Ex-franchisee partner accuses Yum! India, PE firm of cheating and extortion

A former franchisee partner of Yum! India, which runs a slew of quick service restaurant (QSR) chains, has filed a case of cheating and extortion against top officials of the company and private equity firm Samara Capital, according to a media report.

Yum Restaurants India Pvt. Ltd is the owner and operator of a chain of brands like Kentucky Fried Chicken, Pizza Hut and Taco Bell.

Citing a first information report (FIR) registered at the Uttam Nagar police station in Delhi last August, a Forbes report said that a case was filed under sections of the Indian Penal Code related to extortion, cheating, criminal intimidation and conspiracy.

“The accused persons, in collusion with each other, committed extortion and cheating on me and other directors of ANTPL by inducing/forcing us to deliver the entire business, which was valued for more than Rs 208 crore, at a meagre sum of Rs 95 crore,” the report said citing Sharma’s allegations.

Greg Creed, global CEO of Yum! Brands, is also named in the FIR.

Yum! India has denied the allegations.

“ANTPL is a former franchise partner with whom we ended our relationship after it defaulted on payments to Yum!, vendors, real estate owners, employees,  and towards its statutory liabilities. Yum! had also intervened on its behalf to clear outstanding tax liabilities,” the company said in an emailed statement.

An email query sent to  Samara did not elicit an immediate response.

The 2015 deal saw a consortium of investors, including private equity firms Samara, CX Partners and IDI Emerging Market Partners besides Goldman Sachs and others, acquire a set of QSR and casual dining outlets under the Kentucky Fried Chicken (KFC) and Pizza Hut brands in India.

As per the deal, the investor consortium bought 117 KFC outlets and 91 Pizza Hut restaurants from American fast food restaurant company Yum! Brands, Inc and its franchise partners.

Other persons mentioned in FIR include past employees at Yum! India such as former president Niren Chaudhary, former chief financial officer Ankush Tuli, former vice-president (finance) Gaurav Tewari, former director-franchisee affairs Nagesh Shetty, former director-supply chain Rajesh Shetty.

Besides the former employees, the FIR also names Sajan Thomas, former general manager of AN Traders Pvt Ltd; Sumeet Narang, founder of Samara Capital and director of Sapphire Foods India and Samara Capital Partners Fund II, according to the report.

Earlier this year, VCCircle reported that Sapphire Foods India Pvt. Ltd, one of two franchisees for Yum! Brands Inc.’s KFC and Pizza Hut outlets in India, had hired a banker to raise funds for expanding the two fast-food chains.

The other franchisee is Ravi Jaipuria-owned Devyani International.

Yum Restaurants India Pvt. Ltd reported a total income of Rs 706 crore in the financial year 2015-16, according to VCCEdge, the research arm of NewsCorp VCCircle.

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