Saturday, June 23, 2018


McDonald’s India ends franchise agreements with CPRL for 169 outlets
Saturday, 26 August, 2017, 08 : 00 AM [IST]
Our Bureau, New Delhi
McDonald’s recently issued the Connaught Plaza Restaurants Private Limited (CPRL) board a notice of termination of the franchise agreements between McDonald’s India Private Limited (MIPL) and CPRL for 169 outlets operated by the fast food giant operated by the latter in North and East India.  This includes all the outlets impacted by the recent failure to renew their eating house licenses.

As a result, CPRL is required to cease using the McDonald’s System* and its associated intellectual property in relation to these restaurants within 15 days of the termination notice.

McDonald’s was compelled to take this step because of CPRL’s violation of certain essential obligations, including defaulting on the payment of royalties to McDonald’s India. The situation lasted almost two years, during which McDonald’s India provided CPRL with an opportunity to remedy the breaches, but it failed to do so. They were fully aware of these essential terms in the franchise agreement, including the consequences of a breach.

This action will obviously bring uncertainty for many. As McDonald’s proceeds to exercise its legal and contractual rights consequent on termination, a priority will be to mitigate impact on affected parties such as CPRL’s employees, suppliers and landlords, and it is open to working with CPRL to achieve this.

It is a fluid situation, and at this time, McDonald’s unable to discuss specific plans or course of action. It doesn’t wish to speculate what may or may not happen. The notice of termination is the first step, and it is proceeding to exercise our legal and contractual rights consequent on termination. It will share more information at an appropriate time.

It will take time to bring the current situation to a final resolution. However, McDonald’s remains fully committed to the opportunity in the north and east of India and is already looking at the necessary steps to rebuild the brand. As part of this, it is committed to finding the right developmental licensee (DL) partner for north and east India, and is taking steps to do so.

The chain looks forward to growing the business and meeting the needs of its Indian customers. Its priority is to have a reliable, safe and enjoyable experience for our customers and employees in the north and east of India, and a strong, profitable business well into the future.

(*The McDonald's System is a restaurant system which includes proprietary rights in McDonald’s names, trademarks, designs, branding, operational and marketing practice and policies, and food recipes and specifications.)
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