ECONOMYNEXT – The local franchisee of U.S. brand McDonald’s is not a subsidiary of Abans PLC as widely claimed by local media but majority of its stake is owned by the company’s managing director, the Sri Lankan listed company said.
Sri Lanka’s Colombo Commercial High Court last week issued an order preventing the island’s McDonald’s restaurant franchisee from using the brand.
Local reports said McDonald’s Corporation had sought an order preventing Abans Plc from selling McDonald’s food items in Sri Lanka.
“The local franchisee of McDonald’s is International Restaurant Systems (Private) Limited incorporated under the Companies Act No 7 of 2007,” Abans said in a statement to the Colombo Stock Exchange, dissociating itself form the court case.
“The majority shareholder of the said company is Mr. Rusi Pestonjee who owns a 98.73% stake in that company, and who is also the Managing Director of Abans PLC.”
“International Restaurant Systems (Private) Limited is not a subsidiary nor an associate of Abans PLC or its parent company Abans Retail Holdings (Private) Limited.”
“Due to the said reason, the financials of International Restaurant Systems (Private) Limited are not consolidated with the financials of Abans PLC.”
The court order is effective till April 4.
McDonald’s has a raft of restaurants in Colombo and suburbs including Kotahena, Nugegoda, Kiribathgoda, Battaramulla, Kollupitiya, Rajagiriya, Welisara, Mount Lavinia, Colombo City Centre, Macleod Road restaurant and Shangri-La restaurant.
McDonald’s had entered into a Development Agreement with the local franchise on August 21, 1997.
McDonald’s has stated that the basis of the Development Agreement has ceased to exist due to the actions of the franchisee and does not desire the existing franchisee to operate any restaurant under the name McDonald’s, reports said. (Colombo/March 28/2024)