Vixxo Maintenance Price Increase—The Update

Roughly two years ago, National Coalition Board members and officers held a maintenance contract meeting with SEI wherein Joe DePinto decided to put the planned maintenance fee increase on hold mainly because franchisees were not receiving good service from FM Facility Maintenance, which is now Vixxo. At the time, SEI agreed to work with Vixxo to resolve our issues and come back to the National Coalition before any maintenance price increase would be put into affect. I wrote an Avanti article about that meeting in the January/February 2015 issue, and I highlighted the maintenance issues SEI and Vixxo said they would address before a price increase would be implemented. Now I will update you on what has changed.

While it is certainly true that SEI did not impose the maintenance price increase on existing franchisees back then—for which we are thankful—we soon realized that all new franchisees and anyone who renewed their lease or renewed their agreement were subject to the increased prices. So it turns out, SEI did successfully place a maintenance price increase on many franchisees.

The original intent was to hold the increase for all franchisees until the service issues were resolved. Joe DePinto had said if the service levels were not met, franchisees would not have to pay a service increase. Now, SEI has decided to increase the maintenance prices for the rest of us, as much as 32 percent in some areas. I want to revisit, point by point, some of the issues I addressed in my original article.

1. Out of Code BIBs. Franchisees claim that in 95 percent of cases out of code BIBs do not cause a machine malfunction, and franchisees should not be charged the additional $100 fee. SEI agreed to remove it from the contract, but we haven’t seen confirmation that they did. We don’t know if any franchisees are still being charged the additional fee for out of code BIB products, but SEI hasn’t formally told us that it was done.
2. Duct Cleaning. A review of the preventive maintenance scheduled by FM shows semi-annual cleaning of return and discharge HVAC for grills is an SEI expense. In many stores we don’t know when the last duct cleaning was performed. It could be decades. Joe DePinto agreed that the service should be part of the regular preventative maintenance program, and to date it is not.
3. Signed Work Tickets. Franchisees requested signed work tickets be left in stores at the time of service, or be emailed to the franchisee’s personal account while the contractor is still in the store. As of today, maintenance contractors still don’t have the handheld devices to print the work tickets or the ability to email the invoices to the franchisee’s personal email as we requested. We also want to be able to review charges on the Vixxo 24/7 website. This change for paperless work tickets has still not happened. I still have contractors who don’t email invoices. They have a blank tablet and ask for our signature. We don’t know what we are signing.
4. Expense Approvals. When equipment breaks down it often takes up to two weeks to repair due to 7-Eleven expense approval delays or because parts are not immediately available. We have seen some improvement in this area, but still have delays in how SEI approves expenses. If something breaks down, the contractor needs to talk to the local DFM. The local DFM then has to determine if it makes sense, and nine out of 10 times he does it, but the amount of time it takes varies. If it is a revenue-generating piece of equipment, franchisees can’t afford the delays. We can say SEI has made some improvements, but there is still room for improvement.
5. Asset List Update. Franchisees believe the asset list is inaccurate and in many cases overstates the equipment. Some pieces of equipment decommissioned years ago may still be on the list and may be contributing to the cost increase. SEI promised to bring the list up to date by doing a physical audit of the asset list for each store, but the audit has not happened. How can we justify the price increase without knowing the exact number of pieces to be serviced in a given market?
6. P1, P2, P3 Classifications. Franchisees have long believed that these classifications are outdated and don’t match our business model. We are a foodservice destination now and certain pieces of equipment are essential for selling fresh and hot foods. If a light goes out in my doughnut case, it is a P5 and they have 30 days to respond! The Wisco unit, where our hot foods are staged, is a P2 priority of 24 hours, and should be a P1, 4 hours. How can we not offer hot foods for 24 hours (or more)? Our open air case, which probably always contains $500 worth of inventory, is a P2, 24 hours. What are we supposed to do with the inventory for 24 hours? Most sandwiches have a 2-day code. Our condiment station, bun warmer, and chili cheese dispenser are all P2. These are revenue-generating pieces of equipment that are essential to successfully selling fresh and hot foods. SEI agreed to revisit these classifications and revise them, but nothing has changed. They should all be prioritized as P1.
7. Vixxo’s 24/7 website. SEI and Vixxo want franchisees to use it more, but we are still struggling to log in. Some franchisees have to re-register on the website every 30 days. Since we don’t have Internet access in our stores we have asked for an app to track cases from our smart phones, but this has not happened.

We have other issues, such as overbilling. Contractors will check in by making a phone call when they arrive at the store, but they don’t have a way to check out. Sometimes they finish working and eat lunch in our parking lot, and we pay $75 for their lunch break. We need some kind of tracking mechanism at the store level.

To date, SEI has not worked with the National Coalition to resolve these issues, but we are getting the price increase. We expect SEI to honor their word and hold the maintenance price increase until the issues are resolved. We hope that SEI will work with the National Coalition to resolve these issues and delay price increase until the renewal of the franchisee agreement in 2019.

We would also like a holistic review taking into consideration issues such as minimum wage increases, sugary beverage taxes, declining customer counts and increased competition. In light of all of this, I think the best thing to do would be to make this price increase part of the 2019 agreement renewal.