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The US-based burger chain McDonald’s, which has been mired in a legal tussle with its estranged Indian joint venture partner Vikram Bakshi, has been forced to shut down around 40 outlets in Delhi on Thursday.
In an emailed statement to BusinessLine , McDonald’s India Pvt Ltd, said that after the “eating house licences” of a number of McDonald’s restaurants in Delhi expired, Connaught Plaza Restaurants Pvt Ltd, (CPRL, McDonald’s licensee in the North and East India), is temporarily suspending operations in the affected restaurants.
CPRL is a 50:50 JV between McDonald’s and Bakshi. The company said that the board of CPRL is working to obtain the required licences.
“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….While there are ongoing legal disputes, suspending the operations of the restaurants is a collective decision of the CPRL Board of Directors,” the statement said.
“It’s our understanding that CPRL has notified the key affected stakeholders including employees, landlords and suppliers before the temporary suspension started on June 28,” the statement added.
When contacted, Bakshi said, “Around 40 restaurants have temporarily suspended operations from today morning. As this is a temporary shut down, all our employees shall be retained.”
Sources said that McDonald’s operations in the Northern and Eastern region in the country have been adversely impacted due to the legal tussle between the two joint venture partners. Since the ouster of Bakshi in 2013 as the Managing Director, the board of CPRL, has been running the day-to-day operations.
Bakshi had earlier indicated to this paper that the legal battle had also taken a toll on the operations and had led to several senior level exits.
When asked whether the licences were not renewed due to the ongoing legal tussle, Barry Sum, Director, Corporate Relations, Asia Foundational Markets, McDonald’s, said, “We want to focus our effort on resolving the issues as soon as possible at the moment.”
Last year, the Supreme Court had dismissed an appeal filed by Vikram Bakshi which allowed the US-based burger chain to pursue arbitration in the matter at the London Court of International Arbitration.
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