McDonald's outlet to be closed today, 7000 jobs to go

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There are 169 outlets run by CPRL in the north and east whose fate will be decided by what the NCLAT directs on Thursday when it will hear Bakshi's plea seeking relief.

As the termination notice period ended on 5 September, the food outlet chain would now close its 169 outlets from today casting the shadow of uncertainty over the future of around 10,000 employees. The American burger chain has stated that CPRL was no longer authorised to use the McDonald's system and its intellectual property after the expiry of the termination notice because it has not met certain essential obligations that were a part of the agreement.

McDonald India further said in its statement that CPRL needs "to stop using the McDonald's names, trademarks, designs, branding, operational and marketing practice and policies, and food recipes and specifications".

The National Company Law Appellate Tribunal (NCLAT) today refused any temporary relief to Vikram Bakshi on his plea that requested a stay on termination of franchise agreement by McDonald's for 169 stores operated by Connaught Plaza Restaurant Ltd's.

Connaught Plaza Restaurants, a 50-50 joint venture between Bakshi and McDonald's, deliberated on the matter at its board meeting on Wednesday. McDonald's alleged that Bakshi had leased out his property to a rival company, suggesting a conflict-of-interest scenario.

The US food giant has another franchise agreement with Hardcastle Restaurants Pvt Ltd, which operates 261 McDonalds outlets in western and southern India.

A clear strategy on the revival of the closed outlets is yet to be declared by either McDonald's or Bakshi, but in July, the latter did admit a news outlet that re-opening was his biggest priority. McDonald's other franchise, Westlife, owns outlets in West and South India.

The decision by McDonald's follows a protracted legal tussle between Bakshi and McDonald's over the US company's vote against Bakshi's re-election to his post in 2013. "We can't have a situation where stores in plum locations lie vacant", said senior official at DLF told ET. In June, almost 43 of the 55 outlets were closed after CPRL failed to renew health licenses owing to the tussle between the partners. He said the royalty was not paid for two years, even though the CPRL was given ample opportunity to rectify the defaults.

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