McDonald's Closes Sri Lanka Stores After Agreement with Local Partner Ends Over Poor Hygiene Case

By Leira Aquino

Mar 25, 2024 01:39 AM EDT

Customers queue at a McDonald's store in Colombo on March 18, 2013, to claim 1,000 free burgers in celebration of National Breakfast Day. In 2024, all McDonald's outlets in Sri Lanka shut down due to a legal conflict with the American company's local partner, Abans, allegedly related to hygiene issues.

McDonald's stores in Sri Lanka have shut down after a legal dispute with the local franchise holder over poor hygiene concerns, according to local media reports. 

The closures were mandated by the Commercial High Court of Colombo until April 4, following allegations from the parent company regarding the failure of its local partner, Abans, to meet international hygiene standards.

McDonald's Ends Partnership with Abans Amid Legal Dispute

The termination of the agreement came after McDonald's initiated legal action against Abans.

Commercial High Court Judge Sumith Perera issued the order following a lawsuit initiated by the American fast-food giant, which sought the court's jurisdiction under the provisions outlined in the Intellectual Property Act, No. 36 of 2003, according to the Daily Mirror.

"The closure was ordered pending an investigation," stated a court official.

Lawyers representing McDonald's informed the court of the termination of the franchise agreement with the local company, Abans, last week. The court proceedings are expected to resume in early April.

Sanath Wijewardane, representing McDonald's as legal counsel, clarified that the termination of the agreement with the franchisee stemmed from standard compliance issues determined by the parent company.

"The parent company decided to terminate the agreement with the franchisee due to standard issues." He added, "They are not in business in the country. They may decide to return with a new franchisee."

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Abans Barred From Using McDonald's Brand Name

The court's order prohibits Abans from using the McDonald's brand name in any capacity after the plaintiff revoked the defendant's authorization to utilize the name McDonald's or any similar name in a manner suggesting association with the McDonald's brand.

McDonald's and Abans had been partners since 1998, operating 12 outlets across the country.

Following the closure, notices were displayed outside McDonald's outlets indicating that they are "closed," with no indication provided regarding a potential reopening. 

Meanwhile, specific details regarding hygiene concerns, reportedly the reason behind the closures as per local media accounts, remains undisclosed. Neither McDonald's nor Abans have yet to offer comments on the matter. 

READ MORE: McDonald's Faces Financial Risk and Investor Concerns After Worldwide System Outages

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