May 8, 2020
McD as fondly called has joined the bandwagon of other restaurants and food chains including Jubilant FoodWorks-operated Domino’s Pizza, Tata Starbucks and speciality restaurants in seeking rental waivers from landlords and mall owners in lieu of the unceasing condition of the consumer market.
McDonald’s North & East, having 155 outlets, has written to landowners and mall operators seeking rentals waivers for the duration of the outlets that remains closed due to Covid-19 and flat revenue share arrangements after that.
The food services industry is the hardest hit, facing large-scale shutdowns of restaurants, hotels, cafeterias, quick eateries resulting in joblessness as many outlets have posted no revenues since the start of the lockdown to fight COVID-19 outbreak on March 25. Malls in metro cities were shutdown even before that. Few restaurants started operating with limited delivery modules a fortnight back, but response being so low that forced them to close that too.
With almost all retailers seeking waivers from malls and landlords, legal experts expect many of them to get into legal tangles, particularly if contract terms of force majeure are not clearly defined.
“Since almost all malls and restaurants are on commercial leases, the first thing parties must do is to assess their contracts and carefully consider if they have a force majeure clause and if yes, does the clause cover a pandemic like Covid-19,” said Varun Kalsi, partner at New Delhi-based law firm PSA.
“Force majeure refers to rare and unanticipated events beyond the control of concerned entities, which prevents them from fulfilling contracts. In the absence of such a clause or if it is inadequate, the concerned entities must renegotiate the relevant parts of the contracts mutually”, informed Kalsi.
In February 2020, McD had named entrepreneur Sanjeev Agrawal, promoter of Delhi-based MM Agrawal Group, as developmental licensee for its operations in north and east India, that is nine months after it brought out former partner Vikram Bakshi’s stake in their joint venture. Owned by Agarwal,Moon Beverages is also Coca-Cola India’s largest franchisee bottler.