McDonald’s

vs
Vikram Bakshi

Presented to
Pradeep Chauhan
Assistant Professor 
PRESENTED BY GROUP -5
HEMRAJ SINGH
NISHANT MAITHANI
S A H I L K A N WA R
SANDEEP MANDAL
 Overview of Presentation

BACKGROUND

INTRODUCTION Time line of

Of Vikram Bakshi disputes

INTRODUCTION Legal outcomes Impact on business

Of McDonalds

Facts on McDonald's Final outcome

Major concerns
North and east
branch
 BACKGROUND
Connaught Plaza
Restaurants
(CPRL)

• CPRL started in 1995 when Bakshi and McDonald’s

shaped a 50:50 joint venture to run McDonald’s outlets in
India for a time of 25 years. 
• Their ties went bad in 2008 when the Chicago-
headquartered organization attempted to purchase out
Bakshi’s 50 percent stake
•  The situation intensified five years after the fact when
Bakshi was removed as the Managing Director of CPRL. 
• The National Company Law Tribunal (NCLT) in this way
re-established him and furthermore ceased McDonald’s
from meddling in the working of CPRL besides appointing
an administrator to oversee its operations.
 VIKRAM BAKSHI
• Presently, Vikram Bakshi holds the position of
Managing Director & Director at Connaught Plaza
Restaurants Pvt Ltd. Mr. Bakshi is also on the
board of 24 other companies.
• He later ventured into the business of hotels and
service apartments. His company, Ascot Hotels
and Resorts Pvt. Ltd, currently runs three hotels
and five properties of service apartments and
highway amenities.
• He is now working with UK-based Merlin
Entertainments Group (owner of Madame
Tussauds) for the past three years to set up a
branch of the wax museum in India.
McDonald’s
• McDonald’s has a network of over 160 restaurants across the
country, with its first restaurant launch way back in 1996 ,the
company has sought to identify weaknesses in its businesses or
customer concerns.
• While perhaps obvious, the focus has been on simplicity of the
ordering experience, low-cost but tasty food, and response customer
service.
• Prior to its launch, the company invested four years to develop its
unique cold chain, which has brought about a veritable revolution in
food handling, immensely benefiting the farmers at one end and
enabling customers to get the highest quality food products,
absolutely fresh and at a great value.
• McDonalds all time preferred products as McFlurry and soft serve
 McDonalds faced a 3.05
billion downfall in th economy
hence, making itself lose and When McDonald’s entered India in
Globally, McDonald’s
opportunity towards rapidly 1996, it followed the franchise
adopted a franchise
growing quick service model here as well. Its operations
business model to
restaurant were managed by two companies:
easily penetrate new
CPRL and Hardcastle Restaurants
markets and enlarge its
Pvt. Ltd (HRPL). 
target markets. About
80 per cent of its
restaurants worldwide
are owned and McDonald’s reshaped the
operated by country’s fast food culture by
Do you know?
franchisees. This serving low-priced, value-
McDonald India's local partners
model helped push up oriented products, quickly and
McDonald's India Pvt. Ltd. has
McDonald’s gross efficiently. According to
two local partners in India -
margins and operating industry observers, a key reason
Connaught Plaza Restaurants Pvt.
income, and gave it a for its success was the ability to
Ltd. for North and East India, and
stable revenue stream customise its menu to suit local
Westlife Development Ltd. for
with lower operating tastes by understanding Indian
West and South India.
costs and risks. customers’ preferences
TIME-LINE OF THE DISPUTE NCLT-NATIONAL COMPANY LAW
TRIBUNAL

CPRL was formed in 1995 as a 50:50 joint venture between real estate The
hospitality magnate Vikram Bakshi and MIPL. origins
13 years later, in 2008, when CPRL was operating 70 McDonald's of the
Orgin MIPL-
outlets, MIPL offered to buy Bakshi out of the joint venture for $7 million
i.e. $2 million more than Bakshi's initial investment. CPRL
Bakshi roped in consulting firm Grant Thornton for a fair valuation. conflict

In 2009, Grant Thornton valued CPRL at $331 million, and after The
deductions, Bakshi's share stood at $100 million. escalation
of the
McDonald's agreed to reconsider.
Escalation conflict
  CPRL broke even in 2009, and declared its first profit in 2010. bakshi between
wasn’t allowed to borrow and his partner was operating freely MIPL and
Bakshi
MIPL allowed CPRL in 2012 to expand 27 outlets and grow at 125%in Bakshi
2011 under bakshi , when the re-elections agenda was , he was acussed challenges
Explosion his removal
og wrong doings , following which he challenged his removal at NCLT as MD of
CPRL
Legal battle Legal outcomes Further escalation Current status
MIPL invokes arbitration to NCLT's and LCIA's take on Legal battle between CPRL The conflict is now pending
settle the dispute the issue and MIPL intensifies in four forums

• Fast forward to 2017. In
July, the NCLT reinstated
• At the NCLT, Bakshi
Bakshi as the MD of
accused MIPL of
CPRL and restrained
mismanagement and
MIPL from interfering in
oppression.
the smooth functioning of
• Later in 2013, MIPL
CPRL and its 169
removed the joint venture
operational restaurants.
agreement with CPRL and
• It called Bakshi's non-
invoked arbitration based
election illegal, malicious
on a contractual clause to
and unjust and appointed
settle the dispute at the
former Supreme Court
(LCIA).
judge G.S. Singhvi as
• At this time CPRL had 154
administrator to CPRL's
operational restaurants and
board.
was planning to launch 35
• Meanwhile, the LCIA
more.
asked Bakshi to sell his
stake at fair valuation.
• The LCIA award came in • Meanwhile both MIPL
September, wherein they and Bakshi moved the
called for independent Delhi High Court.
• The former filed a
expert valuation of CPRL
petition to enforce the
and Bakshi's share.
LCIA award, while
• However, in August,
Bakshi has challenged
MIPL terminated its
it.
franchise agreement with • MIPL has also moved
CPRL for its 169 the Delhi High Court
restaurants in North and against the centre,
East India. challenging the NCLT's
right to issue a contempt
• Bakshi alleged that the
notice against them.
termination of the
• MIPL also challenged
franchise pact was in
NCLT's July order. The
contempt of the NCLT's
matter is pending in
July order. NCLAT.

• London Court of
Timeline from
International
Arbitration (LCIA). 1995-2017

The dispute also impacted the
market share of McDonald’s in
India. The fast food chain’s
overall market share dropped
from 9 per cent in June 2017 to
3 per cent in July 2017.
Expansion was hit as
McDonald’s opened just one
outlet in 2017 compared to 27
outlets in 2012.
Major Concerns
on December 26, 2017, CPRL had to
shut 84 of the McDonald’s outlets in
eastern India as its logistics partner,
Radhakrishna Foodland,
discontinued supply chain services
alleging uncertainty of future and
non-payment of certain dues.
a string of food quality issues at some
McDonald’s restaurants seriously dented
its image in the country, said analysts.
Same-store sales growth of McDonald’s
remained negative for eight quarters
between mid-2013 and September 2015.
Despite revamping its restaurants and
upgrading its menu, McDonald’s still
struggled to retain dominance in the
QSR sector. In 2016, Domino’s
overtook McDonald’s its market share
touching 16 per cent, while the latter’s
dropped to 7.4 per cent
IMPACT ON BUSINESS
 Rivals gaining ground

Franchisees performance
LOOKING AHEAD…
• In an out-of-court settlement that ended a six-year-long dispute, McDonald’s India announced on May
10, 2019 that it had bought out Vikram Bakshi’s 50 per cent stake in the joint venture.
• CPRL is now wholly owned by McDonald’s India which, in the months following the buyout, has
focused on reviewing the 160-plus outlets in the regions and getting many of the closed units up and
functioning again. I
•  It is also actively looking for a business partner, or development licensee, for the northern and eastern
regions.   
•  McDonald’s posted a net profit of ₹6.52 million during FY17-18, compared to a net loss of ₹3.05
billion the previous year, according to its filings with the Registrar of Companies.
• The QSR market is projected to grow to $250 billion by 2020, and faster expansion in the region could
help McDonald’s capture this growth.
REFERENCES

• https://www.scconline.com/blog/post/2019/05/10/mcdonalds-v-vikram-bakshi-end-of-6-year-ol
d-legal-battle-with-an-out-of-court-settlement
/
• https://
www.google.com/search?q=mcdonalds+vs+vikram+bakshi&sxsrf=ALeKk02AjzLAXmPMBS
T1lq23JOhOpWTCGw:1598533435246&source=lnms&tbm=isch&sa=X&ved=2ahUKEwiH2
caMubvrAhWm4XMBHYh3DgkQ_AUoA3oECA4QBQ&biw=1366&bih=576#imgrc=vtWjA
3K6R3opFM
• https://
www.businesstoday.in/current/corporate/mcdonalds-vs-vikram-bakshi-finally-over-american-fa
st-food-giant-buys-out-stake/story/344960.html
• https://www.google.com/search?q=mcdonald%27s+most+selling+products&sxsrf=ALeKk00F
L5ojekt8TM5gxrCxgTyOYn0ajg:1598545665660&source=lnms&tbm=isch&sa=X&ved=2ah
THANK YOU