McDonald’s says its JV partner for half of India business Vikram Bakshi no longer heads the firm
McDonald’s, the world’s top fast food chain by revenues, said in a public notice on Friday that Vikram Bakshi, managing director of Connaught Plaza Restaurants (CPRL), the master franchisee for McDonald’s chain in the north and east regions in the country, is no longer heading the firm. CPRL is a joint venture between Bakshi and McDonald’s.
McDonald’s operates in India through two master franchisees which handle particular geographies—CPRL for the north and east region (McDonalds N & E) and Hardcastle Restaurants Pvt Ltd (HRPL), which became a subsidiary of public listed company Westlife Development, for the south and west region (McDonalds W & S). The latter became a full franchisee after the local partner Jatias bought out McDonald’s stake in the venture two years ago.
According to the public notice, Bakshi's term as managing director in the firm expired on July 17, 2013. Now the firm is run by the board, which includes Bakshi besides other representatives of McDonald’s.
When contacted for further details on the development, an official spokesperson of McDonald’s N & E replied, “This is an internal matter of the company and we would not like to comment any further.”
In a news report quoting Bakshi, Mint said the matter is in ‘legal domain’ indicating a dispute between the two partners. It added, quoting sources, that there was a difference of opinion over the business model. Although it did not elaborate, this could be linked to bringing the ownership structure similar to the other franchisee of the burger chain in India (more on that below).
Mint also said that CPRL has failed to meet its financial commitments to McDonald’s, which Bakshi denied.
Separate reports have hinted that there is a possibility that the Jatias may end up becoming a national franchisee for McDonald’s as they have first right to become the franchisee partner for the other half of India if an opportunity arises.
Amit Jatia, who heads the business of McDonald’s W & S, was not immediately available for comments on the development and if it means a bigger area of operation for his firm going forward.
McDonald’s operates 319 stores in the country of which 166 are run by Jatias and the remaining 153 are under CPRL.
As reported first by VCCircle, in the last two years, HRPL under Jatias has been growing faster and performing better than Bakshi-led CPRL Sales of McDonalds W & S grew 45 per cent to Rs 544 crore in FY12, overtaking McDonald’s N & E for the first time. Although latest financials for McDonald’s N & E is not available, it is estimated to be less than its other peer as its store count remained lower last fiscal.
Interestingly, McDonald’s W & S started outperforming after the Indian partners bought out McDonald’s stake and are now running it purely as a franchisee as against CPRL which is a franchisee as well as a joint venture with McDonald’s.
(Edited by Joby Puthuparampil Johnson)
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