According to reports, McDonald’s broke its agreement with Connaught Plaza Restaurants Pvt Ltd for 169 restaurants in North and East India. Therefore within 15 days of notice, they have to terminate all the food stuff related to McDonald’s.
McDonald’s said it would find a new license partner for its outlets in the two regions. The closing in of several outlets might result in huge unemployment and also the loss of supplier contracts.
First, the outlets were closed in Delhi as the licenses failed to get renewed.
McDonald’s said,
“We have been compelled to take this step because CPRL has materially breached the terms of the respective franchise agreements relating to the affected restaurants, and has failed to remedy the breaches, despite being provided with an opportunity to do so in accordance with the agreements.”
CPRL is a 23-year-old 50:50 joint venture (JV) between Vikram Bakshi and McDonald’s India. Termination of this leads to unemployment of almost 16,000 employees. They run the chain in North and East India. They will not be able to use the chain’s logo, branding, trademarks etc. CPRL runs almost 430 outlets in India.
McDonald’s India said in an email:
“We understand that this action brings uncertainty for many. It will take time to bring the current situation to a final resolution.”
The rift started since 2003 when McDonald’s reported about the misuse of funds by Bakshi. Later CPRLfailed to renew the license.
“That was the final nail in the coffin,” said a person familiar with developments at CPRL. “McDonald’s was waiting for an opportunity to make its move.”
Bakshi said,
“The timing of this notice is hugely suspect because it comes on the morning of the first board meeting, scheduled by the administrator (a former judge of the Supreme Court of India) appointed by the Hon’ble NCLT) and which the two Foreign Nominee Directors of McDonald’s, declined to attend, despite receiving sufficient advance notice.”
