The New York Times reports on frayed relations between Seven & I Holdings-owned 7-Eleven and its franchisees, in part over the hundreds of private label items that they are forced to carry, even though they might not sell as well as national brands.
In addition, the franchisees are said to be upset about a new contract being forced on them by 7-Eleven that “aggravated broader tensions over the suppliers they must use and how much they have to pay for the goods they sell in their stores … The relationship between 7-Eleven and its store owners has been deteriorating for years. In the early 2000s, the company and franchisees split profits equally. But 7-Eleven has taken an increasingly bigger cut, franchisees say, and is now saying that store owners who do not renew their contracts by the end of 2018 could see their profits shrink further.”
Now, franchisees say they have only two options - sign the contract, or walk away from their businesses.
&-Eleven said in a statement that “it enjoyed a ‘strong, productive relationship’ with its franchisees,” the Times writes. “The company denied pressuring store owners to sign the new contract, arguing instead that it was offering an incentive to lock in current profit-sharing rates.”
You can read the entire story here.
In addition, the franchisees are said to be upset about a new contract being forced on them by 7-Eleven that “aggravated broader tensions over the suppliers they must use and how much they have to pay for the goods they sell in their stores … The relationship between 7-Eleven and its store owners has been deteriorating for years. In the early 2000s, the company and franchisees split profits equally. But 7-Eleven has taken an increasingly bigger cut, franchisees say, and is now saying that store owners who do not renew their contracts by the end of 2018 could see their profits shrink further.”
Now, franchisees say they have only two options - sign the contract, or walk away from their businesses.
&-Eleven said in a statement that “it enjoyed a ‘strong, productive relationship’ with its franchisees,” the Times writes. “The company denied pressuring store owners to sign the new contract, arguing instead that it was offering an incentive to lock in current profit-sharing rates.”
You can read the entire story here.
- KC's View:
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This is a very complicated story that touches on a lot of issues, including the ability of individual retailers to respond to market conditions, versus the desire of a franchising organization to control as much of a business as possible.
I’m fascinated by this, especially by the fact that so little of what seems to be the focus of the argument has to do with some of the modern factors that influence retailing today. If you’re arguing about hot dogs and Slurpees, how are you going to effectively compete with Amazon, Walmart’s new c-stores, and all the other formats that are being developed to appeal to consumers’ convenience needs?
