American fast food chain McDonald’s has ended an agreement with its local partner, Abans, in Sri Lanka. It has also closed all 12 outlets in the country, an attorney for the US company said on Sunday (24th March). According to reports, the development comes after McDonald’s had launched a legal battle against its local partner Abans over allegations of “poor hygiene”.
An attorney for McDonald’s, Sanath Wijewardane said, “The parent company decided to terminate the agreement with the franchisee due to standard issues.” He added, “They are not in business in the country. They may decide to return with a new franchisee.”
According to McDonald’s counsel, the deal was cancelled on Wednesday but the stores continued to operate for some days. While he declined to give details about the issues that led to the cancellation of their agreement with Abans, local media reported that McDonald’s went to court against Abans over allegations of poor hygiene.
According to a report in the Sri Lankan outlet Daily Mirror, the Colombo Commercial High Court issued an order on 24th March preventing Abans from using McDonald’s brand name in any manner possible. McDonald’s and Abans had entered into a Developmental Agreement on 21st August 1997.
Meanwhile, a spokesperson for McDonald’s estranged local partner Abans declined to comment on these developments.
The development in the court
The Commercial High Court of Colombo has mandated closures until 4th April when the hearing is scheduled to resume. The court ruling follows a plea by McDonald’s (parent company), which alleges that its estranged local franchise holder failed to uphold international hygiene standards.
A court official said, “The closure was ordered pending an investigation.”
Lawyers for McDonald’s told the court that they had terminated a franchise agreement with local company Abans last week.
The plaintiff states that it has terminated the right of the defendant to use the name McDonald’s or any name in any way or manner similar to the name McDonald’s and to use any name that would convey to the public that the said restaurant is in any way or manner connected to the McDonald’s, Sri Lankan outlet Daily Mirror reported.
As per the report, McDonald’s, in its plea has stated that the basis of the Development Agreement has ceased to exist due to the actions of the defendant. It adds that the plaintiff does not desire the defendant to be a franchisee and to operate any restaurant under the name McDonald’s.
Additionally, it has also sought a court ruling declaring that the defendant has no right to use the name McDonald’s and/or any name in any way or manner similar to the name McDonald’s.
Following the development, notices were spotted outside McDonald’s outlets in Sri Lanka on Sunday, stating they were “closed,” with no indication provided regarding a potential reopening.