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McDonald's Terminates Franchise Agreement for 169 India Locations

McDonald's India announced today the termination of a franchise agreement in India for 169 of its outlets. McD had a 50-50 joint venture agreement with Connaught Plaza Restaurant Ltd (CPRL) covering the restaurants and the termination puts thousands of jobs at risk. A series of events led to the announcement.

McDonald's India today said that it has terminated the franchise agreement for 169 fast-food outlets in North and East India run by Connaught Plaza Restaurant Ltd or CPRL. McDonald's India had a 50:50 joint venture with CPRL, a company led by Vikram Bakshi. CPRL was the master franchisee for McDonald's India in North and East India. The decision comes weeks after 43 outlets run by CPRL in the national capital were shut due to non-renewal of eating house licenses by local authorities.

WHAT HAS LED TO THE CURRENT SITUATION? McDonald's India and Vikram Bakshi had been fighting a court battle for some time. It all started when CPRL chief Vikram Bakshi was removed from the post of the Managing Director of the company in August 2013. McDonald's alleged that Bakshi had leased out his property to a rival company, suggesting a conflict-of-interest scenario. The US-based McDonald's further said that Bakshi had pledged 51,300 of his CPRL shares to get a loan of Rs 20 crore so that his company Ascot Estate (Manesar) Pvt Ltd could develop the Savoy Outlet Mall and service apartments in Manesar. McDonald's said that Bakshi did not take the company's approval before pledging his shares. — Business Today (India)

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