Future Retail said the termination of the over two-year-old master franchise agreement was with ‘mutual consent’ as Future7-India Convenience could not meet store opening targets and pay franchisee fees
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NEW DELHI :
Future Retail Ltd and 7-Eleven, the world’s largest convenience store chain, have terminated an agreement to open small-format shops across India’s top cities without opening a single store.
In a stock exchange filing on Tuesday, Future Retail said the termination of the over two-year-old master franchise agreement was with “mutual consent" as Future7-India Convenience Ltd could not meet store opening targets and pay franchisee fees.
“No financial or business impact on the company as this arrangement was at the subsidiary company level," it said.
Email queries sent to 7-Eleven Inc remained unanswered at the time of going to press.
In February 2019, Future Retail signed a master franchise agreement with 7-Eleven to develop and operate convenience stores in India. It had then proposed to open its maiden store in India in early 2020. No store was eventually opened.
For Future Group, 2020 was marked by mounting debt, coming on top of a raging pandemic that stressed the country’s offline retail sector. This eventually delayed plans to open the chain’s convenience stores here.
In August last year, Future Group decided to sell its retail, wholesale and other assets to Reliance Retail Ventures Ltd to pay down its debt. The deal was, however, challenged by Future Group partner Amazon, leading to a legal tussle.
Earlier this month, Reliance Retail Ventures Ltd extended the deal’s deadline by six months, giving a breather to Future Group.
In its stock exchange filing, Future Retail said the master franchise stands terminated after executing the mutual termination agreement on 5 October. The termination marks further loosening of Future Group’s grip over India’s organized retail market. The group manages large and small format departmental stores and grocery formats, including Big Bazaar and Nilgiris.
US-based 7-Eleven operates, franchises and licenses more than 77,000 stores in 17 countries, and works as a chain of convenience stores offering packaged foods, beverages, personal care products, and other daily use goods.
At the time of signing the deal, 7-Eleven agreed to support Future Retail in implementing and localizing its unique business model. Future Group promised to open new stores and even convert some of its existing ones to 7-Elevens, focusing on fresh and packaged food tailored to Indian tastes, the two retailers said then.
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