The SGF Collapse: How Kewal Ahuja’s Promises Faded and Franchising Failed

The downfall of SGF India isn’t just a story of one brand’s failure—it reflects the larger regulatory vacuum in India's franchise landscape

Franchising in India has long stood as a gateway to entrepreneurship—an appealing model for individuals who want to own a business but lean on the credibility and systems of an established brand. But as the industry has grown, so have its risks. A case that’s now becoming symbolic of these risks is the rapid rise and fall of SGF (Spice Grill Flame) India under the leadership of Kewal Ahuja.

At one point, SGF was seen as a success story: a vegetarian fast-food chain expanding aggressively across cities, projecting high returns and minimal risks. Yet behind the scenes, a different story was unfolding—one that many investors claim ended in betrayal, financial ruin, and legal battles.

The Lure of Assured Returns

SGF’s popularity spiked during the pandemic, thanks to its FOCO (Franchise-Owned, Company-Operated) model. Investors, many of whom had lost jobs or suffered financial setbacks during COVID-19, were promised monthly passive income of ₹37,500 without being involved in operations. The company claimed to manage everything—from staffing and procurement to administration—while franchisees would simply earn.

Promotional materials were polished and persuasive. SGF boasted of over 125 outlets, strong brand recognition, and exponential growth, making it appear like a low-risk investment with high rewards.

Reality Bites: Cracks in the System

However, once the dust settled, several franchisees reported a very different experience. Complaints began pouring in about:

• Delayed openings of outlets

• Inconsistent supply chains

• Poor backend support

• Sudden closures of branches, including the now-infamous Sector 31, Gurgaon outlet

Many franchisees stopped receiving the assured returns altogether. Worse, some stores never saw completion despite full investments.

Financial Irregularities and Operational Red Flags

A deeper look into SGF’s finances raised more alarms:

• No annual filings with the Ministry of Corporate Affairs (MCA) for multiple years

• Absence of GST invoices for significant transactions

• Reports of funds collected from investors not being properly accounted for

This wasn’t just mismanagement—it pointed to systemic opacity and possible fraud. Franchise agreements reportedly lacked clear clauses for dispute resolution, and attempts to contact the company often led to dead ends.

Legal Pushback and Investor Action

Frustrated and financially strained, several investors initiated legal proceedings. Two major lawsuits—CS/DJ/302/2023 and CS (Comm) 6835/2024—were filed in the Rohini District Court, Delhi, demanding compensation and recovery of investments.

While SGF blamed the pandemic for operational setbacks, investors argued that their losses stemmed from intentional misrepresentation and contractual violations—not external circumstances. These legal battles have further revealed discrepancies in SGF’s financial disclosures, raising questions about the brand’s core business ethics.

Allegations of Political Shielding

Adding a disturbing layer to the controversy are accusations of political interference. Kewal Ahuja is reported to hold a key position in a prominent youth political wing in Delhi. Several franchisees believe this affiliation has helped him suppress negative press and avoid accountability.

Efforts to bring the issue to light through media and social platforms have allegedly been stifled, compounding the sense of helplessness among affected investors.

Lessons from the SGF Fallout

The SGF debacle highlights a grim reality: without regulation and transparency, franchising can become a trap rather than an opportunity. It's a stark warning for aspiring entrepreneurs to move beyond marketing gloss and perform detailed due diligence before investing. Critical checkpoints should include:

• Verifying audited financials

• Reviewing compliance history (MCA filings, GST reports)

• Speaking with existing or former franchisees

• Consulting independent legal counsel before signing agreements

  
  

A Cautionary Tale for India’s Franchise Future

The downfall of SGF India isn’t just a story of one brand’s failure—it reflects the larger regulatory vacuum in India's franchise landscape. Until a proper oversight mechanism is in place, more such stories may unfold, putting honest investors at risk.

In the end, what SGF promised in scale, it lacked in integrity. And without integrity, even the most enticing franchise models can collapse, taking with them not just capital, but trust.