Mcdonald's India cuts off ties with one of its local partners, outlets in northern and eastern India likely to shut down soon
On Monday, the Indian unit of McDonald's ended its agreement with CRPL.
According to the notice, CRPL 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."
Oak Brook, Illinois-based McDonald's was operating through two business entities in India.
CRPL operated 169 outlets in the northern and eastern India.
There is no problem with Hardcastle Restaurants Pvt Limited, which operates 261 McDonald's outlets in the western and southern parts of the country.
McDonald's said CRPL violated "certain essential obligations" of the agreement, including the payment of royalties, according to media reports.
Media quoted the American company as saying that the local partner "has failed to remedy the breaches, despite being provided with an opportunity to do so in accordance with the agreements."
About a couple of months ago, CPRL had shut 43 of the 55 McDonald’s restaurants in Delhi following its failure to renew their licences, amid a legal battle between Vikram Bakshi, managing director of CPRL and McDonald’s.
According to media reports, in 2013, McDonald’s voted against the re-election of Bakshi as managing director of CPRL. Bakshi challenged his removal at the Company Law Board (now the National Company Law Tribunal, or NCLT), accusing McDonald’s of mismanagement and oppression.
Later in 2013, McDonald’s revoked the joint venture agreement and invoked arbitration. McDonald’s has been pursuing arbitration against Bakshi in the London Court of International Arbitration.
However, the NCLT reinstated Bakshi as managing director of CPRL earlier in June, media reported.
While the employees of the units heading for closure are not sure about their future, Amit Jatia, vice-chairman of Westlife, which runs Hardcastle Restaurants Pvt Limited, declined to comment on the possibility of it opting for McDonald’s franchise for north and east India, according to media reports.
Image: McDonald's India/Twitter
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