We Are Not Renters!

By Serge Haitayan, President, Sierra FOA

I recently heard a pro-SEI person say franchising a store is like renting a house from a landlord: we shouldn’t expect to have any rights or expectations beyond what is in the current lease agreement. The person also said that when that lease expires, the landlord has the right to make changes in terms however they want and if a tenant doesn’t like it, they can move on and leave.

I thought about this a lot, and while I’ve heard this analogy several times from corporate people or pro-SEI franchisees, I must say I completely disagree with this line of reasoning. For one thing, when you rent a house from a landlord you are not in any way, shape or form “business partners” or trying to maximize profitability for each other, which is the core
principle of our relationship—supposedly.

I have also heard a point of view from a very long-term franchisee that often gets overlooked. He said when he went into business with SEI, he took himself out of the private job market with normal career paths, and that by agreeing to be a franchisee for 10-15 years or more, he was not as marketable in the open job market in his prior field as before. He also mentioned that companies want long-term employees or look to hire younger people, and by being a franchisee for many years he sacrificed many of his best years in the eyes of the private sector of employers.

This franchisee explained that by giving up his prior career path and his best working years, now at his current age he isn’t as desirable to outside employers. He explained that this career sacrifice and investment in 7-Eleven is not only financial, but in working hard to elevate the value of the brand he created a responsibility on SEI’s part to treat him as an esteemed partner and not a tenant.

He went on to address the common statement we hear from corporate people who haven’t invested any of their own money into the system: “For years franchisees have made too much money.” To this, he said that the model was to maximize profit for both sides, and that if he truly did make good money, then it was only because he made a lot more money for the company. If we are operating in a co-prosperity model, like we’ve heard for years, then what is wrong with making good money if you made even more for your business partner while doing so? He said we should expect the company to embrace and want to keep those making them the most money, and not try to diminish them or reduce their incentive to excel.

I’m certain many of you would agree with this sentiment. There was a time when corporate made its profit (every penny of it) from the store up. But it seems those days are gone, and now we are left with a sense that SEI is making money before the merchandise even hits our store shelves.

I was taken aback by the franchisee’s view, but he wasn’t done. He then wanted to discuss loyalty. He said he recently heard that some of his peers weren’t deemed “loyal to the company” because they were bad mouthing the current atmosphere, the changes that have occurred, and the general climate within the 7-Eleven universe.

I asked him what his thoughts were on being called disloyal to a brand/company that he had been a part of for many years and helped to become very profitable, while growing to our current size. He replied that if he was considered disloyal, then what do you call a company executive that comes and goes as soon as a recruiter finds them another job making more money? He then challenged me to answer how many SEI zone leaders or vice presidents or other executives have left the company for other opportunities. I must admit I don’t know the answer, but I recognize it is a large number over the last 15 years. Based on that, I see many franchisees who have been in place for longer than 15 years. Who is the truly loyal one in this situation?

Franchisees are not “renters”—we have as much at stake in 7-Eleven as corporate does, if not more. We build the brand in our stores with years of sweat and hard work, and we deserve a reward at the time of our retirement. Today there is none.