This prompted McDonald’s franchisees in other countries, such as Saudi Arabia, Oman, Kuwait and the United Arab Emirates, to distance themselves from Israeli operations, according to Reuters.
The pro-Palestinian Boycott, Divestment and Sanctions (BDS) movement has called for a global boycott of McDonald’s until it cuts ties with the Israeli franchisee.
Thursday’s news showed the campaign worked.
McDonald’s said the boycott hurt its financial results. In February, the company reported missing a key sales target, attributing it in part to events in Israel.
The fallout from the conflict “had a significant impact” on performance in France, Indonesia and Malaysia, CEO Chris Kempczinski said in February.
A month earlier, Kempczinski sought to defend the company, saying the reaction was “ill-founded” and based on “misinformation.”
He defended McDonald’s approach of giving leeway to local operations, saying the company was “proudly represented by local owner-operators” globally.
However, the Israeli situation has exposed a major flaw in a franchise model that spans more than 100 countries.
Franchisees like Alonyal have the autonomy to make decisions tailored to the local market while representing the world-renowned brand.
This leaves room for crucial concessions to local tastes and customers.
For example, Indian franchises do not sell beef burgers, and bacon is not for sale in Israel and the Muslim-majority world.
On the other hand, consumers generally do not differentiate between different operations and, as is the case in Israel, may view a franchisee’s actions as an overall position and punish the brand accordingly.
(For the same reason, McDonald’s takeover of Israeli stores may not make much difference to those involved in the boycotts.)
In the statement announcing the deal with Alonyal, Jo Sempels, McDonald’s head of international licensed development markets, said the company was still “committed to the Israeli market.”
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