McDonald's Corporation (NYSE: MCD) announced that it would close around 170 outlets in India's northern and eastern regions, which follows a protracted legal dispute with CPRL starting in 2013.
This move will potentially make thousands of worker out of jobs, and McDonald's said that it would try to eliminate the influence on suppliers, landlords, and employees by closing the stores.
Connaught Plaza Restaurants, which operated 169 McDonald's restaurants in northern and eastern India, close 43 outlets in June after failing to renew licenses. McDonald’s said that Connaught Plaza Restaurants violated franchise agreement terms, which included denying to pay royalties.
In addition, McDonald’s required Connaught Plaza Restaurants to “cease using the McDonald’s name, trademarks, designs, branding, operational and marketing practice and policies” within 15 days of the notice.
“The situation lasted almost two years during which McDonald's India has provided CPRL with an opportunity to remedy the breaches but [it] failed to do so,” Barry Sum, McDonald's Asia spokesman, said in a statement.
“I was shocked,” said Vikram Bakshi, the managing director of CPRL. Connaught Plaza Restaurants also said on Tuesday that the move is “contemptuous” and “oppressive”, and the company is considering a legal action in the long-drawn legal battle.