National Coalition Calls on SEI to Reverse Decision on 24/7 Operating Hours
There has likely never been a time when it has been as difficult as it is today to be a 7-Eleven franchise owner. We are facing a crippling labor shortage, higher operating costs, lower gross margin and lower net profit. Yet our parent company, SEI, continues to ignore our pleas for help. And now comes word that SEI is mandating all stores resume 24-hour operations, 7 days a week, beginning May 24th.
In light of the current situation, The National Coalition is asking SEI to reverse their decision and allow those franchisees who can’t safely accommodate a 24-hour schedule to close overnight. This is part of our ongoing effort to get SEI to sit down with us and recalibrate the terms of the current Franchise Agreement to better support franchisees.
NCASEF estimates about 60 corporate-owned stores are currently closed overnight. We all remember that when the pandemic struck, SEI listened when we asked for permission to close overnight. We ask them to do the same now.
We are not alone in facing a labor shortage. Franchisees and other service-based business owners find themselves struggling to fill positions. The situation has caused several large, national fast-food chains to keep dining areas closed and other retailers to cut back on the hours their businesses are open. In many stores across the country, overnight sales barely cover the cost of paying a clerk to work that shift. And with the shortage of workers, many of us are forced to cover these shifts ourselves, causing stress to our health and our families. Even with SEI’s newly enhanced worker recruitment tool, we know it is hard to compete with other retail companies or delivery services on wages, benefits and flexibility.
“We are already feeling the squeeze. Every additional dollar a franchisee pays his or her employees comes off net profit. The 7-Eleven Franchise Agreement allows the corporation to keep more than 50 percent of the gross profits of each sale. As labor and other direct store operating expenses keep increasing, franchisees are earning less and working more,” said NCASEF Executive Vice Chairman Michael Jorgensen. “One possible remedy for franchisees is to raise retail prices, but that creates a competitive disadvantage in the marketplace, which can adversely affect sales and profits.”
7-Eleven’s fresh food initiative continues to grow, through promotional offers which are creating a need for even more labor, “7-Eleven wants to be a place that customers think of for fresh food, but our Franchise Agreement is based on a convenience store model, not a quick-service restaurant model. The structure of the agreement is flawed. We need a contract that makes this model workable and profitable for franchisees,” said Jas Dhillon, NCASEF Treasurer.
Half our stores in this country sell gasoline – which is bringing in record profits for SEI. Yet, we only get 1.5 cents per gallon. The point was highlighted in the recent report from U.S. Sen. Catherine Cortez Masto of Nevada, who wrote, “Gasoline acts as a loss leader for franchisees and can fail to cover the cost of gas operations.”
After similar complaints from 7-Eleven franchisees in Japan, that nation’s Fair Trade Commission published a report suggesting that mandating 24/7 operations could run afoul of Japan’s anti-monopoly law by “abusing a superior bargaining position.”
Franchisees in this country have nowhere to turn except to 7-Eleven for relief from crippling labor conditions and unfair contractual terms. The corporation knows the pressure we are under, and their recent public statements mischaracterize the truth about franchisee income. We are hopeful the FTC, the SBA and Congress will take a hard look at SEI’s tactics and step in. The National Coalition continues to educate and represent franchisees’ concerns to SEI and government agencies who have to have the power to make a change. The company surely knows that many franchisees are struggling with the labor to safely operate 24 hours. They need to acknowledge that and be amenable to limited hours of operation.