Future Retail ends pact for 7-Eleven stores
Future Retail Ltd. terminated a franchise agreement with 7-Eleven Inc., the world’s largest convenience store chain, nearly two and a half years after signing the agreement to operate stores in India.
The termination took place on “mutual consent” as Future 7-India was unable to meet the goal of opening stores and paying franchise fees, the company headed by Kishore Biyani in a swap dossier. The termination, however, will have no financial or business impact on the business as this arrangement was at the branch level.
In February 2019, the two companies signed a contract to set up the 24-hour U.S.-based convenience stores in India. As part of the agreement, Future Retail formed a subsidiary Future 7-India Convenience Ltd. to develop and operate these 1,000 stores.
The first 7-Eleven store, slated to open in Mumbai by March 2020, is said to have sold drinks, fresh food and groceries. The idea was to compete with 24Seven stores, promoted by Modi Enterprises.
But the Covid-19 pandemic, according to Future Retail’s 2020-21 annual report, has affected retail in India and Future 7-India has not opened any stores as of March 31, 2021. Therefore, there are had no operating income and the subsidiary suffered a net loss of Rs 17.3 crore in FY 21 versus Rs 9.61 crore a year earlier. Total liabilities of Future 7-India increased to Rs 25.38 crore in FY21, compared to Rs 7.7 crore in FY20, against total assets worth Rs 13, 24 crore.
7-Eleven, owned by Japanese company Seven & I Holdings Co, had more than 71,000 in 70 countries as of July 2021.
The termination of the deal comes as Future Group, grappling with accumulated debt, faces a legal battle with Amazon.com over a deal to sell its retail and wholesale assets to the retail unit of Reliance Industries Ltd. owned by Mukesh Ambani.