McDonald's terminates pact with Vikram Bakshi co, 169 outlets to be shut, jobs at risk
McDonald's India has terminated the franchise agreement for 169 fast-food outlets in north and east India run by Connaught Plaza Restaurant Ltd (CPRL) and said the outlets cannot use its brand for any operations
New Delhi: McDonald's India has terminated the franchise agreement for 169 fast-food outlets in north and east India run by Connaught Plaza Restaurant Ltd (CPRL) and said the outlets cannot use its brand for any operations. The move puts question mark over thousands of jobs, according to a report by The Economic Times.
CPRL is led by Vikram Bakshi, the estranged partner of the US-based food chain giant.
The decision comes weeks after 43 outlets run by CPRL in the national capital were shut due to non-renewal of eating house licences by local authorities.
CPRL was a 50:50 joint venture between Bakshi and McDonald's India.
As part of the termination, CPRL is ceased to use McDonalds's name, system, trademark, designs and its associated intellectual property, among others within 15 days of the termination notice.
"Today, we have issued the CPRL board a notice of termination of the franchise agreement between McDonald's India Pvt Ltd and CPRL for 169 McDonald's restaurants operated by CPRL in north and east India," the fast food chain said in a statement.
The termination of agreement includes all restaurants impacted by the recent failure to renew the eating house licences, the company said.
The popular food outlet, which is known for graduating people from vada pao to a range of burgers, has seen its fortunes declining since past few years over a tussle with Bakshi for the management of CPRL, after he was ousted from the post of managing director of the McDonald's franchisee in 2014.
"We have been compelled to take this step because CPRL has materially breached the terms of the respective franchise agreement relating to affected restaurants and has failed to remedy the breaches, despite being provided with an opportunity to do so in accordance with the agreements," McDonald's India said.
McDonald's India further said that it is "committed to finding the right 'developmental licensee partner' for north and east India and taking steps to do so".
The ET report said McDonald’s is working on ways "to mitigate impact on affected parties including employees, suppliers and landlords".
(With inputs from PTI)
McDonald's strikes out-of-court settlement with Vikram Bakshi; buys out former Indian partner from joint venture
CPRL is now wholly owned by McDonald's India Pvt Ltd and its affiliate (McDonald's Global Markets LLC, MGM), following the completion of a settlement reached with Bakshi.
Earlier this month, McDonald's reached an out-of-court settlement with Bakshi, buying out Connaught Plaza Restaurants from the joint venture
The arbitration panel has asked Bakshi to transfer his 1,45,600 shares in the 50:50 joint venture Connaught Plaza Restaurant Ltd (CPRL) to McDonald's India