McDonald's has terminated its franchise agreement for 169 outlets in North and East India with its Indian partner for the region -- Vikram Bakshi-controlled Connaught Plaza Restaurants Pvt Ltd (CPRL).
Close on the heels of the popular burger and fast food chain McDonald’s shutting down 43 of its 55 outlets in Delhi, the multinational has now terminated its franchise agreement for 169 outlets in North and East India with its Indian partner for the region — Vikram Bakshi-controlled Connaught Plaza Restaurants Pvt Ltd (CPRL). McDonald’s has said that CPRL cannot use its trademarks, designs and branding in India, PTI reported. This brings the fate of 169 outlets in North and East India under cloud, which would need to now. The 43 outlets shut earlier are part of the 169 outlets in question now.
Earlier in June, McDonald’s shut down almost 80% of its shops in Delhi as its North and East India licensee CRPL did not renew the eating house licenses, which had expired after 21 years of operations. The closure was a result of a long drawn legal battle between Vikram Bakshi and McDonald’s. Meanwhile, the issue regarding the maintenance of quality and hygiene at the stores had been going on since 2013.
When the first outlet of McDonald’s in India opened 21 years ago in 1996, the global food chain started operating in the country under the management of CPRL in North and East India. CPRL is a 50:50 joint venture between entrepreneur Vikram Bakshi and McDonald’s, which handles all of the outlets of North and East India. Its board of directors has Vikram Bakshi, his wife and two representatives from McDonald’s.
Things were running well until 2013 when in August, McDonald’s announced Vikram Bakshi’s removal from the position in CPRL, following a dispute. Vikram Bakshi was the JV company’s managing director. A month later, in September, Vikram Bakshi filed a petition with the Company Law Board (CLB) challenging McDonald’s action. Meanwhile, McDonald’s approached the London Court of International Arbitration (LCIA) to resolve the dispute. However, it was not taken well by Bakshi and he challenged the step of the food chain in the High Court of Delhi.
As for South and West India, the stores of McDonald are handled by Hardcastle Restaurants Pvt Ltd, which is owned by entrepreneur Amit Jatia, who pays a franchise fee and royalty to McDonald’s for using its brand name.