McDonald’s refuses to settle franchise dispute with CRPL out of court

NEWDELHI: McDonald’s India Pvt Ltd (MIPL), the Indian subsidiary of the American fast food chain, has told the National Company Law Appellate Tribunal (NCLAT) that it does not want an out-of-court settlement with estranged franchise partner Vikram Bakshi.

MIPL’s stand was taken on record by NCLAT, which had on August 25 asked both parties to try and settle the disputes that had led to the estrangement and keep the 169 McDoald’s outlets they operate in north and east India open and running while the talks are on.

“We informed NCLAT today that we wish to proceed with the appeal,” said Barry Sum, director, corporate relations, Asia Foundational Markets, McDonald’s Corp.

The tribunal issued notices to both parties and asked them to file their replies within a week.

“Without going into the question as to who is in default, we understand that there is no chance of amicable settlement,” NCLAT chairperson SJ Mukhopadhaya said during the hearing.

NCLAT is hearing two separate appeals.

One was brought by McDonald’s India against a National Company Law Tribunal (NCLT) order of July reinstating Bakshi as managing director of Connaught Plaza Restaurants Ltd (CPRL, the franchise arm.

Bakshi has filed an appeal requesting a fair valuation of the burger chain’s outlets in northern and eastern India.

“We filed a separate plea so that in case the two parties can’t reach a settlement, the NCLAT chairman has a right to order a fair valuation for one partner to buy the stake of another. After today, there is no option for us but to proceed with further litigation. We will figure out to where to get a stay order,” said Bakshi.

McDonald’s India, on August 21, terminated its franchise agreement with CPRL for all 169 outlets, citing non-payment of royalties as the reason. CPRL is supposed to shut the outlets down within 15 days of termination (by September 6).

The case will be heard next on September 21.