Franchise Mirage – The Rise and Fall of SGF india under Kewal Ashwani Ahuja

Indian franchising industry has been a ray of hope for aspiring entrepreneurs to start their own ventures with reduced risk, particularly in times of recession. Among the several brands that had emerged, SGF (Spice Grill Flame) India stood out for its commitment to profitability and support. Under the leadership of Kewal Ashwani Ahuja, the company rolled out its vegetarian food chain into numerous cities at a whirlwind speed. This whirlwind speed expansion, however, soon got replaced by mounting charges of mismanagement, financial fraud, and unfulfilled promises. This article examines the rise and decline of SGF India, focusing on the misleading franchise model that put numerous investors in trouble and left them disappointed.

Kewal Ashwani Ahuja

The Charm of SGF’s Franchise Model

SGF India entered the market with two franchise models: FOFO (Franchise-Owned, Franchise-Operated) and FOCO (Franchise-Owned, Company-Operated). FOCO model was of special interest during the COVID-19 pandemic as it gave passive returns to investors with zero or little exposure to the food and beverage sector. The investors earned a fixed return of ₹37,500 every month as the company managed day-to-day affairs such as manpower, material, and administration. The model was particularly appealing to individuals who were impacted by pandemic-triggered job loss or financial instability, promising them a chance of secure returns in a shaky economy.

Franchisees were attracted by the prospect of brand power, simplified operations, and fast profitability. SGF even boasted of having set up 125+ stores in India, a figure which instilled confidence in prospective investors. Marketing brochures and videos were replete with testimonials, glossy promotions, and customer loyalty talks, all painting an extremely assuring picture.

Faults in the Facade

The dream fell apart when the franchisees began to have problems soon after they opened shop. The majority of them went through delays in getting supplies, inconsistency in the support from the management, rampant turnover of workers, and eventually, losses. The most heavily quoted was the Sector 31, Gurgaon store that was closed within a year. The closure was sudden and mysterious, and the franchisee ended up with bills that were unpaid and no refunds.

The company also disclosed financial irregularities. SGF never filed annual accounts and reports with the Ministry of Corporate Affairs (MCA) for more than two consecutive years. The collections from franchisees were reportedly not disclosed in statutory filings. The company was charged with not issuing GST invoices for various transactions with high amounts, with charges of tax evasion and diversion of funds.

These issues were worse than ill omens; they were signs of possible systemic deceit. Franchisees had no option, since many franchise agreements reportedly lacked cleared dispute resolution mechanisms or accountability clauses. A call to company representatives typically was useless, and customer service was practically non-existent.

Legal Encumbrances and Investor Backlash

A couple of investors, tired of the unaccountability and absence of transparency, initiated legal action against Kewal Ahuja and SGF. Two such suits—CS/DJ/302/2023 and CS (Comm) 6835/2024—were instituted in the District Court of Rohini, Delhi, for compensation for lost monthly returns as well as for recovery of investment amounts in full.

Before the court, SGF’s defense had been on the financial consequences of the COVID-19 pandemic, but they had asserted that business operating losses were unavoidable. But franchisees complained that they incurred losses owing to company’s deliberate misinformation, careless operational planning, and contractual breaches, rather than the pandemic. The court exposure revealed inconsistencies in the company’s ledgers and challenged the credibility of their business model.

Political Connections and Perceived Influence

Yet another unsettling dimension to this developing story is political influence. Kewal Ahuja is said to be the treasurer of a high-profile youth political party in Delhi. Franchisees and critics accuse him of using this political affiliation to insulate himself from accountability, cover up negative publicity, and muffle whistle-blowers.

Efforts by the franchisees to ventilate their grievances in public and media forums were methodically useless. This alleged suppression was reportedly due to pressures from political connections. This not only added to the sufferings of the investors but to emphasizing the threat that unchecked power presented to the silencing of real grievances.

The SGF India case shows the dirty side of franchising in India, particularly when there is no regulation, transparency, or accountability. It shows how innocent first-time investors get caught up with even the most apparently genuine propositions that promise easy returns. It is an eye-opener for young entrepreneurs to seriously do their due diligence on everything before signing a franchise agreement, including balance sheets, tax compliance, and other past experiences of other franchisees. The failure and destruction of SGF India during Kewal Ahuja’s tenure serve as a severe reminder that even the greatest business propositions can prove to be expensive errors when ethics is not adhered to.