On Thursday, May 9, McDonald’s bought Vikram Bakshi’s 50% stake in its local unit in Delhi, Connaught Plaza Restaurants Limited (CPRL). In an out-of-court settlement, McDonald’s agreed to buy out Bakshi, and the two parties have also withdrawn all arbitration lawsuits against each other.
After buying Bakshi’s half, McDonald’s India and its parent McDonald’s Global Markets Llc is now sole owner of CPRL, ending a six-year-long dispute.
“With the transfer of ownership and management today, Mr. and Mrs. Bakshi end their association with CPRL and McDonald’s. McDonald’s acknowledges the significant work and contribution of Mr. Bakshi in establishing McDonald’s restaurants in North and East India,” said McDonald’s in a statement.
Robert Hunghanfoo has been appointed as Head of CPRL.
Hunghanfood said, “Accomplishing a mutually agreed settlement in this matter means that our customers can now look forward to a reinvigorated, consistent, and uniquely McDonald’s experience when they visit us.”
The court has asked McDonald’s and Bakhi for an official affidavit detailing the terms of their settlement by May 13.
McDonald’s in India
Bakshi opened the first McDonald’s outlet in India in the 1995. He was responsible for the chain’s expansion to 160 outlets across the country as a 50% partner in CPRL.
However, in 2013, Bakshi’s partnership with the company came under stress after McDonald’s voted to have him removed as CPRL’s managing director.
That same year, Bakshi then moved the National Company Law Tribunal (NCLT) against McDonald’s, alleging “mismanagement and oppression”. McDonald’s also brought a suit against Bakshi in London’s Court of International Arbitration.
In 2017, the NCLT reinstated Bakshi as CPRL’s managing direction, leading McDonald’s to end its franchise agreement with Bakshi later that year. McDonald’s said Bakshi had not paid his royalties and asked suppliers to stop selling to CPRL.
Finally, McDonald’s bought out Bakshi on Thursday, sending the six-year-long dispute.
Next steps for McDonald’s
In the coming weeks, McDonald’s India is going to take stock of its 160 outlets in North and East India, reports Mint. This means those outlets will be closed May 6 onwards.
Although there is no immediate clarity about employees’ jobs in the interim, McDonald’s said there will be no job losses in the near future, despite a change in ownership.
McDonald’s India said, “Existing managers and crew will continue to be employed during this temporary closure and will be actively involved in activities to re-open the restaurants.”
The company is currently looking for new partners in India. McDonald’s is looking to expand operations in India with the “right development licensee for the region”.
The Economic Times reported that either the RP-Sanjiv Goenka Group or Moon Beverages, Coca-Cola’s largest bottling partner, might become McDonald’s new partner in CPRL.
There are also rumours that Amit Jatia’s Hardcastle Restaurants that manages McDonald’s India in the south and west might takeover the north and east, as well.
McDonald’s is also working on transferring the ownership and management to ensure smooth continuity of operations.
Rhea Arora is a Staff Writer at Qrius
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