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McDonald's, Vikram Bakshi end 12 year old feud: Here's a recap

McDonald's, Vikram Bakshi end 12-year-old feud: Here's a recap

McDonald's, Vikram Bakshi end 12-year-old feud: Here's a recap
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By Nidhi Chugh  May 10, 2019 5:59:30 PM IST (Updated)

In 1995, Vikram Bakshi and MIPL had entered into a partnership to run the outlets of the US fast food chain in India for 25 years.

The 12-year-long feud between McDonald's and Vikram Bakshi finally came to an end after the fast food major bought 50 percent of Vikram Bakshi's stake in Connaught Plaza Restaurants Private Ltd (CRPL) on Thursday.

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Thursday's development assumes significance as it ended a dispute with its joint venture partners with whom the firm had formed the CPRL, which managed the McDonald's outlets in North and East India with 165 outlets.
The company also announced the appointment of Robert Hunghanfoo as head of CPRL with immediate effect, who will be supported by McDonald's global leaders along with the CPRL team, to facilitate a smooth transition.
McDonald's remains committed to the opportunities in North and East India and intends to facilitate future growth by continuing to actively progress finding the right 'Developmental Licensee' (DL) for the region, the company had said in a statement. As this process continues, CPRL will remain owned by McDonald's India Private Ltd (MIPL) and its affiliate.
The Feud 
In 1995, Vikram Bakshi and MIPL had entered into a partnership to run the outlets of the US fast food chain in India for 25 years. The two partners had formed a 50:50 joint venture and CPRL was responsible for outlets of the McDonald's in northern and eastern regions through the franchise route.
However, in 2008, the relationship between the two turned bitter, when the American parent intended to buy out Bakshi's 50 percent stake.
The situation worsened in 2013 when MIPL voted against the re-election of Bakshi as the MD of CRPL, accusing him of wrongdoings. They also accused Bakshi of not making the royalty payments. Bakshi approached the Company Law Board (CLB) in 2013. On this, McDonald’s was ordered to maintain status quo over the shareholding pattern and right of a call option.
Bakshi also alleged that McDonald's had given more preference to its south and west India partner, Amit Jatia of Westlife Development.
In 2013, MIPL also pulled out of the joint venture agreement with CPRL. The firm also invoked arbitration based on a contractual clause to settle the dispute at the London Court of International Arbitration (LCIA).
The arbitration case was later challenged in the Delhi High Court. In 2016, the court stayed the arbitration proceedings until the civil suit was disposed of or until the Company Law Board vacated its stay prohibiting any change in the shareholding of CRPL. The order was later lifted by a two-judge bench in July 2016.
Bakshi was later reinstated as the MD of CPRL by National Company Law Tribunal (which had taken over CLB functions) on July 14, 2017, following which McDonald's approached the National Company Law Appellate Tribunal (NCLAT).
The court had also ordered MIPL to stay out of CRPL's operations and asked them to appoint an administrator to oversee the McDonald's operations.
In 2017, 41 of 55 McDonald's restaurants in New Delhi were closed due to non-renewal of licences and failure to pass the health check tests.
While NCLT favoured Bakshi, the LCIA ordered him to sell his stake at a fair valuation.
In August 2017, McDonald's ended the contract with Bakshi citing that he did not make royalty payments and told the NCLAT that settlement of dispute with its estranged partner Bakshi was not possible.
The termination of the contract notice barred the firm from using McDonald's brand name, trademark, design, operating and marketing practices and policies, food recipes and specifications after September 5, 2017.
However, Bakshi continued using the brand and operating the outlets as usual, alongside legal battles against McDonald's in NCLAT and the Delhi High Court.
And finally, on Monday,  McDonald's and Vikram Bakshi informed NCLAT that they are working towards an out-of-court settlement, to end the five-year-old legal dispute.
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