McDonald's to close 169 outlets in India in franchise battle

McDonald's India has announced it will close nearly 170 McDonald's outlets in northern and eastern India after the American fast food giant decided to terminate a franchise agreement with its Indian partner.

McDonald's said its partner Connaught Plaza Restaurants violated the terms of the franchise agreement, including reneging on payment of royalties.

Connaught Plaza Restaurants, which runs 169 McDonald's outlets in northern and eastern India, said Tuesday it is considering legal action in the long-drawn legal battle. In June, it shut 43 McDonald's outlets in the capital, New Delhi, after it failed to renew their licenses.

McDonald's said its Indian partner would have to "cease using the McDonald's name, trademarks, designs, branding, operational and marketing practice and policies" within 15 days of the termination notice.

The decision to close nearly a third of the 430 McDonald's outlets in India creates a challenge for the company, disrupting operations in the world's second most populous country.

Vikram Bakshi, the managing director of Connaught Plaza Restaurants, described the McDonald's decision as "mindless and ill-advised."

"Appropriate legal remedies that are available under law are being explored," Bakshi said in a statement.

McDonald's said it is looking for a new partner to work with in north India. McDonald's franchises in southern and western India are run by a separate company.