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New Delhi, August 21
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), alleging breach of contract terms and payment default.
The termination notice also bars CPRL, where the fast food giant’s estranged franchise partner in the region Vikram Bakshi holds 50% stake, from using McDonald’s brand at these outlets that employ thousands of staff.
McDonald’s, however, said a priority will be given to mitigate the impact on affected parties such as employees, suppliers and landlords and it is open to working with CPRL to achieve this.
As part of the termination, CPRL is ceased to use McDonalds’s name, system, trademark, designs and its associated intellectual property, among others, within 15 days of the termination notice.
The decision comes weeks after 43 outlets run by CPRL in the national capital were shut due to non-renewal of eating house licences.
“The termination is essentially because of CPRL’s violation of certain obligations as part of the agreement, including a default of payment of royalty to MIPL,” McDonald’s Corporation Global Head of Corporate Relations, Foundational Markets, Ron Christianson said.
He further said it has been two years since the royalty had not been paid and CPRL has been provided with an opportunity to remedy those breaches but they have failed to do so.
“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 fast food chain said. — PTI
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