Not All Stores Are Ready To Return To 24/7 Operations

By Jay Singh, Chairman, NCASEF, President, San Antonio FOA

As we all know, 7-Eleven has been a 24/7 operation for nearly six decades. Every single franchisee has signed an agreement with SEI to keep their store open around the clock, except in cases where local ordinances prohibit it. Our brand is known for that. Even through natural disasters like hurricanes and severe winter storms, most of our stores have remained open to serve our communities. However, the COVID-19 pandemic has proven to be a huge challenge to our modus operandi.

In the beginning of the pandemic, when very little was known about the new coronavirus, lockdowns were instituted throughout the country to help curb the spread of the disease. Only businesses considered essential—like convenience stores, supermarkets, food manufacturers, banks, and healthcare providers, to name a few—were allowed to remain open. But panic quickly set in and many small business owners, especially 7-Eleven franchisees, soon found themselves short-staffed as employees quit out of fear of getting inflected.

The situation was compounded when the federal government began supplementing regular state unemployment benefits with an extra $600 per week, now down to $300. People then quickly realized they could earn more money staying home than working, so many have opted to remain unemployed. Needless to say, they have zero incentive to return to work or to seek new employment until this extra stimulus expires on September 6.

The labor shortage exacerbated by the pandemic has made it very difficult for many franchisees to keep their stores open 24/7. Franchisees in some big cities like New York had to close their stores entirely in the early weeks of the outbreak because they could not find employees at all, even for their day hours. But the shift franchisees are having the most difficulty filling is the overnight. Even during the best of times, it is a challenge to find people willing to work the overnight hours, and the pandemic has made this problem far, far worse.

Early in the pandemic, the National Coalition created a template letter that franchisees could give their market managers or zone leaders to request permission to close their stores overnight by invoking the force majeure clause in our contract, since this pandemic was far beyond our control or anyone else’s. Franchisees asked for this permission not only because of the employee shortage, but also because the overnight hours were not very profitable due to the pandemic. And this is still the case. For many stores, the overnight hours remain practically unprofitable, and it makes little sense for them to remain open during that time.

SEI has complied with the requests, for the most part. The company has even offered to help franchisees find staff for their stores. They tried their best to provide candidates, but many of them turn out to be applicants who just want to show the unemployment department that they applied for a job so they can continue receiving their unemployment checks. So it is still very hard to find employees. Through local sourcing, through local groups, window signs, through SEI’s Highlight program via the ISP … nothing helps to find employees, especially for our overnight shift.

This has created two situations wherein franchisees are finding themselves stuck between a rock and a hard place. One, in order to receive permission to close overnight SEI is requiring franchisees to pay them a greater portion of the gross profits. This is not fair to franchisees because SEI has created a formula that punishes them in this instance. By this I mean that the percentage imposed is disproportionate to the sales of the store, since the overnight sales are very low. Even the company’s own sales statements show that the overnight sales are the lowest they have been in the past 15 years.

Two, many franchisees find they cannot reopen during the overnight hours when mandated by SEI to do so because they are still understaffed. In these cases, the company is issuing breaches and LONs, stating that the franchisee is violating the terms of the Agreement. I find this to be very curious, especially considering that many corporate stores remain closed between the hours of 10 p.m. to 5 a.m., or 8 p.m. to 5 a.m. because they cannot find employees for their overnight shifts. So if they are remaining closed, why should it be mandatory for franchisees to go back to 24/7 operations?

Therefore, the National Coalition is asking SEI to reconsider their mandate that all franchised stores return to 24/7 operation until our staffing situation eases. We are also asking the company to stop punishing those franchisees that have no other choice but to remain closed overnight, with LONs and breaches. We further ask SEI to consider adjusting the CDC and McLane delivery times so all deliveries arrive after 5 a.m. and before 11 p.m. so stores that need could close overnight.

Franchisees are suffering. They are either putting in many hours themselves at their stores, or they are closing overnight and being penalized. The pandemic and staffing problems are not our fault, and we should not be treated as if they are.