Economy

Will McDonald's 169 India outlets face closure today?

Will McDonald's 169 India outlets face closure today?”

CPRL is a 50:50 JV between McDonalds and its estranged partner Bakshi.

Meanwhile, the National Company Law Tribunal on Tuesday dismissed a plea by CPRL managing director Vikram Bakshi challenging the termination of the franchise agreement by McDonald's. He further added that the company had been unable to pay the royalties because of falling sales, as well as demand by McDonald's that CPRL repay its bank debts rather than rolling over loan facilities.

The company operates a chain of McDonald's restaurants in west and south India through its subsidiary Hardcastle Restaurants Pvt. It implies that the CPRL can no longer use McDonald's name, system, trademark, design, and associated intellectual property, among other things.

Bakshi has been at loggerheads with the fast food chain over the management of CPRL after he was ousted from the post of MD of the McDonald's franchisee in August 2013. The termination notice period ended on 5 September, according to a report in The Economic Times. The CPRL operates McDonald's stores in north and east India and now it has taken a big hit as relations between the two have been estranged for the last couple of years. Of the 169 stores, only a handful were owned directly by Bakshi, while majority of the stores were under leases by different store owners.

With regards to the termination of the franchise agreement, the tribunal said that since the National Company Law Appellate Tribunal (NCLAT) is looking into the matter already, it would not be appropriate for it to pass any directions and that both Bakshi and McDonald's should wait for the appellate body to take a call on it.

"The NCLT has stated clearly that it has restrained McDonald's Corporation from interfering with the smooth functioning of CPRL", said Bakshi.

In an email statement to ET, one of the spokespersons from McDonald's India stated that the termination notice given to CPRL had its deadline on 5th September. The agreement was cancelled two months after CPRL shut 43 of 55 McDonald's outlets in Delhi, as local authorities did not renew licenses.

He had also filed another plea against McDonald's Corporation alleging interference into the affairs of their 50:50 joint venture - Connaught Plaza Restaurant Ltd (CPRL). However, the NCLT in July 2017 reinstated him as the Managing Director of CPRL, while appointing justice GS Singhvi as administrator of the board.

Reports mention that McDonald's has alleged breach of contract terms and payment default by the operator of the franchise in north and east India.



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