McDonald’s Shutdowns Locations in Sri Lanka, Ends Agreement with Local Franchisee Over Unhygienic Stores

McDonald's closed several stores in Sri Lanka on Sunday, March 24. The discontinuation of operations comes after the American burger joint giant initiated a legal battle against Abans, the chain's local franchisee.

Local Court Ordered the Closures

According to The Hindustan Times, McDonald's alleged that Abans neglected the stores, and it wants them closed due to poor hygiene. The affected locations will officially cease operations on April 4 as ordered by the Commercial High Court of Colombo after the headquarters said they failed to meet its international hygiene standards.

It was learned that Abans has a franchise agreement with McDonald's and has been operating 12 branches since the restaurant entered the Sri Lankan market in 1998. The stores have already put up signages to inform the locals about the shutdown. Neither Abans nor the HQ says whether this is a temporary or permanent closure.

Possible New Franchise for the Region

The Colombo Commercial High Court handed down the order last weekend. This will also ban the Sri Lankan franchisee from using McDonald's brand name in any way. Since McDonald's had already ended its contract with Abans, it was reported that a new franchisee may enter the scene to open new stores.

"The parent company decided to terminate the agreement with the franchisee due to standard issues," McDoanld's lawyer, Sanath Wijewardane, said in a statement. "They are not in business in the country and may decide to return with a new franchisee."

In any case, Reuters reported that while the lawyer declined to elaborate on the issues and cause of the closure, various local media indicated that McDonald's went to court to resolve conflicts with Abans over poor hygiene. Meanwhile, another hearing about the case is set to resume next month.

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