Many outlets in north India also face impending closure.

All 84 McDonalds outlets in east India shut over supply crunch legal issuesImage source: Albert Bridge via Geograph
Atom Legal Tuesday, December 26, 2017 - 16:01

As the McDonalds issue continues, nearly all outlets across east India have shut down owing to supply crunch. Several outlets in the north also face a potential shutdown.

The number stands at 84. Amidst the legal tussle between joint venture partner Connaught Plaza Restaurants Pvt. Ltd (CRPL) and McDonald’s India, CRPL has shut sown these outlets after Radhakrishna Foodland, logistics partner of the north and east franshise partner, discontinued supply chain services, reports Mint.

CPRL operates a total of 169 McDonald’s restaurants in north and east India.

Radhakrishna Foodland’s reasoning behind cutting off supply is the uncertainty of the future along with the complexity of operations.

Vikram Bakshi, managing director of CPRL calls the move by the supplier a malicious act. Speaking to Mint, he said, “there is a non-availability of raw material, due to which we had to shut more than 80 restaurants in east India. The rest of the outlets are also under pressure. This is a malicious act; we were not even informed beforehand. Radhakrishna Foodland has even decided to hold back stock for approximately Rs10 crore paid by us.”

Shutting down the outlets has already cost CPRL a loss of one crore rupees and given the on-going festive and holiday season, the company will be hit hard with loss of business. 

CPRL says that it is looking to make alternative arrangements for raw materials to be able to open outlets for business by the end of the year.

Back in August as well, CPRL faced closure of all 169 outlets when McDonald’s India terminated its franchise agreement with them.

McDonald’s sent Bakshi a notice according to which CPRL was to stop using the brand name, recipes, trademark, branding, design and even operational practices of the fast food chain starting September 6.

A legal battle ensued after Bakshi contested the termination notice before the National Company Law Tribunal (NCLT) for being in contempt of the earlier NCLT order, which had asked McDonald's Corp. to refrain from interfering in the smooth functioning of CPRL.

Back in 2013, McDonald’s voted against re-election of Bakshi as the managing director of CPRL, which he contested at NCLT. He won this case after NCLT re-instated him as the MD and asked McDonald’s corp to not interfere in its operations.

The reason behind Radhakrishna cutting off supply could be that McDonald’s India informed all suppliers that the franchise agreement has been terminated because of which CPRL is not allowed to operate McDonald’s outlets.

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