5 Things you HAVE to know before buying a 7-Eleven!

This is written for anyone that might be interested in purchasing a 7-eleven convenience store in the United States. 

When you are given the 200 page Franchise Offering Circular (The rule book), it can be very difficult to understand all of the “fine print”. 

So here is some of that fine print in laymen terms:

 

1. 7-Eleven will take AT LEAST 52% of your profits.

The company advertises that they take 50% of your profits, but read closely … depending on your sales and profits around 2% of your profits will go towards advertising! (Have you seen a lot of commercials on TV? Neither have any of the 7-eleven franchisees ) )

BUT WAIT there’s more, depending on your store profitability you will have an even worse profit split. That’s right, the more you make, the more they charge. It is possible for a high sales volume store to end up only keeping 43% of their Gross Profit … So think hard before you buy that “great” store.

 2. 7-Eleven Franchise Agreement can change at any time

Just because your contract says it’s good for 15 years, when the next agreement comes, it will be pushed on you hard, sign it or go on the shit list (kind of thing). Also, even if you don’t sign it, when you sell your store, the incoming franchisee has to sign it which could easily decrease the value of your store. As an example, in the most recent franchise agreement upgrade, (as I mentioned before) the high gross profit making stores GP split has been changed from 50, 50 to 43, 57 – in favor of 7-Eleven.

3. Buying a 7-Eleven = Buying yourself a job

Don’t have any misconceptions, you’re not going to be a business owner, you’re going to be a manager who is told how to run his store, what he can and can not do and like I said in point #2, the rules of the game can change at any time.

4. 7-Eleven’s are almost impossible to run hands off

For those of you who think they can buy a store, hire a manager and forget it … those days are long gone. The company has put in place strict requirements for you to be present at your store. They do this through a combination of twice weekly meetings with you field consultant, and by having a technologically cumbersome ordering system. Though it’s “state of the art” it requires roughly 15 man-hours a week for the experience order writer. You can trust a store manager only so far, as many franchisees in the past have learned that it is possible to come back to an empty store P . Roughly once a year owners hear a story of a store manager, printing up 100 money orders and taking off to another country. So aside from having a large family who are not qualified to do anything better, you are stuck verifying store operations on your own.

5. 7-Elevens have an income CEILING

This is not a business you want to go into if you are dreaming of making MILLIONS. It is very possible to estimate your exact income from a 7-eleven, as a rough guide you can use 5% of sales. This however is not a perfect measure because as sales go up so do expenses, and as sales go down, so do expenses… It is very possible that a Franchisee owning a $1.3 mil store to make the same as a $1.7 mil store. (–They don’t tell you this during your interview–)

 

By now you’re probably thinking, who the hell would want a 7-eleven? Well I’m here to give you a completely impartial story, so stay tuned for the next post on reasons to buy.

——–

If you are considering purchasing a 7-Eleven and would like unbiased answers to all of your questions as well as advice on specific store locations:

You can reach me at: c-store-expert@greatconsult.com

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58 Responses to “5 Things you HAVE to know before buying a 7-Eleven!”

  1. Alex Says:

    Your blog is interesting!

    Keep up the good work!

  2. cstoreguru Says:

    Thank you! Sorry for the slow response, your message was sent to the spam folder for some reason.

  3. Cai Says:

    Well, I was just wondering how did you know so much about 7-eleven?

    Did you have any past work experience in that franchise?
    Anyway, you sound professional indeed.

    So, csstore, if you are given a choice to run a franchise, which one is it going to be?

    Thanks

  4. Cai Says:

    Sorry, didn’t see your introduct, District Manager (Consultant) :)

  5. Inquiring Mind1 Says:

    After reading this post I am concerned about the 7-eleven franchise opportunity that I was looking into. I was considering it because the start up costs are not of the charts like McDonalds or KFC to name a few. Are there any you reccomend?

    • shrimic Says:

      # 1. If 52 % sound like a huge cut compare it other leading francising like Subway & others where you have pay 12.5 % on the sales, 7 to 8 % on add and on top of that you have to bear the rent and utilities. If 7 Eleven is not a great francise for the money you are investing, please name a franchise that is ?

      # 2. 7-Eleven Franchise Agreement can change at any time : Any franchising agreement can change at any time or any economy or govt. policies can change any time too. what are you going to do on that?

      # 3. Buying a 7-Eleven = Buying yourself a job : Well, if that’s true you must be very lucky when compared to job lay-offs that’s happing in this economy. Atleast you have a job & power to make a basic living which I consider is better than getting fired or working 9 to 5 for someone else following the orders of our ” Boss “. No matter how much you make you would’nt get the felling of being your own boss.

      # 4. 7-Eleven’s are almost impossible to run hands off : Why would anybody in the world will think of investing 250k (as an example) in any kind of business for that matter and expect to stay home or go on a vacation ? Its like buying a brand new Mercedes and giving it away ! If you are ready to invest on a business means you must be ready to take care of it as well…if not, do not invest. There’s no business in the world or will ever be a kind that you just invest & stay home. If so please specify ?

      # 5. 7-Elevens have an income CEILING : Every Business in the world as its own potential. you don’t expect to make millions buy investing in low budget franchisings like 7 eleven. Franchising a Mcdonald’s or a pizza hut and other popular fast food brands takes at least a million $ to start, do you expect becomining a billionaire in some years ?

  6. cstoreguru Says:

    Inquiring – I’m not saying that 7-Eleven is a bad franchise … I think the choice of franchises depends greatly on the potential franchisee … their interests, lifestyle, and expectations.

  7. Sohail Says:

    I use to have Franchisee store but omg they were pain in -@$$. i can imagine how this 7-11 can rip apart you … Thanks for writing this intresting facts ..

  8. DYEN Says:

    i was so excited abt thinking to own a 7-11, but their hidden behaviors seems like scary. Just like u have told that The owner actually will be like a manager of the store working under heavily restricted rules( I completely understand what u ment though)
    How friendly or bad these cooperate people are regarding giving u a pain @ the A.s.

    Plz advise , i am so fonfused now….

    i would highly appreciate for your any kind of response

  9. prateek malhotra Says:

    where you can find loans for buying 7-11 franhise. can somone help me

    • Recruiterguy Says:

      7-Eleven finances (internally) up to 70% of the franchising fee for franchise applicants with approved credit (700 or better

  10. Jean Says:

    I am interested in buying a 7-eleven franchise myself, I already submitted the application. I have a question .
    I understand if you only own 1 store, you will be working as a store manager for the company. If you really want to make money you must own more than 1. What are the rules to own more than one store? Is it possible?

    • cstoreguru Says:

      Jean – Owning one store does NOT make you a store manager for the company. It does typically mean that you’re buying yourself a job. You are still a franchisee, but to maximize your income you will be doing various duties at store level to save on payroll. To purchase additional stores you will need to follow the 7-Eleven multiple store purchase criteria and guide, and of course you’ll need to have the money to purchase additional stores.

  11. JAY Says:

    REASON # 6

    After speaking to some store owners, I understand that the overnight operations aspect is a big nuisance.
    Should we add Reason #6 – Be prepared to work night shifts too?

    By the way, I think your insights are wonderful and extremely accurate. Pretty much I am coming to very similar conclusions to yours after my own research.

  12. Mizz Edee Says:

    Franchising my store in Lake Tahoe provided me with an income to enjoy the Tahoe lifestyle and raise my children in a great environment. It is important to make sure you purchase a “high volume” store in an area that has consistent income. It is not an easy business but it has its rewards.

    • Richard Says:

      I am looking at a store currently, what would u consider a high volume? This particular store is doing 1.2M and is only branded 1 year, so it’s still growing. Do u consider this a high volume? Thanks regards, looking.

  13. Omar Says:

    Basically if you don’t have job just buy your self a job and steady income. if you have cash what ever she described and you will have job for sure. it’s not that bad for those who don’t have job. you wont be a boss but technically you are running that place. either way you want to owner off any type of business get ready to hustle. either way you will be waking up middle of the night cause you have invested that much.

  14. Unnamed Franchisee Says:

    Reason #7:
    Training: Although it is not listed in the agreement i have found that recommended training for 4 trained order-writers is essentially mandatory training. The biggest part of the training is for each employee is the time they spend on the computer. The training time for each employee can run up to 40 hours/each depending on the training course and employee computer literacy level. Considering the high employee turnover and low quality of employees available to work at the store this is a costly investment, both in the franchisees time and money. The training is outdated and not very mundane.
    After taking the training an employee is not even able to use the “MOT” to load up an order, let alone order. The training is cumbersome and ineffective to say the least. It focuses on the fact that ordering should take a long time and to do it slowly. While i find that those ideas maybe suitable for the franchisee I dont see why employees should be exposed to this kind of mentality. I want my employees to work fast and efficiently.

    • cstoreguru Says:

      Great comment!!! You’re absolutely right in certain parts of the country, but not others.

      In the Bay Area, where I’m from, what you’re saying is dead on. Franchisees can’t afford to pay their employees much more than a minimum wage, so the result is usually poor/unskilled employees and high turnover (both of which makes 40 hours of paid training quite wasteful). On the other hand, if you go to the midwest where a 7-Eleven employee makes enough (with the aid of their spouse) to actually support a family and buy a home, and now training that employee makes a lot more sense.

      And of course the amount of access you give to that employee for uploading orders and utilizing the system is completely up to you as a franchisee.

  15. jakoh1 Says:

    The new agreement ends in 10 years or whenever your lease ends, whichever comes first (usually the lease if the building in not owned by 7-eleven). Also a 20% franchise renewal fee has been added if your agreement lasts 10 years.

  16. jakoh1 Says:

    extension of reasons 2 & 3
    Employee Training: Although not explicitly listed in the agreement the recommended training for 4 and preferably more employees is essentially mandatory (or you are on the “shit list” as the cstoreguru says above). The biggest part of the training is the time spent on the computer. The training time for each employee can run up to 40-80 hours depending on the training course and employee’s computer literacy level. Considering the high employee turnover and low quality of employees available to work at the store this is a costly investment, both in the franchisee’s time and money. And because you want to retain trained employees, than go through retraining, training comes at a higher payroll cost for the trained employees than expected.

  17. Workinboy Says:

    We are over ten year multiple franchisees of 7-Eleven. With the changes which have taken place since the “Japanese” (7&I Holding Company, under Mr. Sezuki) have taken the company private, I wouldn’t take another store if they waived all costs to do so. I believe 7-Eleven is in the convenience industry, but no longer really in the convenience business. They seem to want to operate like a corporation with the franchisees having the financial liabilities. And cstore is right, they think they can change anything, anytime they wish regardless of the financial consequence to the franchisee. If you are thinking of franchising with 7-Eleven, DON’T DO IT! Ask a reputable franchising attorney to fully explain the consequences to you and you will look elsewhere….. BUYER BEWARE!!!!

  18. Khalid Says:

    This is very true that there is no money coming at the end of the month. For the last three years, I had to pay back four times large amouts to pay back to equit account due to more expanses than income. Also, monthly checks will not be more than four to six hundred dollars after profit splitting.

  19. James Jones Says:

    Credit Card Fees, that can be another 2-3%, should be added on to Reason #1.

  20. Victor Says:

    cstoreguru, great stuff! I really like this blog/website. I notice that it isn’t being updated as much, did it move to another url? I am opening up a closed down convenience store. It had been a store for the past 30 years and the owner made some bad financial decisions on another business and was forced to close it down. I am buying the building for approx 100K (3000 sq ft) and will open up a store again with new items (the previous owner didn’t stock convenience items)

  21. Workinboy Says:

    THE 7-ELEVEN BUSINESS MODEL AS IT IS CURRENTLY BEING APPLIED IS THE BENCHMARK JUSTIFICATION FOR SOLICITING FAIR FRANCHISING LEGISLATION, BOTH FEDERALLY AND STATE BY STATE. THE ABUSES ARE SO GREAT THE INTRUSION INTO THE “MANNER AND MEANS” OF THE DAY TO DAY OPERATION HAVE DILUTED THE MEANING OF “INDEPENDENCE CONTRACTOR” TO THE POINT THAT IT NO LONGER FITS THE STATE OF CALIFORNIA PARAMETERS WHICH DEFINED IT. IF YOU REALLY WANT TO BUY A 7-ELEVEN FRANCHISEE, I HAVE TWO GREAT LOCATION I WILL SELL YOU, BUT I AND OUR ATTORNEY ADVISE YOU TO THINK TWICE, THREE TIMES AND THEN TAKE A MONTH OFF AND THINK AGAIN. BUYER BEWARE!!!!!!!!

  22. weezer4up Says:

    How does one go about getting a new product in a 7-eleven? I know there is a form to fill out but couldn’t each store owner decide if they wanted to add a product instead of having to go through corporate?

    Thanks!

    • Recruiterguy Says:

      A franchisee can bring up to 15% of store inventory in, from whomever they want. In other words, a franchisee must use 7-Eleven vendors for 85% of thier inventory…but, if you have a location next to the local pro sports venue and want to bring in team stuff (hats, banners, etc), you can do so.

  23. Anonymous Says:

    Reasons 7-Eleven is franchising aggressively. They are hiring a “manager” who can NOT quit without losing his investments. They are washing their hands off the biggest expense and headache – payroll and employees. They don’t have to worry about health benefits and laws and rules applied to big corporations. It is a win win situation for THEM. They are screwing the franchisees by forcing them to buy from ‘recommended vendors’ with small gross profit margins. I bet there is funny stuff going on with ‘deals’ and kick backs cloaked as commisions, bonuses or another label to the company. You may make more money buying from Krogers and reselling!

    Most of the unnecessary paperwork and cumbersome and manpower expensive ordering system is to ensure that they are trying to keep you honest for their benefit. There are no safeguards for your benefit. YOU are responsible for their or their suppliers’ mistakes.

    The reason most people buy this franchise is relatively small initial investment and job security. If you can afford it, buy an independent business. Do NOT be foolish enough to fall in their honey trap. EVERYTHING is stashed in their favor.

    If you choose to franchise, contrary to the advice, go for a higher volume store with at least 1.5m in sales. Even with lesser GP share, it is a better investment.

  24. Amit Says:

    I am looking into buying a location in either Florida or Texas. I currently live in California but the cost to purchase an existing store here is just too expensive. I know 6 franchisees who have been in the franchise from 2-15 years and all of them are making money. The initial investment is high, the job is not NOT easy, corporate is on your ass but it is all jusitifed. The investment is high, but so is the return; the average franchisee will take hom 5-9k per month – YES, take home. The job is not easy; nothing that has a reward is easy. Would you rather work an 8-5? Corporate is on your ASS – this is why 7-eleven is so sucessful. customers no they can get what they want and don’t have to walk into an independent liquor store that has limited items available and a setup they are not familiar with. If you keep your store clean and run it effeciently, you’re off the radar and your FC wont trouble you. The only complain I hear about is that most franchisees get pressure from corporate to open another location. Again, this is only what I have heard but I have seen people around me change their lifestlye and it is directly connected to the business. Food for thought….

  25. Keith Carpet cleaning sydney Says:

    Very interesting i think i will give them a miss thanks for the tips

  26. Recruiterguy Says:

    Interesting Blog filled with interesting comments. As a Franchise Recruiter for 7-Eleven I will be the FIRST to tell you that it is NOT a franchise for everyone. By all means, if you are considering a 7-Eleven franchise, DO check it out totally and talk with as many different people as you possibly can…you WILL hear the good and the bad. Many people run from the idea and the concept – while many others THRIVE as true Capitalist/Entreprenuers. As an example: Presently, as 2011 ends, we have 7,400 locations in the USA. The Franchise agreement runs 10 years. For the last 4 years, GUESS the average percentage of Franchisees who decided NOT to renew their agreement at the end of the term? It’s LESS than 2%. I feel that figure speaks volumes about the happiness (and maybe profitability) of 7-Eleven franchise holders.

    • Max Says:

      I’m now retired (2006) with 40 yrs of experience in the grocery industry. I’ve worked for Southland Corp in the 1970′s as a Field Rep (now referred as a Field Consultant) Also I’ve been a franchised owner of two 7-Elevens and have noticed a huge change in the owners attitude toward the corporation. This has been due to the large decrease in the owners income . Gas income used to be 25% of the gross profit and now I believe it’s about 1-2 cents per gallon. Also the owners gross profit has been reduced an average of 3-5%. I used to make 52% GP in the 70′s and 50% in the 2000′s. The new contract has resulted in the owners being a glorified store manager. I’m just happy to be retired. Oh, and only 2% don’t renew their agreement because most owners of decent volume stores sell rather than walk away. It’s the low volume store owners that don’t renew.

  27. Richard Gannett Says:

    There is nothing being said here that isn’t widely applicable to all franchises. The FA is always geared to the franchisors favor, nothing new or burdensome there. Frankly, franchising simply isn’t right for everyone. Given the way they operate, if you can make $50k a year with a small investment, its not a bad deal, but not for everyone. If you have a spouse or kids then it can become a really good family business. So don’t let the naysayers send you away fro 7-11. Do your own due dilligence, talk to franchisees and then make your own educated opinion.

  28. Kumar Says:

    I chanced upon this website, in my quest to get more information on buying a 7-eleven store.

    After perusing through the information, it has become clear to me, that 7-Eleven is not for me. I was looking for building a business, but 7-Eleven is basically, buying yourself a job. Doesn’t mean that 7-Eleven is not suitable for anyone. Its suitable for some but not all.

    Thanks Guru for maintaining this website.

  29. Sunny Says:

    Hey everyone, I’m actually in the process of taking over my own store with my sister she is actually the Franchisee and I will be the manager and help out with daily operations and everything. I’m actually excited I know we have bought ourselves a job but running mom a pop shops isn’t for me. My dad has owned Stride Rite Franchisee to a Dollar Store that failed. I know for a fact that 7-11 will be in business for hundreds of years and I’m investing his money right. I’m young just turned 21 and can’t wait to take up the opportunity.

  30. sean Says:

    I would like to mention that a owner will make 7% of sales if the store is doing $1.2million, which in CA is the case then the owner can expect to make 7% currwntly I own a store in Southern CA and i too have been fed up with 7-eleven system. I have low sales so the split for now is 52 and 48 in my favor bit I know once sales pick up they take more. The meeting once a week is complete bull shit. thwy push the franchisee to get new products and they mention they r more experience I. this field, so forth. Anyway, overall an owner will make easily $60 to 70k on a 1.2 mil store

  31. George Edward Says:

    THE DEVIL IS IN THE DETAILS! I can certainly understand the negative comments above however, 7-11 does offer many opportunities to many middle class families to own a business. I have ran businesses before and you have to be on the ball all the time and can not turn your back. However, contracts are subject to change is correct however, contract changes are usually due to negative performance. No money making, well run business will be changed, everyone has a stake rather it be the owner of the store or 7-11. Part of many failures in business is your eye off the ball. Too succeed in any business you must be your own champion and that may mean 80 hour weeks and sleepless nights. The bottom line, know what your signing, understand everyone wins if a mutual understanding relationship.

  32. sunny Says:

    this business is not for faint harted people,they r talking about 7-11 problem think about customer they are going to steal left and right in your store. you cant do aything. i myself is franchise beware of 7-11

  33. Jae Says:

    Hi everyone,
    If I wanted to make 78000 a year after taxes at seven eleven, the store would probably have to make around 1560000 right? How much would a seven eleven store that makes 1560000 sell its goodwill for?

    • Petre Says:

      Jae,
      Sorry to break your heart but if a store’s total sales are 1,560,000.00 your gross, that’s right gross would be approx. $70,000.00. In order to take home $78,000.00 after taxes your store beetr be at $2.5MM yearly sales. In the 7-11 world that is rare.

      • cstoreguru Says:

        Petre… that’s a bit pessimistic for most of the country. With a $1.56mm and a typical 35-36%gp a franchisee should have about $100K take home before taxes. I am aware that there are stores with significantly lower GP%, in which case you’re absolutely right.

  34. Anonymous Says:

    is that true that you can’t have another business if you own 7-11?

  35. Stacie Collins Says:

    Is health insurance available through the corporate 7-11 or are you considered a small business and are on your own with that? I’m also wondering if you have to “ask” for time off from corporate or is that left up to what you feel your franchise can handle payroll wise?

  36. Mahendra Amin Says:

    what is the distance requirement between the two stores of seven eleven and how are they measured?? From door to door or let me know?

    • Anonymous Says:

      they can open a 7-11 right accross your store if they want to! They have no guidlines or restraints in that matter!

  37. Shawn Jensen Says:

    Can anyone tale me what they bring home a month on a average 711 store. I hoping at least 5,000.00

  38. Danny Boi Says:

    Hello everyone. I just got back home from the military. I was injured in operation Iraqi freedom so now I am eligible for a substantial government loan to start a small business. As I searched around for a small business investment, I found the “GI job” site in which it explains that 7-11 is one of the top 100 places to work/own for vets. I was wondering would I have an advantage in obtaining a highly sought after store or would I be competing with everyone else? the only reason I ask this is not because I feel more entitled than anyone else but my time is very limited and I have to try my best to provide for my family with a secure income as soon as possible. If i can obtain a good store and provide for my family that would be enough. I would like all your honest input and advice. I thank you in advance. – Danny

  39. Petre Says:

    It is not $5000 a month. I could tell you that. There are a few stores, and I mean a few that do that. You are better off working for the franchise at minimum wage. At the end of the year you will make the same and have less stress.

  40. Mike Says:

    I currently own a health supplement company. I own it 100% with its own brand name. My products are now distributed throughout the US, Europe and some of South America via large distributors here in the USA as well as Europe. I now have a staff in place who does 99% of the work. I find myself with a tremendous amount of time on my hands.

    I am considering starting a new company with a food product which I think would do well in convenient stores. I have done some test marketing with this idea with positive results. I want to start slow and grow the company in a slow but steady way the same as I did with my first company. I want to test the products in a couple conveniences stores, see how they do, possibly tweak them depending upon feedback, sales etc. Then expand the business slowly store by store myself and then finally turning it over to a distributor to service the stores.

    I do not want to do through corporate and do not want to suddenly need to supply hundreds or thousands of stores. To me slow and steady is the way to grow a company. How would I find a list of franchise stores? In your opinion does this seem like a well thought out plan?

    Thank you for your time.

    • cstoreguru Says:

      Hi Mike,

      Yea, that’s a perfectly good plan … it’s one I’ve seen from many local vendors. I don’t think you’d be able to find a list of franchised stores without some help. I would try approaching a few local managers/franchisees and asking for their assistance. Offer to buy them lunch or something, and I’m sure they’ll be happy to help :-)

      Best of luck to you!

  41. Anonymous Says:

    I was thinking of taking a franchise, however doing my own assessment and reading these posts, I now beliee that it is not worth. I agree that you will be working for 7-11 as too much restrictions and they will control you. They make you feel that they are doing an obligation despite you are investing money.

  42. Michelle Crowe Says:

    Thanks so much for this detailed post!


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