Neville Lahiru
Recently, the Colombo Commercial High Court issued an enjoining order preventing the Abans Group from operating McDonald’s (McD) in Sri Lanka. The order was issued following a lawsuit filed by the franchise owner (McDonald’s Corporation) under the provisions of the Intellectual Property Act, No. 36 of 2003.
Effective until the 4th of April, the enjoining order also included the closure of all 12 McDonald’s outlets in Kotahena, Nugegoda, Kiribathgoda, Battaramulla, Kollupitiya, Rajagiriya, Welisara, Mount Lavinia, Colombo City Centre, Shangri-La (One Galle Face), and Macleod Road. By the 23rd of March, Abans closed down all of its McD locations and removed its official Facebook and Instagram accounts, along with its online delivery platform.
As per the court filings, at least six of the McD locations in Sri Lanka were run illegally. The filing points out that the outlets in Mount Lavinia, Colombo City Centre, Macleod Road, and One Galle Face all ran without a franchise agreement while the Kollupitiya, Rajagiriya, and Welisera restaurants had expired contracts. Incidentally, the Kollupitiya outlet is the first McD location to open up in Sri Lanka dating back to 1998.
In the lawsuit, the McDonald’s Corporation stated that it has terminated the agreement with Abans to use the McDonald’s brand name in any of its operations. While Abans has yet to offer an official statement, Sanath Wijewardane, an attorney for McDonald’s mentions that the cancelation was owed to standard issues. Despite the franchise no longer operational in the country, Wijewardene says “they may decide to return with a new franchisee.” It’s believed that a select few Sri Lankan companies are eyeing a possible franchise acquisition. At the time of writing, McDonald’s continues to list Sri Lanka as a franchisee and that it doesn’t “seek any additional franchisees.”
Apart from the closure, the future of the restaurant chain’s 300 employees now remains in limbo. It’s possible that Abans may absorb some of the staff to its other companies, though other franchises like Burger King Sri Lanka have already begun hiring.
More questions than answers
The incident raises questions about the operations of McD in Sri Lanka in recent years, particularly around the quality and standards of the service. It also raises questions on how Abans was able to serve McD food when six of its locations were reportedly run illegally. More broadly, the issue puts the spotlight on international fast-food chains operating in Sri Lanka in general.
For instance, in December, Public Health Inspectors raided the Rajagiriya KFC outlet after a complaint alleging the restaurant selling spoilt chicken over a “buy one get one free” offer. The inspectors proceeded to dispose of the restaurant’s stock of chicken and stated that the Medical Research Institute would run tests for further investigations. However, no further audit has been done on the franchise’s operational status in the country. In light of the Abans Group fiasco with the McDonald’s franchise, this could potentially change. In any case, only time will tell how things will pan out.
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