Several newspapers reported a dispute between Connaught Plaza Restaurants Private Limited (CPRL), the local joint venture between Vikram Bakshi and McDonald’s, and the fast food giant.
The legal dispute between CPRL, the 50:50 local venture between Vikram Bakshi and the US headquartered McDonald’s that operates the fast food chain in north and East India and the global burger giant results in the temporarily shut of 43 outlets.
Bakshi, who is the former managing director of CPRL, is still on the CPRL board along with his wife. McDonald’s has two representatives on the CPRL board. The decision to close down the outlets was taken during a board meeting via Skype on Wednesday morning, Economic Times reported.
While the estranged joint venture partner declined to share reasons for closure, highly-placed sources disclosed that CPRL failed to get the mandatory regulatory health license renewed because of the infighting between Bakshi and McDonald’s. McDonald’s has also been going through hygiene and quality issues since mid-2013.The Indian partner is “working to obtain the required licenses,” McDonald’s Asia spokesperson Barry Shum said in an emailed statement. He also added that”India continues to be an important market for McDonald’s and we are committed to working with CPRL to resolve the issue as soon as possible”. Some reports said 1,700 employees will lose their jobs and that as a consequence of the dispute which began a while ago, health clearances for the Delhi outlets were not renewed. Shum dismissed those claims as “erroneous,” saying McDonald’s was told employees will be kept on and paid their regular salary even while the stores are closed.
Brand strategist Harish Bijoor told Economic Times that unless McDonald’s sorts out its legal battle, things might worsen. “Every passing day is a slur on the front-end brand,” he said, adding that there is nothing really bigger than the brand.
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