Home » McDonald’s franchisee to challenge enjoining order over share sale dispute

McDonald’s franchisee to challenge enjoining order over share sale dispute


By: Staff Writer

March 26, Colombo (LNW): McDonald’s local franchisee Rusi Pestonjee is to challenge the ex-parte enjoining order issued against him over a dispute concerning the sale of shares.

Pestonjee owns 98% stake in International Restaurant Systems Ltd., the local franchisee of McDonald’s.

Colombo Commercial High Court Judge Sumith Perera last week issued an enjoining order preventing Pestonjee from using the name McDonald’s in any way as well as sale of its food menu in 11 outlets until 4 April.

The Court made this order consequent to a lawsuit filed by McDonald’s Corporation, US seeking the court’s jurisdiction under the provisions of the Intellectual Property Act, No. 36 of 2003.

The plaintiff stated 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 which would convey to the public that the said restaurants/outlets is in any way or manner connected to McDonald’s.

The plaintiff stated that the basis of the Development Agreement entered into in August 1997 has ceased to exist due to the actions of the defendant. The plaintiff further stated that the plaintiff does not desire the defendant to be a franchisee and to operate any restaurant under the name McDonald’s.

Dr. Romesh De Silva PC instructed by Sanath Wijewardane appeared for the plaintiff.

A spokesperson for the franchisee said that McDonald’s action is related to sale of shares and not due to hygienic issues as widely reported.

“As per the agreement Pestonjee is required to sell only up to 50% ownership of the local franchise entity but McDonald’s is demanding 100%. We will be contesting the enjoining order,” the spokesperson added. “

McDonald’s (MCD.N), opens new tab has ended an agreement with its local partner in Sri Lanka and all 12 outlets in the country have been closed, an attorney for the U.S. company said on Sunday.

“The parent company decided to terminate the agreement with the franchisee due to standard issues,” said Sanath Wijewardane, an attorney for McDonald’s. “They are not in business in the country. They may decide to return with a new franchisee.”

He said the deal was cancelled on Wednesday but the stores had continued to operate for some days.

Wijewardane declined to describe the issues but local media reported that McDonald’s went to court against Abans over allegations of poor hygiene.Abans says on its website, opens new tab it first partnered with McDonald’s in 1998.

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