Waze Founders Near Deal for McDonald's Israel Franchise
Translated & summarized from Calcalist by baba
The four co-founders of Waze, led by Assaf Rappaport, are nearing a deal to acquire the franchise for McDonald's in Israel for an estimated NIS 500 million. This follows McDonald's termination of its previous franchisee due to controversial donations to the IDF. Potential partners like Zehavit Cohen and Apex are being considered, and the deal is expected to bring a technological approach to the fast-food chain. The Waze founders are reportedly willing to walk away if negotiations don't conclude favorably.
The story in 6 lines · by baba
- Waze co-founders are close to securing the McDonald's Israel franchise for an estimated NIS 500 million.
- McDonald's terminated its previous franchisee in 2024 over donations to the IDF, causing international backlash.
- Potential partners, including Zehavit Cohen and Apex, may join the Waze founders in the franchise deal.
- The global company prioritized franchisee stability over the deal's valuation, seeking a private owner.
- The Waze founders are expected to bring a tech-focused approach to revitalizing the chain.
- Negotiations are advanced but not yet finalized, with the Waze founders prepared to withdraw if necessary.
The four co-founders of Waze, led by Assaf Rappaport, are reportedly close to acquiring the franchise for McDonald's operations in Israel. Zehavit Cohen and Apex (AMI) may join as partners, but this decision will be made after the franchise agreement is finalized. While negotiations with McDonald's are advanced and the Waze founders are believed to be the sole remaining candidates, the deal is not yet guaranteed and could take several more weeks to complete.
McDonald's terminated its previous franchise agreement with Omri Padan in 2024 due to the Israeli branches' benefits for soldiers and donations to the IDF, which sparked backlash in Arab countries and led to boycott threats and a sales slowdown. The global company acknowledged the negative impact of the Gaza war on its sales. Padan reportedly received between NIS 1.5 to 2 billion for the franchise he held since 1992. Following the termination, McDonald's global took over management of the Israeli branches, ceasing donations to the IDF.
McDonald's initiated the search for a new franchisee about 18 months ago, managed by investment bank Goldman Sachs. Several entities expressed interest, including Ury Max, Apex, the Meir Group, Phoenix and Clal insurance companies, and George Horesh's Union Group. Assaf Tochmeyer and Barak Rosen, owners of Cafe Cafe and Canada Israel, also showed interest.
McDonald's had specific conditions, preferring not to sell to a public company and avoiding parties with potential regulatory issues or those who had made political statements. This reportedly led to the withdrawal of the Meir Group and Union Group. Goldman Sachs did not officially notify rejected bidders but ceased contact. The preference was for a private franchisee capable of long-term ownership.
Rappaport is expected to bring a technological and digital marketing approach to McDonald's Israel. The deal's attractiveness is significantly influenced by the price, estimated around NIS 500 million, considerably lower than Padan's sale. McDonald's global appears to prioritize franchisee identity and management stability over the deal's valuation. The franchisee will also pay annual royalties based on revenue, with an estimated investment payback period of five to seven years.
Despite Rappaport's success in tech, the transition to the food and retail sector presents different challenges, requiring operational experience, cost control, and managing a large workforce. If the Waze founders secure the franchise, they are expected to bring in a partner with food and retail experience, with Apex being one possibility. Rappaport views revitalizing the struggling chain as a business challenge. Yotav Kostika, manager of the founders' family office, is reportedly leading the negotiations. Since McDonald's global took over management, the chain has reportedly seen declining sales and service quality.
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