Fast food chain McDonald’s said on Monday it planned to shut all 169 of its restaurants in India’s northern and eastern regions, escalating a dispute with its local partner and potentially putting thousands of workers out of jobs.
The U.S. company said it was “compelled” to take the action because its partner Connaught Plaza Restaurants Pvt Ltd (CPRL) had breached the terms of their franchise agreements, reports Reuters.
The decision by McDonald’s India follows a prolonged legal dispute with the partner that had already led to the temporary shutdown of more than 40 outlets starting in late June.
Vikram Bakshi, managing director of CPRL, told reporters the decision came as a “big shock” and it was studying all its legal options.
Madhurima Bakshi, a member of CPRL’s board, said McDonald’s outlets in the region employed 6,500 people directly and many more indirectly.
All of the restaurants will have to stop using McDonald’s name, trademarks, designs, branding, and recipes within 15 days of the termination notice, McDonald’s said, adding it remained committed to northern and eastern India and had started looking for a new partner.
“It will take time to bring the current situation to a final resolution,” McDonald’s said. It added it would try to mitigate the impact on employees, suppliers, and landlords affected by the move.