Part of the company’s national strategy, 7-Eleven purchased the 188-store Wilson Farms chain and shed some 30 stores through auction, closed others and prepared the 90 area stores for franchising.
Given the strong presence Sintel Systems has in the retail, restaurant and service industries’ point of sale marketplace, we share these service sector growth trends with our customers and franchise hopefuls looking for key insights and opportunities in order to help them make the best decisions from the very beginning.
Here are the highlights of a recent BuffaloNews.com post, “For 7-Eleven, The Franchising Bonanza Is Just Getting Started”:
• BuffaloNews.com notes that the franchise industry is booming, with an estimated 3,581 systems – spanning 234 industries – now operating in the U.S., a 43 percent increase from a decade ago, according to research firm FRANdata. The quick-service restaurant segment dominates the industry with the most franchise units, followed by lodging and maintenance service franchises.
• “7-Eleven is a long-established, successful retail business. We have been franchising since the mid-1960s,” Margaret Chabris, the company’s corporate communications director, said in an email quoted in the post. “We provide a model that focuses on co-prosperity, success for both the franchisee as well as 7-Eleven.”
• “It takes quite a bit of time to convert these locations to 7-Eleven stores,” Chabris said. “For example, we had to review each store, remodel using local contractors, install new equipment, install our proprietary retail information systems, transfer and train employees, lots of paperwork. We are now at a point where we have a wide geographic selection of stores locals interested in being their own boss can consider.”
• BuffaloNews.com says the convenience retailing behemoth behind the iconic Slurpee and Big Gulp has more than 8,000 locations in the U.S. and Canada, and more than 6,200 are operated by franchisees. In total, the Dallas-based company has more than 53,300 stores in 16 countries, but only 13 percent of them are corporate run.
• 7-Eleven aims to be a fully franchised retail company in the U.S. “We are truly a franchise company because we know that franchisees run better stores,” said Michael Daddario, a local franchise sales representative and quoted in the post. “They are vested; their livelihood, their futures are at stake, so their stores are more successful.”
• The company believes that the area’s high number of stores could attract prospective franchisees from around the country.
• Industry-wide, franchises are typically responsible for the construction or lease of their buildings, as well as the equipment and utilities. Additionally, royalties to the franchiser tend to range from 3 to 7 percent of sales. Chabris says 7-Eleven is the outlier of the industry. “Entrepreneurs partner with the company, touted for its turnkey operation with stores already fully stocked with inventory, where 7-Eleven provides the land, the building and equipment,” he tells BuffaloNews.com.
• In return for the turnkey store, 7-Eleven takes 49 percent of the store’s gross profits. “The most important differentiation is that our franchise model is designed to provide co-prosperity for both 7-Eleven and the franchisee,” Chabris said. “We share in the gross profit of the franchised store, the result of sales minus the cost of goods/inventory. This way, 7-Eleven has a financial interest in the franchisee’s success. Most franchisers take a royalty or percent of sales from each store.”
• In addition, 7-Eleven also keeps the books, does payroll and provides its franchisees with a personal business consultant. Startup costs, including the franchisee fee, average about $239,000. About 50 percent of new franchisees take advantage of financing, through the company. Veterans receive a 20 percent discount on the franchise fee, capped at $50,000.
• “Historically, we had a very high percentage of our 7-Eleven franchisees as single-store operators, but over the last 4 years, we have seen a lot of growth in multiple-store operators,” Chabris tells BuffaloNews.com. “Last year alone, 236 current franchisees purchased additional stores. We see multistore franchisees as a growing part of our future.”
• The franchisee application process usually takes 120 days, and includes interviews, background and credit checks and business and personality tests. Prospective franchisees should know how to analyze data, like profit and loss statements, and feel comfortable doing so.
Read the full BuffaloNews.com post here.
For more insights into franchising and the franchise-seeking mindset, check out our related posts, Private Sector Job Growth Fueled By Franchises, In Franchising, Women Find Empowerment, The Baby Boomer Franchising Boom, and Now’s A Good Time for Good Timing.
Sintel is the only full-service, direct-to-user point of sale provider — no resellers, no middleman. From software development to franchise incubator to ongoing support, part of Sintel’s commitment to our customers and industry is to share information on how to achieve success.
Before you make your franchise move, consider calling Sintel Systems for a free phone consultation to help weigh and understand your options. We serve as a franchise incubator for clients across the retail, restaurant and service industries, forming lasting partnerships with our clients that you simply can’t get from a reseller.
If you are interested in learning more about Sintel’s point of sale (POS) systems and how our knowledge and support can impact your future success, call us for a complimentary phone consultation.
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