McDonald’s Corp’s battle with one of its two franchisees in India escalated after the American company moved to terminate an agreement involving more than a third of its restaurants in the world’s second-most populous nation.
The Indian unit of McDonald’s said in a statement on Monday it has ended the pact with Connaught Plaza Restaurants, a joint venture that operates the brand’s 169 outlets in northern and eastern parts of the country, after it breached terms relating to some restaurants.
Connaught Plaza in a separate statement said it is considering “appropriate legal remedies” in response.
The local partner “has failed to remedy the breaches, despite being provided with an opportunity to do so in accordance with the agreements,” McDonald’s India said. “We understand that this action brings uncertainty for many.”
The development creates a challenge for McDonald’s, disrupting operations in one of the world’s biggest emerging markets. The company will need to rebuild its brand across half the country as it searches for another partner for northern and eastern India.