New Survey Finds Trust Breakdown Between 7-Eleven Franchisees & Corporate
The company maintains that it remains committed to supporting franchisees during this challenging operating environment.
SAN ANTONIO, Texas — The 2021 National Coalition survey of 7-Eleven franchisees finds a trust breakdown between franchisees and corporate.
The survey, conducted on behalf of the National Coalition of Associations of 7-Eleven Franchisees (NCASEF), yielded responses from 598 franchisees, representing 1,118 stores in the United States. Seventy-one percent of those respondents said they have been 7-Eleven franchisees for at least 10 years.
Sixty-eight percent of respondents said they signed the 2019 Franchise Agreement. Of those, 83 percent disagreed with the statement, "I am in a better financial position since signing the agreement," while 75 percent said they would not enter the system again as a franchisee if they had the chance to do it over.
"The results of this survey are alarming," said Jay Singh, chairman of NCASEF. "The overall sentiment is that franchisees are unhappy. The company is making money selling gasoline, but franchisees are telling us they are not making a reasonable profit because of the nature of our contract."
When asked to choose from a list of 11 "most important issues facing my business," a whopping percentage pointed to labor. Eighty-two percent cited staffing and the cost of labor as an important issue, while 87 percent said their job is more difficult today than it was five years ago.
Additionally, 80 percent agreed with the statement, "The effect of running my 7-Eleven business has negatively impacted my physical health, mental health, and/or family well-being."
In a statement, 7-Eleven Inc. (SEI) said it remains committed to supporting franchisees during this challenging operating environment that is facing all independent business owners.
"Since the start of the COVID-19 pandemic, we have committed more than $185 million in incremental support for franchisees as they operate as essential businesses. The commitment by 7-Eleven franchisees to serve their customers and communities during this challenging time is heroic," the company told Convenience Store News, adding that the commitment is paying off. "Franchisees are experiencing the strongest increases in sales, margin and gross profit performance in over four years. In fact, less than 5 percent of stores turned over in 2020, which is consistent with our standard turnover rate for the past 10 years."
However, the recent Coalition Survey found that trust continues to be a major sticking point in the relationship between SEI and its franchisees. More than three-quarters of franchisees disagreed with the statement, "7-Eleven trusts its franchisees."
The same percentage of respondents indicated they do not trust 7-Eleven. When asked if they thought 7-Eleven executives were honest and ethical, 74 percent disagreed. This compares to the National Coalition's 2018 survey, when 64 percent disagreed with that statement.
"Trust is a real issue in part because SEI accepts money from its vendor partners while telling us we won't necessarily receive the lowest cost of goods from the supply chain they control," said NCASEF Executive Vice Chairman Michael Jorgensen, a Tampa-area franchisee. "When we raised this issue with FTC Commissioner Rohit Chopra at our recent convention, he said the commission was aware of the practice."
In response, SEI said it is committed to supporting franchisees, including striving to obtain the lowest cost of goods and, as 7-Eleven shares in the gross profits with franchisees, it also shares in the cost of goods sold.
"Any rebates or other allowances received by 7-Eleven from vendors are shared with franchisees in line with the gross profit split. In fact, an independent group of franchisees has the opportunity to review all vendor contracts," corporate stated. "The best way for 7-Eleven to increase profits is to secure the lowest cost of goods for franchisees. We know that everyone wins when franchisees have the lowest cost of goods — customers, franchisees and 7-Eleven Inc."
Other findings of the survey include:
In 2020, SEI unveiled a new accounting system for its U.S. stores. When franchisees were asked if they "trust the accuracy of 7-Eleven's retail accounting system," 89 percent disagreed.
Eighty-two percent disagreed with the statement, "7-Eleven's initiatives and strategies are aligned with my goals."
When asked if it were possible to sell their store and salvage their investment, 71 percent indicated they would. At the same time, 80 percent said the equity in their store and its value are lower today than they were two years ago.
According to NCASEF, SEI has spent $28.3 billion in 39 separate acquisitions, without investing in many of their existing franchised stores. Sixty percent of participants said it had been more than a decade since their store received a physical plant upgrade worth at least $10,000.
To view the 2021 National Coalition survey in its entirety, click here.
NCASEF was founded in 1973 and is comprised of 41 Franchise Association members who represent more than 4,400 7-Eleven stores in the U.S.
Headquartered in Irving, Texas, 7-Eleven operates, franchises and/or licenses more than 77,000 stores in 16 countries and regions, including 16,000 in North America.