McDonald converts HRPL to franchise operation

Mc Donald’s Corporation, in a surprise move exited Hardcastle Restaurants Pvt Ltd (HRPL), one of its two 15 year old equal joint ventures that ran Big Mac Outlets in India( basically in west and south India), and converting it into a franchise operation. Further news has it that the company has sold its 50 per cent stake to Indian Partner BL jatia family for an undisclosed amount. “ We are excited, as it gives us the freedom to grow aggressively and take quick decisions”, HRPL Vice Chairman, Amit Jatia said. It means that Mc Donald will no longer invest in HRPL but lend its brand name and give training, development and knowledge. The Indian company will pay a royalty for the use of the brand. Further, it will own the real estate and use its local knowledge and capital for brand building. Speculation is rife that the decision to switch to franchise model was due to a fall out between the US firm and HRL where the former refused to take further bank loans for expanding HRPL operations and on which Jatia replied, “ Mc Donald was not a guarantor, it just gave letters of comfort which were not legally binding”.