Kishore Biyani-led retail major Future Retail Ltd (FRL) on Tuesday has terminated a franchise agreement with US-based 7-Eleven Inc after failing to the meet target of opening stores and payment of franchisee fees, the company said in a stock-exchange disclosure.
Future Retail and 7-Eleven Inc announced a master franchise agreement in February 2019 to develop and operate 7-Eleven convenience stores in India. A subsidiary Future 7-India was also set up for the same. Future Retail added that this will have no financial or business impact on the company as this arrangement was at the subsidiary company level.
The agreement with FRL was going to see one of the world's largest convenience store chains enter the Indian market. FRL had plans of opening stores in Mumbai, to begin with. Kishore Biyani is also quoted in media reports as saying that over 1,000 stores could be opened in Mumbai alone.
The first store was set to open in either February or March of 2020. However, March saw the world hit by the COVID-19 pandemic, followed by stringent lockdowns in the country. This resulted in delays in the opening of stores with the subsidiary registering losses even before opening any stores.
Future Retail, in its latest annual report, said Future 7-India, incorporated mainly with the objective to operate, develop, maintain and run the convenience stores, hadn't opened any stores as of March 31, 2021. This, it said was on the back of the pandemic affecting the retail business in India.
In FY21, there was no income from operations and the subsidiary incurred a net loss of Rs 17.3 crore.
US-based 7‑Eleven today operates, franchises and licenses close to 10,000 locations in the US and Canada and more than 71,100 stores in 17 countries around the world.
Future Group's Future Retail operates retail chains such as Big Bazaar, Food Bazaar, FBB, Nilgiris, among others. After business took a major hit due to the COVID-19 pandemic, the company decided to sell its retail, wholesale and logistics assets to Reliance Retail for Rs 24,713 crore by way of a slump sale. This deal has been embroiled in a legal tussle with Amazon for over a year now.
(Edited by : Jomy Jos Pullokaran)
First Published: IST