Here is Why 169 McDonald’s Close in North India…

McDonald’s India Pvt. Ltd (MIPL), the local unit of the American fast food chain, on Monday terminated its franchise agreement with Connaught Plaza Restaurants Pvt. Ltd (CPRL), which runs McDonald’s outlets in north and east India, and is now looking for a new partner.

CPRL is a joint venture between MIPL and Vikram Bakshi, who is managing director of CPRL. McDonald’s cited “default in the payment of royalties by CPRL” as the primary reason for termination.

As a result, CPRL will have to “cease using the McDonald’s system (which includes proprietary rights in McDonald’s names, trademarks, designs, branding, operational and marketing practice and policies, and food recipes and specifications) and its associated intellectual property in relation to these restaurants within 15 days of the termination notice”.

“The termination is a result of a breach, a violation of certain essential obligations that were a part of the agreement typically the default of payment of royalties to MIPL for two years. CPRL was notified of the breaches and was provided opportunity to remedy those; it had failed to do so,” said Ron Christianson, global head of corporate relations, foundational markets, at McDonald’s Corp., adding that the company is looking for a new developmental licensee partner.

“It is a lengthy process but we are committed to the market. We want to rebuild a stronger McDonald’s,” Christianson said.

The company is currently working on the terms to mitigate the impact of the shutdown on all stakeholders, including thousands of employees across 169 restaurants. McDonald’s operations in west and south India have not been affected as the master franchisee rights of the burger chain are owned by another firm, Westlife Development Ltd, through its unit Hardcastle Restaurants Pvt. Ltd.

Amit Jatia, vice-chairman of Westlife, declined to comment on the possibility of it opting for McDonald’s franchise for north and east India. Christianson of McDonald’s said it was too early to comment on potential partnerships.

The move comes almost two months after CPRL shut 43 of the 55 McDonald’s restaurants in Delhi following its failure to renew their licences, amid a legal battle between Bakshi and McDonald’s

Source : Hindustan Times

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