The deal, which is expected to close in the second quarter ofthis year, includes a 20-year license agreement. During aconference call, Matthew Paul, McDonald's senior EVP and CFO, saidthe cash deal represents approximately half of the $1.5-billionbook value of the existing units. Initially, the parent companywill collect 5% in royalties, and the percentage will escalateafter 10 years.

This deal is in keeping with McDonald's previously announceddevelopmental licensing strategy, Paul said, "which allows us togrow faster and become more locally relevant." Staton is expectedto invest $100 million a year in adding new units and renovatingexisting ones throughout the region.

"Franchising is the backbone of our business," said RalphAlvarez, president and COO, during the conference call.Three-quarters of the company's units are "franchised byentrepreneurs," he said, noting, "McDonald's Latin America has haddouble-digit comp-store gains for the past three years."