Market Overview

7-Eleven Franchisees Gather as Corporate Moves to Reduce Store Owners' Profits

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Over 1,100 7-Eleven Franchisees will convene in Orlando next week for
the annual convention of their independent franchisee association,
NCASEF (National Coalition of Associations of 7-Eleven Franchisees). It
comes at what may be the most tumultuous time in the history of the
company.

The theme of this year's convention is, "Franchisees are the Brand." It
is bold idea guiding the nation's more than 5,000 store owners, whose
love for the brand is reflected in the exemplary way they run their
businesses. But, it has become increasingly clear the corporation does
not share that sentiment. 7-Eleven has unveiled a new Franchise
Agreement, which thousands of operators with agreements expiring in 2019
and 2020 must sign. The company is applying heavy pressure for
franchisees to sign the new agreement by the end of this year. Its
provisions run counter to what CEO Joe DePinto told his company's
magazine about 7-Eleven operators. "Franchisees know their customers and
business better than anyone," he said.

The new agreement is DePinto's first as CEO and the first since 7-Eleven
Japan has taken ownership, and it further enhances the pervasive control
7-Eleven already exercises over its operators. For years, the company
has been eroding franchisee profitability by increasing operating costs.
Now, 7-Eleven is aggressively advising franchisees to sign the new deal
immediately before its terms get worse.

Jay Singh, Chairman of the National Coalition, says the agreement
reflects the company's greed and fails to address franchisee concerns as
outlined in a 27-point memo delivered to the company earlier this year.
"We outlined for the company the most important issues facing
franchisees, but the agreement they have presented us with lacks
understanding of the very real issues which are impacting franchisee
profitability and quality of life," Singh said. "The agreement they are
offering will make it increasingly more difficult for our franchisees to
realize a profit for their hard work and dedication to the 7-Eleven
system.

Some of the most egregious issues in the new agreement include:

  • A $50,000 franchise renewal fee, which is among the highest franchise
    renewal fees known to exist in any franchised system in the U.S.
  • A new Graduated Gross Profit Split that gives 7-Eleven as much as a
    marginal 59 percent share off the top, even as franchisees must absorb
    higher operating costs.
  • Franchisees are responsible for maintaining aging store equipment that
    they don't own and which 7-Eleven won't replace.
  • No guarantees that the cost of goods franchisees receive from the
    7-Eleven supply chain will be lower than what they could buy at a
    local big-box retailer.
  • One-sided legal provisions that force franchisees to: pay 7-Eleven's
    court fees even if they win their case, give up their right to a jury
    trial and be subject to the governing laws of the state of Texas
    regardless of where they operate their stores.

More franchisees have registered for the 2018 conference than for any
previous convention, which, according to Singh, is a result of 7-Eleven
operators' uncertainty and apprehension surrounding the new agreement.

The National Coalition convention is being held July 23-26 at the Gaylord
Palms Hotel and Convention Center
, 6000 Osceola Parkway, Kissimmee,
FL. Media are invited to attend. Please contact Darcie Fisher (contact
info below) to facilitate interviews: darcie@ellisstrategies.com
| 774-281-3506
.

About the NCASEF: The
National Coalition of Associations of 7-Eleven Franchisees
is
the national trade association for 7-Eleven franchise owners.
Originally
founded in 1973, NCASEF is comprised of 44 Franchise Association members
who represent more than 4,600 7-Eleven owners in the U.S.

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