The US burger chain, McDonald’s which has a presence across 119 countries said that it was terminating an agreement with Connaught Plaza Restaurant (CPRL) for to a breach of franchise agreement. The joint venture is 23 year old and is a 50:50 venture between McDonald’s India and Vikram Bakshi. McDonald’s operates a total of 430 outlets in India through Hardcastle and CPRL restaurants. This means CPRL, which runs McDonald’s operations across the north and east India, will not be able to use the branding, logo, trademarks and recipes within a period of 15 days of receiving the notice of termination.
Every outlet of McDonald employs about 40-60 workers based on the size. This excludes the corporate employees as well as the suppliers which include farmers who supply the raw produce such as onions, tomatoes, lettuce and other ingredients for sauces. Based on this, more than 10,000 people will lose their jobs. McDonald’s was engaged with Bakshi since 2013 and has about 430 outlets in India through the joint venture in the south and west. The company is now looking for a new partner to replace CRPL and it will take time to bring the current situation to a final resolution.
43 McDonald’s stores were closed in June due to the failure of CPRL to get the mandatory health licenses for the outlets which was the final nail in the coffin and McDonald’s decided to call it off. This comes as a huge blow on McDonald’s business. With an increasing competition and changing preferences of the consumers, McDonald’s had a difficult time reinventing their menu and had recently added a few items to their menu which is dominated by veg and non-veg burgers. There will be huge layoffs due to the shutdown and its impact will be much larger than we can imagine.