Bambang Rachmadi first established McDonald's here in
1991 when he opened a number of restaurants - 25 - each
with its own franchise agreement with McDonald's. The
business was very successful, in fact, one of the restaurants
soon became the highest monthly gross revenue generating
McDonald's restaurants in the world and there was an article
about it in Fortune Magazine at the time. McDonald's were so
pleased they asked Bambang to form a Joint Venture (JV)
and expand the business.
business was very successful, in fact, one of the restaurants
soon became the highest monthly gross revenue generating
McDonald's restaurants in the world and there was an article
about it in Fortune Magazine at the time. McDonald's were so
pleased they asked Bambang to form a Joint Venture (JV)
and expand the business.
A 50/50 Joint Venture was established in about 1994 where
Bambang transferred 12 of his original restaurants into the JV.
The JV then opened many more restaurants whilst Bambang
continued to own 100% of his remaining 13. Bambang became
the CEO of the Joint Venture. Then things started to go wrong.
McDonald's wanted to continue to add restaurants such that
they asked for a capital call. Bambang was unable to come up
with his share of the funding so McD diluted him down to 10%
but he remained as CEO although he had very little decision
making power.
The JV then opened many more restaurants whilst Bambang
continued to own 100% of his remaining 13. Bambang became
the CEO of the Joint Venture. Then things started to go wrong.
McDonald's wanted to continue to add restaurants such that
they asked for a capital call. Bambang was unable to come up
with his share of the funding so McD diluted him down to 10%
but he remained as CEO although he had very little decision
making power.
Then the Asian financial crisis hit and some of the restaurants
started to lose money. Bambang on several occasions strongly
suggested to McDonald's that they should close some of the
restaurants - they closed some but not many.
McDonald's then provided a loan to the JV at very high interest
rates to basically keep the business going. This went on and on
such that by the beginning of this year Bambang still had his 13
original restaurants and the JV has 97. Bambang's restaurants
are profitable but the JV has around US$130 million of losses.
Of course, all this time McDonald's have been collecting
are profitable but the JV has around US$130 million of losses.
Of course, all this time McDonald's have been collecting
royalties on gross revenue from all 13 plus 97 restaurants plus
interest on the loans they provided to the JV, which they own
90% of. And then things really got bad. McD decided to sell
all the assets of the JV to another Indonesian company
WITHOUT Bambang's approval. In addition McDonald's claimed
Bambang was in violation of his 13 franchise agreements on
his own restaurants so they served him notice of termination. He
WITHOUT Bambang's approval. In addition McDonald's claimed
Bambang was in violation of his 13 franchise agreements on
his own restaurants so they served him notice of termination. He
accepted the wrongful termination and closed all 13. They were
immediately taken over by ToniJacks, which you see referred to
in the media.
,
in the media.
,
No comments:
Post a Comment