The case is about the tussle between US burger major McDonald’s and its Indian joint venture partner Vikram Bakshi (Bakshi), which impacted the fortunes of the company in the highly attractive Quick Service Restaurant market in India. McDonald’s, which entered the country in 1996, operated through two master franchisees, one with Bakshi called Connaught Plaza Restaurants Limited (CPRL), a 50-50 joint venture between Bakshi and McDonald’s India Private Ltd. in the north and east of the country, and another Hardcastle Restaurants Pvt. Ltd (HRPL) owned by Amit Jatia in the south and west. After more than 15 years of smooth operations, during which McDonald’s acquired a pan-India presence and became synonymous with fast food in the country, the ties between Bakshi and McDonald’s grew strained, with both the parties hurling accusations at each other. McDonald’s said CPRL did not maintain the required quality and had failed to pay royalties for two years. It sought to buy out CRPL at a low price. Bakshi claimed that the money meant for the royalty was used to settle a debt of which McDonald’s was aware. At the same time, McDonald’s went in for a friendly buyout of HRPL, after which its fortunes took a turn for the better. McDonald’s issued notice to CPRL to close down its restaurants and terminated the agreements with its suppliers. But Bakshi continued to operate with a different set of suppliers. The parent company termed it as a breach of contract. As the stalemate continued, competitors started gaining ground in the Indian QSR market. .

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Issues

The case is structured to achieve the following teaching objectives:

	To understand different types of franchising methods
	To analyze the ways of selecting a franchisee
	To explore the methods used by companies to exert an influence on the distribution channel
	To explore the problems arising out of the Differing Goals of the Franchisors and the Franchisees

Contents

MCDONALD’S: A BRIEF HISTORY

REVENUE MODEL

MCDONALD’S: FRANCHISING ROUTE TO INTERNATIONALIZATION

MCDONALD’S IN INDIA: THE STORY OF TWO FRANCHISEES

BUSINESS OUTLOOK FOR THE TWO FRANCHISEES

VALUATION OF TWO FRANCHISEES

MCDONALD’S IN 2017

THE INDIAN MARKET

THE ISSUE WITH REAL ESTATE IN INDIA

TOUGH TIMES

EXHIBITS

Keywords

McDonald’s India,Franchisee,Franchisor,Joint venture,Franchise operations,Franchise Conflict,Franchise management,Brand development,Negotiations,Friendly Buyout

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