Connaught Plaza Restaurant Ltd, the 50:50 joint venture between McDonald’s India and its estranged partner Vikram Bakshi, cannot use the McDonald’s brand name from Wednesday. This means that 169 outlets of the fast food chain that the entity runs in North and East India face closure.
A spokesperson for McDonald’s India, which had cancelled the license agreement with CPRL in August, said the termination notice period ended on Tuesday, after which the franchisee is not “authorised to use the McDonald’s system and its intellectual property”.
Bakshi said the CPRL board will decide on a course of action in a meeting presided by the administrator appointed by the National Company Law Tribunal, Justice GS Singhvi, on Wednesday. “The two nominee directors of McDonald’s Corporation will also participate,” Bakshi told PTI.
McDonald’s representatives had stayed away from the previous two board meetings in August.
The National Company Law Tribunal on Tuesday dismissed a plea by Bakshi challenging the termination of the franchise agreement by McDonald’s, The Economic Times reported.
The conflict
On August 21, McDonald’s India ended its deal with Connaught Plaza Restaurant Ltd and said it would find a new partner for its outlets. The agreement was cancelled two months after CPRL shut 43 of 55 McDonald’s outlets in Delhi, as local authorities did not renew licenses.
McDonald’s said it had been forced to end the partnership as CPRL had “materially breached terms of the respective franchise agreements relating to the affected restaurants, and failed to remedy the breaches”.
The joint venture between McDonald’s and CRPL first hit a roadblock when Bakshi was ousted in 2013 after McDonald’s voted against his re-election. Bakshi challenged his removal in the tribunal and was reinstated as managing director in July.
What about the employees?
The closure of 169 outlets could leave thousands of employees jobless. “This will cause widespread damage to the lives of 10,000 Indians, the company, the suppliers and all business associates,” Bakshi told The Economic Times on Monday.
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