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 . 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: firstname.lastname@example.org