McDonald’s transfer of assets goes ahead despite lawsuit

The Jakarta Post ,  Jakarta   |  Thu, 06/04/2009 9:31 AM  |  Business

McDonald’s Indonesia pressed ahead on the sale of assets to PT Rekso Nasional Food (RNF) on Wednesday despite facing a lawsuit filed by Bambang Rachmadi, its partner for 18 years.

The fast food restaurant,  locally controlled by PT Bina Nusa Rama (BNR), said it had concluded Wednesday the sale of assets and had appointed RNF as the sole master franchisee replacing Bambang.

In a letter sent to The Jakarta Post, the BNR board of directors   said that with the transfer of assets RNF now operates approximately 97 McDonald’s restaurants and holds the sole license to open new restaurants.

The transfer, however, does not affect Bambang’s ownership in BNR and 13 other restaurants in his name.

Having been aware of the plan on the sale of assets, Bambang filed a complaint to the South Jakarta District Court last month demanding a court annulment of the process.

Bambang argued that BNR had violated his rights as a company shareholder by planning to sell the assets without his consent.

“They should have discussed it with me instead of transferring the franchise and selling the assets … They can only sell their shares, not the assets,” he said earlier.

Under the Investment Law, a local restaurant business partner must hold at least 51 percent  of the shares.

The court held the first hearing on the civil lawsuit on May 19 and decided to hold a further court session in August, taking into account it would take some time to summon McDonald’s US representatives.

Bambang also complained of  the sudden franchise termination.

According to a government regulation, a transfer of a license to another franchisee can be made only after the franchiser secures a settlement with the previous license holder.

The settlement, which is called a Clean Break, must be carried out no more than six months after the franchise termination.

Speaking to the Post on Wednesday, BNR spokesperson Dian Supolo said that Bambang’s grievances were unfounded and that the company would press ahead with its plans.

With the new partnership with RNF the  company aims to expand by opening up to 75 new restaurants during the next five years.

“We are proud to forge a new cooperation with the family of McDonald’s and happy with the business opportunity at hand,” RNF said in the statement.

RNF also vows to develop McDonald’s brand through opening up new business cooperation with more suppliers and other partners.

“We are very enthusiastic and very committed to develop McDonald’s brand in Indonesia. … We also believe that there will be more job opportunities for the people,” the company says.

McDonald’s opened in Indonesia in  February 1991 with its first restaurant located at the Sarinah Shopping Mall in Central Jakarta and has since expanded the business to 110 restaurants in the country.

The fast food business, which mostly focuses on Western foods such as hamburgers and fried fries, has also adapted its menus to include various local tastes such as rice and fried chicken.

According to 2008 data, the McDonald’s is the second biggest global market shareholder in fast food after Kentucky Fried Chicken.

RNF is famous for its product Teh Botol, a sweet tea drink flavored with jasmine.

The product was first introduced in 170, the first of its kind. The design of the bottle currently used to package the tea drink has not changed since 1974.

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