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Reliance Industries (RIL), controlled by billionaire Mukesh Ambani, is allegedly in talks with quick-service restaurant (QSR) chain Subway Inc to buy its India franchise for $200-250 million (about Rs 1,488-1,860 crore). It's worth noting that Ambani, Asia's richest man, wants a piece of the QSR pie after online shopping, music, online pharmacy, fashion, and furniture.

The American culinary behemoth that specialises in sandwiches operates in India through a network of regional master franchisees. According to a storey in ET, the company is undergoing a huge reorganisation under chief executive John Chidsey to shift headquarters, slash costs, and reduce its global personnel amid plummeting revenues and mounting suspicion of a global takeover.

If the talks go well, Reliance Retail, RIL's retail arm, will have access to a network of 600 Subway stores across India, allowing it to expand its omnichannel ambitions to new markets. More importantly, RIL's entry will increase competition in India's organised QSR sector, as the Mumbai-based oil-to-telecom conglomerate will compete directly with major global brands like Domino's Pizza, McDonald's, Burger King, Pizza Hut, and Starbucks, as well as their local partners like the Tata Group and the Jubilant Group.

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According to persons familiar with the situation, informal offers have been made to private equity firms with significant food and beverage exposure in their portfolios to buy out Subway's local franchisee business.

In 2017, many Indian Subway restaurants attempted to establish a platform and were in talks with financial backers like TA Associates and ChrysCapital to acquire the world's largest single-brand restaurant chain. The discussions, however, were in vain.

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In contrast to the present model of regional master franchisees and their particular networks, the American QSR chain, which serves the popular "$5 footlongs" sandwiches, has been examining ways to reorganise and develop its India company through a single dominating local partner.

Chetan Arora, Sachin Arora, Manpreet Gulri, Rishi Bajoria Gulprit Gulri, and Rahul Bhalla, all from Delhi, are among Subway's primary development agents. The US-based restaurant company hires master franchisees, often known as "development agents," to oversee clusters of fast-food restaurants or sub-franchise locations for smaller partners. One of these partners is Dabur's Amit Burman's Lite Bite Foods.

Subway, a division of Doctor's Associates Inc., does not own a single location in India, yet each franchisee pays the company 8% of revenue. It holds about 6% of the Rs 18,800 crore organised QSR sector in India, with Domino's, the market leader, controlling 21% of the market and McDonald's controlling 11%.

(Source: Times Now)