My First Six Months As Chairman

In a recent article by former National Coalition legal counsel Arnold “Arnie” Hauptman, he spelled out everything I need to accomplish as the new chairman within six months before I could relax and enjoy the rest of the year. The list included encroachment, the tiered 7-Eleven charge or “Split,” franchise fees, the DVR security system, the gasoline commission, the 85 percent recommended vendor requirement, SEI’s excessive use of LONS and breaches, and the “ever-increasing costs and ever-decreasing gross profit of 7-Eleven stores.”

Needless to say, I and the National Coalition Board and officers are still working on all of those issues—and to be quite honest, Arnie’s list has grown since he wrote that article.

One issue that was added is the new GEA survey implemented in February, because it has raised many questions and concerns from the franchise community. The National Coalition asked SEI for clarification on many aspects of the survey, and to go back and reassess it as we feel it can be very overwhelming to our stores. As of this writing, we have been told that the survey will return to the old form, and that FCs will be responsible for conducting the surveys. We understand that the NBLC is also currently charged with reevaluating the form.

We realize that growing our fast food category and hot foods program is a top priority for the company, but many of the new things added to the GEA survey made it seem better suited for evaluating cleanliness in restaurants rather than c-stores. Given that ours is a 24/7 business that also sells gasoline and grocery, health and beauty, and other products, it hardly seems reasonable to hold our stores to the same standards as a restaurant.

In the last several months, the most concerning issue related to the GEA survey has been the LONs and breaches delivered to stores for out-of-stocks. The concern is that there is no definite guideline as to what constitutes an LON or what constitutes a breach for being out-of-stock. Even the franchise agreement doesn’t indicate what specific factors can lead to an LON or a breach for being out-of-stock.

Based on what we’re seeing, the out-of-stock LONs and breaches are being generated on an individual store basis, and there is no consistency in their application. As many of you can argue, and I do agree, out-of-stock is not a situation incurred by franchisees alone—it is usually the result of circumstances beyond our control. Under-ordering or not forecasting correctly would definitely be our fault, but why should we be penalized if delivery dates are changed or our supplier is out of stock, leading to an out-of-stock situation in our store?

It’s not like we want to impact our business by not keeping a well-merchandised store, so consideration needs to be given—or at least a discussion held between the franchisee and SEI management—before these LONs and breaches are issued. The National Coalition has addressed this and we continue to query SEI on the matter. We have offered to sit down and suggest a criteria process to address out-of-stocks that all stores can understand and that will make the system fair for everyone.

The National Coalition’s biggest role is to protect the rights of every franchisee in our system. Our biggest goal is to establish a relationship with SEI that allows us to communicate and address our concerns or ideas in an environment where we are viewed as business partners with our franchisor. In this way we can together bring about positive changes to the system that benefit everyone. As your chairman, I promised to continue working toward that end, not only on the GEA survey issues, but on every issue affecting the franchisee community.