McDonald’s 169 stores across the North and East could well be closed within a fortnight, with the US firm announcing the termination of the franchise agreement between its India’s arm McDonald’s India Private Limited (MIPL) and Vikram Bakshi headed Connaught Plaza Restaurants Ltd (CPRL) on Monday.
The development could not only wipe out the burger and fries chain, at least temporarily across half the country, but also puts a question mark on thousands of jobs of employees and contracts of suppliers running into crores.
CPRL will not be allowed the use of any intellectual properties of McDonald’s at the 169 outlets across North and East India within 15 days of the termination notice, a statement issued by McDonald’s said. The operational licenses of all stores were with CPRL.
While McDonald’s said it is “committed to finding the right ‘developmental licensee partner’ for North and East India and taking steps to do so”, industry watchers said it is unlikely that a new partner could be found within 15 days. McDonald’s said in its statement that it will take the time to bring the current situation to a final resolution.
“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,” the statement added.
McDonald’s said it is working on terms to mitigate the impact on affected parties including employees, suppliers and landlords.
The decision comes about two months after 43 outlets run by CPRL in Delhi were shut due to non-renewal of eating house licences by local authorities.
The equal joint venture between Bakshi and McDonald’s India found itself in tatters when CPRL managing director Bakshi was ousted from his post in 2013, with McDonald’s citing alleged financial irregularities. Soon after, Bakshi moved Company Law Board (CLB) against the move, and McDonald’s moved the London Court of International Arbitration in response. Bakshi was reinstated as MD of CPRL last month by the National Company Law Tribunal (NCLT).