7-Eleven franchisees have to pay up to stay in business
If 7-Eleven franchisees want to keep doing business under the chain’s moniker, it’s going to cost them, thanks to some controversial new stipulations in the company’s franchise agreement.
7-Eleven franchisees will be expected to pay a $50,000 renewal fee in accordance with the new deal, which goes into effect in 2019, according to the Orlando Sentinel. Stores will also be expected to share more revenue with corporate (up to 59 percent for higher-performing stores) and to stay open on Christmas. The chain asserts that franchise owners made more money last year collectively than ever before. The conflict with corporate has caused concern and outrage at the National Coalition of Associations of 7-Eleven Franchisees convention in Florida.
The latest blowback against 7-Eleven corporate is not the first big disagreement between franchisees and the home office.
Late in 2017, the same 7-Eleven franchisee group holding the convention (which represents almost 7,000 U.S. stores total) sued the parent company, according to Convenience Store Decisions. The lawsuit alleged a power grab by management that was removing stores’ ability to hang on to money they generated, causing franchisees to take a hit on pricing and cover credit card processing costs among other complaints.
But the lawsuit, which hinged on the organization’s belief that franchisees were mischaracterized as independent contractors rather than employees, according to CSP Daily, was thrown out earlier this year. The court concluded that a franchisee agreement alone does not create an agency or employment relationship.
The changes to the franchisee agreement come in the wake of some other unprecedented moves from the home of the Slurpee. In January, 7-Eleven announced the acquisition of 1,030 stores previously owned by Sunoco. This represented the largest acquisition in 7-Eleven’s history, boosting the total store count up to around 9,700 in the U.S. and Canada.
The chain has also been pursuing technological enhancements to keep pace with rising customer demands for convenience. Last year, 7-Eleven began testing a mobile app at 10 locations in Dallas, Texas that allowed for pickup and delivery.
- 7-Eleven at odds with franchisees over new agreements – Orlando Sentinel
- What will 7-Eleven do with all its new stores? – RetailWire
- Franchise Owners Sue Parent 7-Eleven – C-Store Decisions
- Judge Dismisses Franchisee Lawsuit Against 7-Eleven Inc. – CSP Daily
- 7-Eleven goes omnichannel with mobile, BOPIS and delivery – RetailWire
DISCUSSION QUESTIONS: Is making increased demands on franchisees a good move by 7-Eleven corporate or has it fallen out of touch with the needs of the individuals running the convenience chain’s stores? What can other chains operating on a franchise model learn from this situation?