Franchising is one of the best ways you can own a business without having to build your brand from the ground up. Most of the grunt work has already been done. All that’s left for you to do is to make sure sales targets are always met.
One of the most popular franchises around the globe is 7-Eleven. If you’re in any urbanized area, you’ll see a 7-Eleven every few blocks. It’s prevalent since they are a convenience store that will always be open no matter what time it is.
It’s no surprise that it’s prevalent. It seems like a lucrative business, given that it has everything you will ever need. You also won’t have much trouble with supply since they can help you with that.
But is buying a 7-Eleven franchise all that it seems? Well, that entirely depends on you and how much capital you have. If you’re still unsure, we made this article to help you see what’s really at stake when you do buy a 7-Eleven franchise.
Here are four reasons why you shouldn’t buy the franchise.
1. 7-Eleven doesn’t give you complete control
Franchising allows you to have a business without worrying about branding and marketing as much as you usually would. Most franchising businesses also help you out with giving you supply and other aspects of the business. It may seem like what you’ll be left to do are the easy parts, but it’s not always the case.
With 7-Eleven’s business model, you can see that they have an employer-employee relation rather than a franchisee-franchisor relationship. So when you buy a franchise from 7-Eleven, you’re not exactly buying the brand name to make income for yourself. If you’re looking at a realist’s perspective, 7-Eleven asks you to buy the brand so that you can work for them. For an opportunist, however, buying a 7-Eleven franchise opens a lot of doors for them. This is going to be up to you to decide.
The Small Business Administration (SBA) also mentioned that they had identified a few issues about the service agreement. If you’re not familiar with SBA, they’re an organization that helps small businesses get loans to the franchise.
There are just too many excessive fees you need to overcome. Moreover, every store receipt would need to be deposited into the franchisor’s account. There’s also the fact that it is the franchisor who owns the business. The franchisor and not the franchisee also provide the payroll services. There’s just too much control that it can be hard to operate freely.
2. Most of your revenues go to 7-Eleven
7-Eleven uses an Operator Model. If you’re not familiar with that, it’s essentially a model where the franchising company buys the land, store, equipment, and building. Now when you finally start, they will lease all these things back to you.
So apart from paying the franchising fee, there are other things you need to check out. That means your projected ROI may take even longer to realize. It can be misleading, especially since they don’t precisely disclose it. Moreover, 7-Eleven takes 50% of your gross revenue upfront, making it even harder for buyers.
Not only do they take 50%, but they also increase the percentage every time your revenue goes up. How much you earn will also vary. Some items have higher margins compared to others.
Several store owners even decide to work on their store rather than hire someone else for the job because your profit margin is not as significant as it appears on paper. Some even mention that the projected profits are at 5% of your store sales. Even if it’s not an accurate calculation, it should help you understand what you can expect.
3. They are known for gouging and unethical practices
Just a quick search on your browser, and you’ll find a plethora of complaints from franchisees and ex-franchisees who had a bad experience with the company. There’s even more when you go to the website named the Unhappy Franchisee.
The most common issues are the low wages combined with a stressful environment. You’ll need to clock in many hours when you have a 7-Eleven since they operate round-the-clock.
There are even stories about 7-Eleven executing their power in the worst ways. The franchise forced one owner who competed for them to throw out food every day, which cost them almost $200.
Most of them even remark how it takes out a bite from the American Dream. Not only that, the royalty fees topped with the low pay and almost non-existent benefits can turn this opportunity into a nightmare quickly.
4. It will need a lot of your time.
One of your most significant obligations as a 7-Eleven franchisee is that you have to keep your store open all the time. That means if you’re a store owner, you’d need to hire someone for the day shift and the night shift. Since there are only eight working hours and 24 hours per day, you’d need to hire people 4x to make up for each 8-hour shift.
Apart from the crazy shift, this can be very stressful and challenging. You’ll need to shell out a lot of money at the start, and your ROI will take time. If you’re planning to work on your store, you have to remember that you’ll be committing a lot of time to this thing.
There are also strict regulations that you need to abide by, or you’ll face legal issues.
Moreover, you need to have security since it can be dangerous for you or your staff since not many people are around during the wee hours of the morning. As we mentioned before, this franchise looks good on paper, but it’s not very enticing in real life. It’s a franchise that can cost you more than you will earn.