Can You Hear Me Now?
I was pleased to report last issue that we have accomplished the task of fixing the FIW (Financial Impact Worksheet) being used as a tool to bash franchisees with their own mistakes or employee incompetence, and I am hoping we have put all remnants of the FIW and reports like it behind us for good.
Franchisees not involved with purposefully fraudulent activities no longer have to worry about getting an FIW that goes back 18 months and punishes them unfairly for mistakes or employee theft.
As part of the realignment of Asset Protection as a tool for protecting franchisee assets—and not only those of 7-Eleven—every franchisee will receive a weekly or biweekly email from Asset Protection questioning any transactions that the system has flagged, and asking for an explanation or a correction in the case of a mistake. This is an approach we encouraged SEI to take and they did.
We asked SEI to work on an end-of-the-year cutoff deadline for overage and shortage calculations and they worked on this also. As it turns out, there is no reason for an overage policy because Asset Protection now can pinpoint any issue at store level day-by-day. The revision of this policy is that the first quarter audit of every New Year will offset the last audit of the prior year, and we believe this is a fair temporary solution. We would like to thank SEI and the folks at Asset Protection for working with us diligently on these two issues.
The bad news is that besides these two tangible accomplishments, we see no evidence of other material progress on franchisee Accounting issues with SEI. We have gotten warm understanding and promises of change on a range of issues, but the progress has been scarce and we have trouble understanding why. Where do I start? Some of the issues we have been tracking for two years or more that are near and dear to my heart and have not seen any progress include:
- Encroachment, especially as 7-Eleven acquires additional store chains (consolidation in our industry is rampant, in case you had not noticed) is diminishing our in-store sales for those franchisees unlucky enough to be caught in the crossfire.
- Hot foods in many areas has a horrible GP% and increases labor.
- A distribution center (CDC) that we as franchisees are financing. We did not become franchisees to support and sustain a distribution model that has failed us financially.
- Less support from SEI as a result of Project E, which cut staff and is now called realignment.
- Gasoline fees that are absolutely causing franchisees income loss, and a gasoline pricing strategy that is hurting in-store sales but is generating over 75 percent of SEI’s income at franchisee expense.
- Can we just say “Out of control credit card fees?”
- Old, not yet remodeled stores, in some cases just across from brand new shining competing 7-Elevens or other chains.
- Minimum wage increases throughout the country that we can’t sustain with our current franchise model.
- The new 2019 agreement that we were promised we would be part of the discussion.
- A lower cost of goods that is not materializing and a market basket model that cannot be proved.
- Increasing discomfort with the potential abuse by SEI of this sentence in our agreement:
“If cooperative advertising allowances are available from the Vendor and the Vendor advises us that it will not lower the cost of its products and services to 7-Eleven Stores in lieu of providing such cooperative advertising allowances, then we will accept and use such cooperative advertising allowances as designated by the Vendor.”
- Last but not least, one of the biggest issues we face: Are we really independent contractors or just “unglorified” store managers with no benefits? Today we are being told what to order, where to order from, what time to order, who will be doing the ordering, and we have an even more restrictive, regimented system in BT, which goes against everything that is Retailer Initiative.
At this point I am wondering how long are we going to continue on this road. SEI is increasing their income by huge amounts, and ours is shrinking. In a lot of cases I have to ask: Are franchisees and their families putting in more hours to cut down unaffordable payroll? Something has to give.
These are my thoughts, and as usual, I welcome yours.