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McDonald’s Strikes Back in Indonesia Burger Battle
Yessar Rosendar | November 25, 2009

A customer buying ice cream at ToniJack’s in Jakarta. The brand was created by controversial businessman Bambang Rachmadi after he lost his franchise rights for McDonald’s. (Photo: Yudhi Sukma Wijaya, JG) A customer buying ice cream at ToniJack’s in Jakarta. The brand was created by controversial businessman Bambang Rachmadi after he lost his franchise rights for McDonald’s. (Photo: Yudhi Sukma Wijaya, JG)
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Former ToniJack’s owner Bambang Rachmadi was made to walk the proverbial plank on Tuesday after international burger giant McDonald’s announced that it was terminating all remaining cooperation and joint venture agreements with him and was selling his 10 percent share in their joint venture company.

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

Formed in 1991, the joint venture now owes its US McDonald’s parent company about $130 million, an amount that could see Bambang’s shares in the venture rendered almost worthless.

The statement by McDonald’s also accused Bambang of breaching obligations to transfer equipment in former company stores he operated at fair market value, and assign the leases for the restaurants in question to McDonald’s.

“More specifically … he has opened competing restaurants and has been making false and hostile public statements and allegations against the corporation,” the McDonald’s statement said.

On Nov. 17, the global burger giant demanded that the flamboyant Jakarta businessman shut all of his 13 former franchised McDonald’s restaurants in Indonesia, which are now operating under the name ToniJack’s.

It said the new outlets violated Bambang’s contractual agreement restraining him from competing with the McDonald’s franchise.

However, on the same day, ToniJack’s senior management said Bambang no longer had a stake in the outlets, which have replaced the world-famous Golden Arches logos with logos featuring an eye-patched pirate’s face.

The Nov. 17 demand by McDonald’s followed its earlier move forbidding Bambang from operating any restaurants in the country under the McDonald’s brand name as of Oct. 1, forcing him to convert his stores into ToniJack’s outlets.

Responding to the statement from McDonald’s, a lawyer for Bambang said he would continue legal action against the franchise, and would not agree to any sell-off of his stake at current market value.

“The market value will be low right now because the joint venture company has high debt,” said Adhyaksa, the attorney representing Bambang’s company, PT Rezeki Murni, on Tuesday.

Bina Nusa Ram a reduced its debt to $130 million from $150 million after it sold the franchising rights and assets of 97 McDonald’s restaurants, formerly operated by Bambang, to food processor the Sosro group for $20 million.

In early June, Rezeki Murni sued the US McDonald’s for $105.5 million in the South Jakarta District Court for selling the assets without previously notifying it.

Adhyaksa said the sale materially damaged his company and its ability to repay its debt.