7-Eleven franchise owners are making another public plea to 7-Eleven Inc. (SEI) to reconsider the mandate that all stores return to 24-hour operations. In a press release dated May 3, 2021, the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) – the independently elected advocacy group for 7-Eleven franchisees – cited a crippling labor shortage, higher operating costs, lower gross margin and lower net profit as reasons why franchisees should be granted a waiver from returning to overnight operations.
The company has not responded to the National Coalition’s request that SEI recognize the extremely challenging situation thousands of franchise owners are facing. Many are unable to fill open shifts, forcing them to man the register overnight after managing the business during the day.
“The situation is not only unsafe, but also unsustainable,” said NCASEF Executive Vice Chairman Michael Jorgensen.
“At the same time, 7-Eleven is closing some corporate stores between 5:00 p.m. and 8:00 a.m. 7-Eleven is effectively saying, ‘Do as we say, not as we do,’” said Bilal Barqawi, president of the Delaware Valley Franchise Owners Association – a longtime member of the National Coalition.
According to National Coalition General Counsel Eric H. Karp, “In exchange for permission to close overnight, the company is requiring franchisees hand over a greater portion of their gross profits. What 7-Eleven refers to as an ‘appropriate adjustment’ to the gross profit split amounts to an improper penalty imposed on franchisees based on circumstances well beyond their control.”
Karp pointed out NCASEF has repeatedly attempted to highlight SEI’s unfair and opportunistic practices in press releases and media reports.
Across the service industry, business owners are finding an historic shortage of employees. One of 7-Eleven’s principal competitors, Wawa, recently announced it needs to hire 5,000 more employees. The company has quietly been limiting hours and closing stores. SEI has even notified franchisees of significant shortages in the supply chain it controls because many of its vendors are also facing a critical shortage of employees. SEI’s parent company reported that the merchandise gross margin of all U.S. stores in 2020 was its lowest in at least 15 years, meaning franchisees are receiving a smaller and smaller piece of a shrinking pie, said Karp.
With the arrival of summer and fewer coronavirus mandates, more customers will be coming into 7-Eleven stores and other retailers. The National Coalition says its franchisees always want to offer excellent service and keep up with the company’s new initiatives, like fresh food, but are struggling without reliable, trained associates in place. Franchisees face the prospect of reducing their already shrinking profits to support higher labor costs—even as their store-level operating expenses are increasing.
“We hope the Federal Trade Commission is taking note of the heavy-handed way SEI is handling this situation with its franchise owners as part of its review of the Franchise Rule,” Jorgensen said.
About NCASEF: The National Coalition is a trade association for 7-Eleven franchise operators in the U.S. Originally founded in 1973, NCASEF is comprised of 41 separate independent Franchise Owner Associations collectively having more than 4,400 7-Eleven operators as members.
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