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Indonesian Businessman Strikes Back at McDonald’s
Muhamad Al Azhari | November 29, 2009

Customers dining at a Toni Jack Customers dining at a Toni Jack's restaurant in Central Jakarta. (Photo: Yudhi Sukma Wijaya, JG)
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Bambang Rachmadi has fired back at fast-food giant McDonald’s, saying the US-based corporation created “artificial” losses at their domestic joint venture while “sucking” huge earnings out.

“When [the joint venture] was operating in Indonesia from 1991 to 2008, McDonald’s sucked as much as $190 million [from it], mostly from royalties, franchise fees and interest on loans,” but he never received any profits from the venture, Bambang said in a statement last week.

He also claimed McDonald’s dual roles as franchisor and franchisee, as well as lender and borrower, were conflicts of interest.

“Currently, Bambang Rachmadi is processing a lawsuit against McDonald’s in South Jakarta District Court because McDonald’s is considered to have violated laws and have done serious manipulations that caused [him] as a local partner to suffer serious losses,” the statement said.

Bambang and McDonald’s formed PT Bina Nusa Rama in 1991. At one time it operated 97 McDonald’s outlets across the nation, and had accumulated debts of $150 million as of 2007.

In June, McDonald’s sold the assets in the 97 outlets owned by the venture and transferred its franchise rights to the Sosrodjojo family. All that remained of Bina Nusa Rama was debt.

Bambang’s legal counsel, Tri Adhyaksa, claimed in June that McDonald’s sold the assets and franchise rights for only $20 million.

After the sale, the company was left to pay $130 million in debt, which would render Bambang’s shares almost worthless.

However, McDonald’s said in a statement last week that it would honor an arrangement to determine the “fair market value” of Bambang’s 10 percent stake in Bina Nusa Rama, noting that “given the legal relationship between the parties, neither shareholder is personally responsible for any of the debts.”

Tri Adhyaksa said Bambang was seeking $105.5 million in compensation for losses.

Bambang was left with 13 independently owned McDonald’s outlets after the corporate parent’s sale of Bina Nusa Rama’s assets. McDonald’s this month demanded that he shut all his former McDonald’s outlets, which are now operating under the name ToniJack’s, claiming he had violated a contractual agreement restraining him from competing with McDonald’s outlets.

However, ToniJack’s senior management claimed on the same day that Bambang no longer had a stake in the outlets.