Future Retail Ends Pact For 7-Eleven Stores
Future Retail Ltd. has terminated a franchisee agreement with 7-Eleven Inc., the world’s largest convenience store chain, almost two-and-a-half years after they signed the deal to operate stores in India.
The termination has been with “mutual consent” as Future 7-India was not able to meet the target of opening stores and payment of franchisee fees, the Kishore Biyani-led company said in an exchange filing on Tuesday. The termination, however, will have no financial or business impact on the company as this arrangement was at a subsidiary company level.
In February 2019, both companies had signed a contract to set up the U.S.-based round-the-clock convenience outlets in India. As part of the deal, Future Retail formed a subsidiary Future 7-India Convenience Ltd. to develop and operate 1,000 such stores.
The first 7-Eleven store, planned to open in Mumbai by March 2020, would have sold beverages, fresh food and groceries. The idea was to compete against the 24Seven stores, promoted by Modi Enterprises.
But the Covid-19 pandemic, according to Future Retail’s 2020-21 annual report, affected the retail business in India and Future 7-India didn’t open any stores as on March 31, 2021. Hence, there was no income from operations and the subsidiary incurred a net loss of Rs 17.3 crore in FY21 against Rs 9.61 crore a year earlier. Future 7-India’s total liabilities rose to Rs 25.38 crore in FY21 from Rs 7.7 crore in FY20, against total assets worth Rs 13.24 crore.
7-Eleven, owned by Japan-based Seven & I Holdings Co, has more than 71,000 in 70 countries as of July 2021.
The termination of deal comes at a time the Future Group, grappling with piling debt, faces a legal battle with Amazon.com over a deal to sell its retail and wholesale assets to Mukesh Ambani-owned Reliance Industries Ltd.’s retail unit.