Future Retail terminates franchise agreement with 7-Eleven

Future Group, which had entered into an agreement with US-based convenience store chain 7-Eleven in 2019 to open and operate its outlets in India, has terminated its agreement with the company citing the inability to “meet the target of opening stores and payment of franchisee fees.”

“Pursuant to Regulation 30 and other applicable provisions of SEBI Listing Regulations, we would like to refer to Master Franchise Agreement dated 28th February, 2019 executed between Future7-India Convenience Limited, Company’s wholly-owned subsidiary (“Future-7”) and 7-Eleven INC, and also executed by the Company and Future Corporate resources Private Limited (“FCRPL”) as confirming party and Controlling Principal for developing and operating 7-Eleven stores within India, is now terminated pursuant to execution of Mutual Termination Agreement (“the Agreement”) executed among the Company, Future-7, 7-Eleven, INC and FCRPL on 05th October, 2021,” the company said in a regulatory filing on Tuesday.

Future Group had inked a master franchise agreement with 7-Eleven in 2019 to open about 1000 stores in India. The company planned to launch five-seven stores in Mumbai initially in 2020. Future Group wanted to customise the stores for India and also offer food items and breakfast, lunch, and dinner at these stores. However, according to reports, its plans were stalled due to the pandemic.

7-Eleven, owned by Japan-based Seven & I Holdings Co, operates over 70,000 convenience stores across the world.

The termination comes amid the Future Group’s massive legal battle with e-commerce behemoth Amazon, over its deal with Reliance Industries. Debt-ridden Future Group, which operates several modern trade store chains including Big Bazaar, Foodhall, and Nilgiris, had sold its retail business to Reliance Industries last year for Rs 24,713 crore. The sale would have allowed cash-strapped Future Group to stay afloat. However, the deal is yet to fructify due to e-commerce major Amazon’s objection to it. Amazon contests the deal claiming that a prior agreement with the Future Group entitled the company to pick up a stake in Future Retail at a later date. Amazon in 2018 had bought a 49 percent stake in unlisted Future Coupons Private Limited.

The two companies have been embroiled in legal battles since last year after Amazon moved to Singapore International Arbitration Centre (SIAC) to block the sale of Future Group’s retail assets to Reliance Industries.

In the most recent turn of events, the Supreme Court of India in August gave a verdict upholding the validity of the Singapore-based Emergency Arbitrator’s award in India, which had blocked the deal after hearing both the parties last year. SIAC is yet to give its final verdict on the matter.
On September 9, Amazon had approached Delhi High Court seeking the implementation of the emergency arbitrator’s award. However, the Supreme Court intervened, on Future Group’s appeal, and ordered a stay on the proceedings of the ongoing Amazon-Future Retail case before the Delhi High Court for the next four weeks. The apex court also directed the National Company Law Tribunal (NCLT), Competition Commission of India (CCI) and Securities and Exchange Board of India (SEBI) to not pass any order on the matter.

In another development, last week Reliance Industries extended the deadline to complete the buyout of Future Group’s retail assets by six months. The oil-to-telecom conglomerate had earlier extended the deadline for the Rs 24,713 crore deal by six months in April.

Future Group’s future meanwhile hangs in balance as it stands on the brink of bankruptcy with Rs 21,000 crore in debt.

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