Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

McDonald's to shut 169 outlets in India amid dispute with local partner

Published 08/21/2017, 12:31 PM
Updated 08/21/2017, 12:31 PM
© Reuters. Visitors are seen at a McDonald's restaurant in Mumbai

© Reuters. Visitors are seen at a McDonald's restaurant in Mumbai

By Zeyad Masroor Khan

NEW DELHI (Reuters) - Fast food chain McDonald's (N:MCD) said on Monday it planned to shut all 169 of its restaurants in India's northern and eastern regions, escalating a dispute with its local partner and potentially putting thousands of workers out of jobs.

The U.S. company said it was "compelled" to take the action because its partner Connaught Plaza Restaurants Pvt Ltd (CPRL) had breached the terms of their franchise agreements.

Vikram Bakshi, managing director of CPRL, told Reuters the decision came as a "big shock" and the company was studying all its legal options.

The move by McDonald's India follows a protracted legal dispute with CPRL that started in 2013, when McDonald's said Bakshi's term as managing director had ended - a decision Bakshi challenged in the courts.

"They fell out because McDonald’s thought that Mr Bakshi was involved in irregular siphoning activities, so they wanted him to go," said A.S. Chandiok, a lawyer representing Bakshi, who added that his client denied the allegations.

McDonald's did not comment on the court dispute in its statement on Monday, but said it would try to mitigate the impact on employees, suppliers and landlords affected by the closure of the outlets.

The decision will likely lead to thousands of job losses and further dent McDonald's share of India's booming quick service restaurants market, where it has already been losing ground to rivals like Domino's Pizza (N:DPZ).

The north and east Indian outlets under the McDonalds-CPRL franchise employ 6,500 people directly and many more indirectly, said Madhurima Bakshi, a member of CPRL's board.

All those restaurants will have to stop using McDonald's name, trademarks, designs, branding, and recipes within 15 days of the termination notice, McDonald's said. It added, though, that it remained committed to northern and eastern India and had started looking for a new partner.

© Reuters. Visitors are seen at a McDonald's restaurant in Mumbai

"It will take time to bring the current situation to a final resolution," McDonald's said.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.