The ongoing tussle between McDonald’s and CPRL (Connaught Plaza Restaurants Limited) does not seem to end as of yet. The deadline given to CPRL by McDonald’s has expired on 5th September. According to McDonald’s officials, the franchise restaurants owned by CPRL will not be able to use McDonald’s brand name or logo anywhere in their operations. CPRL currently operates 169 restaurants across North and East India.
In an email statement to ET, one of the spokespersons from McDonald’s India stated that the termination notice given to CPRL had its deadline on 5th September. According to the notice, CPRL will no longer be authorised to use anything associated to McDonald’s. That includes McDonald’s brand name, its system, design, operational and marketing strategies among others. McDonald’s is now looking for more legal options to preserve their rights against CPRL.
NCLT (National Company Law Tribunal) has rejected a plea filed by Vikram Bakshi, Managing Director CPRL. In his plea, Bakshi had challenged the termination notice sent to him by McD. In the plea, Bakshi had mentioned that the termination letter, if implemented, will affect over 10,000 individuals directly and indirectly. These people include CPRL employees, suppliers and other business associated.
The issue between Connaught Plaza Restaurants Limited and McDonalds
McDonald’s and CPRL have been in an agreement where the burger brand had given its licence to CPRL to operate restaurants under its brand name in North and East India. This is a 50:50 joint venture between both the parties. However, last few years, the relationship between the two parties got spoilt, allegedly because of the issues related to non-payment of royalty amount etc. In 2013, McDonald’s accused Bakshi of implementing financial irregularities in the system and removed him as the managing director of CPRL. Post that, the two parties were under a legal battle. NCLT had, however, reinstated Vikram Bakshi as CPRL MD in July this year.
On August 21, McDonald’s had served a notice to CPRL, asking it to stop using all its intellectual property within 15 days. The time period of 15 days ended yesterday, i.e. 5th September.
What next?
With these developments, other stakeholders of the partnership have started to come into the picture. In a statement, DLF, which owns many of the properties where these restaurants operated, said that it has asked the concerned authorities to vacate the premises as it will lose big time if the stores in the prime locations are operated without McD brand name.
The suppliers of McDonald’s in the concerned areas are still unaware of their fortune as according to them, no communication has been received by them, putting them in the dark light. Also, there are a number of restaurants which are leased out by individuals and the development will affect them too. CPRL directly manages just a few of the 169 restaurants in question.