McDonald's battle with franchisee in India escalates as it terminates deal

McDonald's battle with franchisee in India escalates as it terminates deal

McDonald's India, the hamburger and fast food restaurant chain has made a decision to terminate the franchise agreement for 169 fast-food outlets in north and east India run by Connaught Plaza Restaurant Ltd (CPRL).

Explaining the reason behind the move, McDonald's accused CPRL of violating numerous terms of the agreement. McDonald's has said that CPRL can not use its trademarks, designs and branding in India, PTI reported.

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.

The latest license termination comes after McDonald's shut down about 43 restaurants in Delhi on June 29 amid the infighting between the chain and CPRL.

McDonald's and Bakshi have been at loggerheads over control of CPRL and an arbitration proceeding is being pursued by the food chain at the London Court of International Arbitration in this regard, where the matter is pending.

Things were running well until 2013 when in August, McDonald's announced Vikram Bakshi's removal from the position in CPRL, following a dispute. A month later, in September, Vikram Bakshi filed a petition with the Company Law Board (CLB) challenging McDonald's action.

Connaught Plaza in a separate statement said it's considering "appropriate legal remedies" in response.

The termination of agreement includes all restaurants impacted by the recent failure to renew the eating house licences, the company said. Its board of directors has Vikram Bakshi, his wife and two representatives from McDonald's.

"It's unfortunate, but operation of 43 restaurants operated by CPRL has been temporarily suspended", the Economic Times quoted Bakshi as saying.

McDonald's said Monday it is shutting 169 restaurants in India after a legal row with a local franchise operator.

McDonald's India said the company will try and mitigate impact on the employees in these restaurants.

The move means all McDonald's outlets in north and east India including the capital New Delhi will close, although the company said it would look for a new partner.

McDonald's said: "We understand this action brings uncertainty for many. We are open to working with CPRL to achieve this".