McDonald's is planning to introduce its franchising system to the mainland, in a move which could help the company significantly expand its presence. The fast-food restaurant chain operator, the world's standard bearer of franchising, will start recruiting franchisees once Beijing passes its first franchising regulations - expected to be implemented before the end of the year. McDonald's China senior vice-president James Chu Yuen-wo said: 'We could have more than 1,000 outlets in a short period of time.' The company had thousands of applications from entrepreneurs hoping for a franchise. McDonald's operates 493 outlets on the mainland. More than half are in four major cities - 84 outlets in Beijing, 56 in Shanghai, 74 in Shenzhen and 61 in Guangzhou. They are either run by McDonald's, or in the form of joint ventures with mainland partners. 'It is the right time for us to expand after 12 years in the mainland,' Mr Chu said, adding the company hoped to use franchising to expand into second-tier cities. Mr Chu said it would be able to draw on its nation-wide network of suppliers to serve new outlets in smaller cities. The company will charge a franchise fee of US$300,000 for a 20-year lease on a mainland outlet. 'The fee is a one-off payment for equipment, siting, signage and decoration,' Mr Chu said. McDonald's will put up the initial money for property and any improvements to the leasehold, and these charges will later be passed on to the franchisee. The initial cost of opening a McDonald's shop is about US$600,000, including the costs of both the franchisee and the company. McDonald's charges a franchisee a royalty of 5 per cent of gross sales. Mr Chu said recruitment of potential franchisees will not be limited to the mainland. 'We hope to recruit mainland entrepreneurs, who have local expertise in their markets . . . but we will keep our doors open to Hong Kong businessmen,' he said, pointing out franchisees will be trained in Hong Kong's Hamburger University, set up in August last year. Analysts said the company was stepping up its effort to grab more market share from rival KFC. But Mr Chu said the mainland market was big enough for many foreign players to compete and he believed more fast-food shops would be a positive sign of the level of economic advancement of a mainland city. McDonald's operates more than 30,000 outlets - with about a third in the United States. Its franchise model was proven to be successful with its 85 per cent penetration in the US market, 69 per cent in Australia and 82 per cent in France. However, whenever it moved into developing countries it always drew fierce criticism. While the locals said its entry represented the invasion of the US junk-food culture, environmentalists were also worried. But Mr Chu said mainland government officials welcomed the company, saying that a McDonald's opening was a symbol of a city being ready for foreign investment.