Corporate Spat at McDonald’s India: Employees Are Not Lovin’ It!

Tussle between McDonalds India and CPRL leaves employees and suppliers in the dark.

Since McDonald’s India terminated the franchise agreement in the North and East region, employees have been in the dark about their job security.

Photo: The Quint

It’s been 20 years since Indians have queued in to fill a red tray with a juicy Maharaja Mac, a glass of frothing ice cream immersed in coke, and a side of fries. McDonald’s has discontinued the franchise agreement in Northern and Eastern India. People are now lining up for possibly the last chance to eat their favourite burger.

Following a tussle with estranged partner Vikram Bakshi of Connaught Plaza Restaurants Limited (CPRL), McDonald’s India gave a deadline of 5 September.

The franchisee is now barred from using the brand, trademark and associated intellectual property.  Out of the 169 outlets across the country, 43 were shut down in June, after their health code licenses expired. Despite the ultimatum issued, Bakshi continues to run shop.

Many employees, who have been moved to other outlets, are working lesser hours with a lesser pay, and are desperately looking for other jobs.Photo: The Quint

However, the big question is – what is the status of jobs of over 6,500 McDonald’s India employees.

The Quint visited a few outlets in New Delhi to find out whether the company is protecting their livelihoods. We found out that those working in outlets that are shut, have been moved to the ones that are still functioning.

The employees have been put on shorter shifts, and hence, they get a lesser pay. 23-year-old *Ramesh at Connaught Place, Delhi now works for only four hours. He said that the lighter salary envelope is taking a toll on his daily life, but is glad his job is secure. ‘Even if all outlets shut down, Vikram Bakshi has said that we will receive three months of pay. But we might have to look for new jobs,’ he said.

A few permanent employees refuted this claim.

They said the employment contracts of some have been terminated, and the compensation on paper does not translate to reality.

Rohan*, who has been working in Connaught Place, Delhi, is afraid his job is under the axe. 'Many have lost their jobs. Some of the employees have got termination letters and have hence left. Their aspirations and expectations were not met,' he said.

Vikram Bakshi said some employees have resigned due to the looming fear of job insecurity. ‘The nominee directors on the board of CPRL are part of McDonald’s India. Hence, one arm of MCD is cutting the other arm to suit its reckless thinking,’ he said.

Suppliers and vendors to the McDonald’s outlets are in the dark about the future of their agreements and contracts. McDonald’s India (MIPL) has instructed all suppliers and vendors to cease the use of McDonald’s intellectual property. However, Bakshi said the vendors have signed agreements with CPRL, and MIPL isn’t permitted by law, or by any authorisation, to discharge any action on behalf of CPRL.

Also Read: Decoding McDonald’s VS Bakshi That Jeopardised 169 Outlets

‘It is not a corporate battle. It is battle of an Indian entrepreneur and his band of 6,500 employees and other 3,000-4,000 stakeholders. This is a like a David-Goliath fight,’ said Vikram Bakshi.

Though CPRL is assuring that there have been no job cuts and they will protect the jobs of the stakeholders, many workers say job contracts have been terminated, leaving several jobless.Courtesy: Screenshot/ McDonalds India

The war between McDonald's and Bakshi started in 2013, when he was ousted as the Managing Director of CPRL over alleged management lapses. He then approached the NCLAT (National Company Law Tribunal) to call for a board meeting and said, "it is business as usual" till a consensus is arrived at.

The brand image of McDonalds India has been hit with shares declining by as much as 71% from June to July. This has come as great news for rivals who are keen on grabbing a share of the pie.

According to a study by Kantar IMRB-Crownit, KFC shares rose by 2% and Subway by 5% when it came to sales numbers in malls. Burger King is rolling out more buns than usual at Connaught Place, Delhi, now that only one out of five McDonald’s outlets is open in the area.

McDonald's India's franchisee in South and West India, Westlife Development, could replace Bakshi’s firm if NCLAT does not rule in his favour in the next hearing, slotted for 21 September.

Also Read: QBiz: Accounts of 2L Firms Frozen; 169 McDonald’s Stores May Shut

*Names changed as per request

Video Producer: Smitha TK & Roshni Balaji

Video Editor: Purnendu Pritam