Sunday, 3 September 2017

McDonald’s India terminates the franchise agreement for 169 outlets in North and East India

By Himani Gandhi


McDonald’s India has terminated the franchise agreement for 169 fast-food outlets in north and east India run by Connaught Plaza Restaurant Ltd (CPRL) and has said the outlets cannot use its brand for any operations.
CPRL is led by Vikram Bakshi, the estranged partner of the US-based food chain giant.
The decision comes weeks after 43 outlets run by CPRL in the national capital were shut due to non-renewal of eating house licences by local authorities.
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 a separate company, Westlife Development Ltd, through its unit Hardcastle Restaurants Pvt. Ltd.
The decision could impact about 6,500 direct jobs in India, and lead to the possible closure of McDonald’s restaurants in the northern and eastern regions, at least temporarily. CPRL owned 169 outlets, including 43 in and around Delhi that have already been shut down. 
The battle had not only impacted profitability of CPRL, but also revenue growth, which fell to 6% in 2014-15 from 29% four years earlier. The burger and fries chain said it was compelled to terminate the agreement because “CPRL has materially breached the terms of the respective franchise agreements relating to the affected restaurants, and has failed to remedy the breaches despite being provided with an opportunity to do so in accordance with the agreements”.


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