McDonald's India Pvt. Ltd, the Indian subsidiary of the US fast food chain, has terminated its agreement with the Connaught Plaza Restaurant Pvt. Ltd (CPRL) for 169 fast-food outlets in the north and east India. Additionally, the fast food chain has also said that the outlets will now not be permitted to use its brand name for any operations.
CPRL, a 50:50 joint venture between Vikram Bakshi and McDonald's, will now also not be able to use the latter's systems, trademark and designs and this will come into effect within 15 days from now.
"Today, we have issued the CPRL board a notice of termination of the franchise agreement between McDonald's India Pvt Ltd and CPRL for 169 McDonald's restaurants operated by CPRL in north and east India," the Press Trust of India quoted the fast food chain as saying in a statement.
Explaining the reason behind the move, McDonald's accused CPRL of violating numerous terms of the agreement. "We have been compelled to take this step because CPRL has materially breached the terms of the respective franchise agreement relating to affected restaurants and has failed to remedy the breaches, despite being provided with an opportunity to do so in accordance with the agreements," McDonald's India added.
The chain also said that it now plans to look for a suitable licensee in these regions.
The latest license termination comes after McDonald's shut down about 43 restaurants in Delhi on June 29 amid the infighting between the chain and CPRL. However, both the parties had then claimed that the closure was "temporary."
"It's unfortunate, but operation of 43 restaurants operated by CPRL has been temporarily suspended," the Economic Times quoted Bakshi as saying.
Later McDonald's India also confirmed to International Business Times, India that the CPRL was working towards obtaining new licenses. It was also being said that due to this closure, almost 1,700 employees of the fast food outlet were rendered jobless but McDonald's had refuted these reports.
"The comment in the media stories on employees becoming jobless is erroneous. We understand that CPRL is retaining the employees of affected restaurants and will pay them their salary during the period of suspension. Please confirm this with CPRL," it said.
