OREANDA-NEWS. X5 Retail Group N.V., the largest Russian food retailer in terms of sales (LSE ticker: “FIVE”), announced on October 8 that it signed an agreement in principle to create a joint venture to launch a new franchising program of convenience stores across Moscow, St. Petersburg and their respective regions, the company's press release reads.

The new stores will operate under the brands Pyaterochka-Express and Perekrestok-Express - depending on a store location and size. The anticipated floor space of each store will be between 50 sq.m to 200 sq.m.

The venture will be formed with a group of private investors including Valery Tarakanov, the owner of the Perekrestok-Mini franchises and German Goglichidze, the Chairman of the Board of Directors of the Jack Pot chain of amusement halls.

X5 Retail Group N.V. intends to hold 40% in the venture. According to the terms of the agreement, X5 has an option to purchase a further 30% of the company in 2011 and another 30% in 2013.

It is expected that Mr. Tarakanov, who has extensive experience in running the Moscow Perekrestok-Mini stores will oversee the JV stores operations. As part of the agreement, X5 Retail Group will provide the joint venture with know-how and support in developing the product range, setting up a supply chain via X5’s distribution centers, signing contracts with key suppliers, and introducing modern IT systems.

Commenting on the agreement, Lev Khasis, CEO of X5 Retail Group, said, “The new franchising programme announced today not only strengthens our leading position in the two most important regions of the Russian market but it also ensures convenience for our customers, as part of our strategy focused on long-term multi-format organic growth. It is the first of a number of initiatives we have launched that strengthens our supplier relationships in the retail, agriculture, construction and services sectors. We will monitor the implementation of the programme in Moscow and St Petersburg and on that basis consider rolling it out across the country.”