Shutting down nearly 80 per cent of its outlets might cause the American fast food chain to go in great loss, but the restaurant chain made a decision to do it anyway due to health and regulatory reasons.
While there were administrative issues between the two sides, matters turned ugly in 2013 when McDonald's India removed Bakshi as the managing director of the joint venture, on allegations of serious misconduct and financial irregularities.
Refusing to renew the licence, McDonald's told media that the restaurant licenses of these McDonald's restaurants in Delhi "expired", bringing curtains down on two-year-old controversy and ending 20-year-old partnership with Vikram Bakshi. "Pending this, CPRL is temporarily suspending the operations of the affected restaurants", McDonald's India Pvt Ltd said in a statement.
"It's unfortunate, but operation of 43 restaurants operated by CPRL has been temporarily suspended", the ET report said quoting Vikram Bakshi, former managing director of CPRL, which operates 168 restaurants.
Yes, the infighting between Connaught Plaza Restaurants (CPRL) and McDonald's took an ugly turn as a result of which the CPRL board made a decision to shut out the outlets. The case is being heard at the London Court of International Arbitration.
Addressing the issue of the possible loss of jobs, MIPL has dismissed all fears, saying, "We understand that CPRL is retaining the employees of affected restaurants and will pay them their salary during the period of suspension".
In fact, Bakshi has been involved in a drawn-out legal fight with McDonald's taking them to the Company Law Board (CLB), which is yet to announce its verdict.
Sources familiar with the development said that more outlets in the national capital could be affected due to expired licenses.
CPRL controls the restaurants spread across north and east regions of India.
In March, a pregnant woman complained of finding a lizard in the french fries she bought at her local McDonald's restaurant in eastern India.
Experts fear the closure of restaurants in Delhi will further hurt the prospects of McDonald's which has seen its performance sliding in India, with pizza brand Domino's replacing the company from its number one position.
Brand strategist Harish Bijoor contends that unless McDonald's sorts out its legal battle, things might worsen.