Called the Sam Walton of India, Kishore Biyani, founder and chief executive officer of the Future Group, has signed a master franchise agreement with
Japan's 7-Eleven, the world's largest convenience store chain, to develop and operate stores within India. Coming from a small business family in Rajasthan, Biyani started his career at the family fabric-trading business, Bansi Silk Mills. In 1987, he started a garment company called Manz Wear Private, which sold garments were under the brand name Pantaloon. Mumbai educated Biyani says 7-Eleven's stores will be open for 24 hours a day and will be serving breakfast, lunch and dinner at affordable prices. He believes that agreement with 7-Eleven can bring technology and experience from all around the world, which can be used in Indian stores.
Q: Can you tell us more about the 7-Eleven deal?
A: We happen to be 7-Eleven's chosen partner in India. We are opening stores all over the country as an Indian partner on the licence with them. We are starting with Mumbai store. We and our licensor personally believe that India probably is a huge market for both of them. In terms of convenient seekers, India is a young country. Around 500 million people by next year would be born post-2000. So, that is the opportunity that India gives us. Young people want everything faster, nearer and a lot of convenience seeking is happening. So, this store is all about offering fresh foods, beverages, chocolates, confectionaries, ice-creams, tobacco and café being part of the store, you can get your morning breakfast, lunch and dinner at very hygienic and affordable prices. So, it's an interesting model and this format doesn't exist in India and most of the stores will operate for 24 hours wherever it is allowed.
Q: Whenever you look at master franchise model, there is also a tiered structure that operates where you give out sub-franchises to other parties, so are you open to that, is that a part of the agreement as well?
A: We are all bound by the agreement and it allows sub-franchising, but that is not in the first phase. Our first phase is to perfect what we are doing, get successes in the whole format as this is a new format in this country. Then scale it up in the city and then probably move into other cities.
Q: Sub-franchising will be in other states?
A: At the moment, we are not discussing sub-franchising.
Q: In term of the overall structure, royalty payments and revenue generation opportunities, give us some sort of ballpark as to what is the kind of royalty that you would have to pay and what is the kind of expectations in terms of revenues? According to the agreement, there is royalty in terms of the franchise fee, which we have to pay, depending on the sales rather than per sale.
By this agreement, we get technology, system and process, learning from all the other 17 countries and the 70,000 stores which they run. They operate a kind of a hand pay store probably the first in the world in Korea, done drone deliveries and have scan and go stores. So, there will be a lot of technology that will be available to us in India.
Q: What technology will you integrate into the first phase?
A: It is too early for me to talk. Our job is to make this model and make it successful.
Q: You have 1,500 small stores at this point in time. But, you have an ambitious target of about 10,000 stores over the next couple of years. So, will the expansion of 7-Eleven be a part of this small store strategy?
A: Ours is a membership strategy, this is a convenience store and this is a very different strategy. The categories overlap is very minimal, this is more about fresh food and that is more about ingredients which go into your homes. There are membership stores that sell grocery, home and personal care, which these stores don't sell.
A: I think that is the idea.
Q: So, the expansion will be over and above the 10,000 stores that you have planned?