How Did We Get To This Point?
What has caused the deterioration of the once sound relationship between 7-Eleven Inc. and franchisees? I doubt that anyone can pinpoint a day or event when things changed. I believe we all agree we can never return to the days when 7-Eleven was the only real player in the convenience store business. The reality of direct competition from other c-stores and the rise of new and different retail outlets all around us underscores our business environment today. Unfortunately, different views of the cures for this situation prevent both franchisees and our franchisor from fashioning a reasonable way forward.
“That Used To Be Us: How America Fell Behind In The World It Invented And How We Can Come Back,” co-written by Michael Mandelbaum and Thomas Friedman, is a book published a few years ago by a renowned professor and an accomplished journalist. In it the authors highlight the challenges the United States faces in this complex world and the course we must take to survive and grow.
During the general session of the October 2011 National Business Leadership Council (NBLC), I had just read this book, and I stated that our system is under pressure from external economic uncertainty and internal factors. I used a quote from the book: “It is not the strongest of the species that survives or the most intelligent that survives. It is the one that is most adaptable to change.” In no uncertain terms I was told, “7-Eleven is not in survival mode, we are in growth mode!” I replied that I was speaking for franchisees who are getting beat up not only by competition but by eroding income with no store remodels, AND we somehow need to learn to adapt to THEIR needs. Little did I suspect franchisee survival mode would become, and would continue to be, a self-inflicted wound seemingly created by our franchisor.
One of the key events, or set of events I believe created this atmosphere flew under the name “Project E”—the total centralization of all operational communication and decision making to headquarters in Dallas. No longer would market managers have the authority or the discretion to make local decisions. They became basically ‘super’ field consultants with a large sub-group. Relegated to the role of pantomime, they promoted the latest 7-Eleven edicts, and franchisee morale plummeted. Week after week and month after month of endless directives, threats, and regulations were issued from Dallas. Gone were dialogue, discussion and direction. In its place were terror, bewilderment, hopelessness, and despair on the part of franchisees for our businesses.
The current leadership in Dallas has branded themselves anti-relationship, anti-FOA, insensitive to franchisees, and pretty much anything anti-franchisee. Under this administration franchisees have lost two-thirds of our gas revenue, we have been handed all credit card interchange fees, and Dallas has proven not shy about cultivating profits in the form of franchise fees.
At the National Coalition we talk frequently about low-volume and underperforming stores because we want to help these franchisees make a decent living or get out of the business. Is SEI thinking more about operational income or about helping these franchisees? We all know from experience that there is a huge supply of franchisees ready to buy stores, because they believe they can “run this store better than the previous owner.” SEI’s capital is amortized and the current franchisee is stuck and forced to move on.
Until Dallas truly embraces the inverted pyramid promoted by our CEO and returns to a spirit of mutual trust and respect for ALL franchisees, this franchisee will continue to watch over his shoulder, check his store carefully for hidden cameras installed by Asset Protection, and continue to fight for change. I love this brand, but I loved it more when we were happy, fun loving, energetic, and self-motivated, highly profitable franchisees. Perhaps one day we can get back there. That used to be us!
I want to thank all of you who write back commenting on my articles. These are my thoughts, and I would love to hear yours.