Why 7-Eleven Franchisees May Have to Pay Another $50,000 and Work on Christmas
Would you pay $50,000 to maintain profit rates? That’s the conundrum for 7-Eleven franchisees.
7-Eleven is a staple of the Â鶹Éç Franchise 500. In 2017, 7-Eleven was ranked as our top franchise, and this year it’s No. 2. However, according to an article by , the tension between the company and its franchisees has been growing for years.
Franchisees cite several reasons for that tension, including requirements that force franchisees to carry 7-Eleven-branded items — which tend to carry higher margins, but often underperform compared to name-brand competitors — and an evolving revenue-sharing model.
“It’s no longer, “You make a dollar, we make a dollar,'” Michael Jorgensen, the owner of three stores in Florida, told The Times.
7-Eleven has offered its franchisees the chance to lock in current profit-sharing rates, with a couple of catches:
- Franchisees must agree to keep the store open on Christmas. According to The Times piece, only 1.7 percent of franchises close for Christmas, and it’s one of the company’s best-performing days of the year.
- Franchisees must pay a $50,000 franchise renewal fee. That number can, in some cases, be more than the total investment for a 7-Eleven, which ranges from $37,550 to $1,149,900. According to The Times, regulatory filings show that for the 65 stores in the Northern Chicago region, average revenue was between $971,000 and $1.8 million last year; gross profits were between $353,000 and $655,000. However, those numbers can vary depending on store, location and more.
What would you do in this situation? Would you be willing to pay $50,000 to maintain profit-sharing rates or not?
Related: 24 Top-Ranked, Affordable Franchises You Can Buy for $25,000 or Less
7-Eleven franchise information
- CEO: Joseph DePinto
- Business headquarters: Dallas
- Franchising since: 1964
- Initial investment: $37,550 to $1,149,900
- Initial franchise fee: $10,000 to $1,000,000
- New units in 2017: 3,336 units (5.7 percent)
- Training: 240 hours on the job, 24 hours in the classroom
- Marketing support: Co-op advertising, ad templates, national media, regional advertising, social media, SEO, website development, email marketing, loyalty program/app
7-Eleven is a staple of the Â鶹Éç Franchise 500. In 2017, 7-Eleven was ranked as our top franchise, and this year it’s No. 2. However, according to an article by , the tension between the company and its franchisees has been growing for years.
Franchisees cite several reasons for that tension, including requirements that force franchisees to carry 7-Eleven-branded items — which tend to carry higher margins, but often underperform compared to name-brand competitors — and an evolving revenue-sharing model.
“It’s no longer, “You make a dollar, we make a dollar,'” Michael Jorgensen, the owner of three stores in Florida, told The Times.
