The plan was that the Compass bid for the international company would give it a third of the shares of the French firm.
But those owning 33 per cent of Eurest France have said non.
Philippe Durance-Daguin of La Societe Civile des Salaries Eurest, the controlling shareholder of Eurest France, said that: "Although Compass has held preliminary discussions with the management shareholders of Eurest France to propose an acquisition of their interest, such a proposal was not acceptable to the management shareholders."
The deal between Compass and French hotel group Accor gives Compass control of Eurest International, which owns a 33 per cent stake in Eurest France.
The chief executive Francis McKay was unavailable for comment, but a spokesman for Compass said that it would not affect the deal for Eurest International.
Even so, the announcement will be a blow to Mr McKay, who last week said he expected to be able to acquire a sufficient interest in Eurest France to gain overall control.
Privately analysts believe that the French company's statement made Compass look too sure of itself. And although Compass had made it clear that there was a need for further discussions on the French part of the deal, analysts say this is not good news. Mr McKay's management style is highly regarded although it was clear that the market felt he had been too hasty with his announcement. Fears were also expressed that this might sour relations with parent company Accor, which now holds a 22.5 per cent stake in Compass.
The link-up between Compass and French hotel company Accor, owner of Eurest International, took a year to negotiate and would have given Compass a 33 per cent stake in Eurest France, the third-biggest caterer in France. However, Mr Durance-Daguin maintained there was no understanding between Compass and the shareholders regarding the sale.
"While further discussions may be held there can be no assurance given that Compass will at any time acquire the interest of the management shareholders in Eurest France," he said.
Compass's arch rival, the French catering group Sodexho, owns 33 per cent in the company, while the management of Eurest France own the balance of shares and control 58 per cent of the voting rights.
Compass's acquisition of Eurest, including the French segment, makes it the world's biggest caterer with around pounds 3m in turnover, pushing Sodexho into second place with a turnover of pounds 2.7m.
Eurest Franceemploys 7,200 staff and serves around 600,000 meals a day in 1,200 restaurants.Reuse content