When Vendors’ Resources Are Stretched Thin, Franchisees Suffer: Is This Fair?
I’ve been a franchisee for many years and I’ve seen my share of unfair practices by SEI. In some instances, I let things roll off my chest. I’ve come to realize that some battles aren’t worth fighting. But in other instances, like the way that SEI is treating their vendors, I feel that something must be said.
As we all know, the vendor/franchisee relationship is very important. The National Coalition, FOA groups and franchisees value this partnership, and we do everything possible to treat it with the respect it deserves. We need the vendors, and the vendors need us. It’s a beautiful give and take, and we work together for the benefit of all parties involved. Unfortunately, SEI doesn’t seem to see it this way, especially when it comes to the 7-Eleven Experience—and franchisees are paying the consequences.
It’s a known fact that SEI puts pressure on the vendors to exhibit at the 7-Eleven Experience. Of course, vendors oblige because they want to maintain a positive relationship with SEI; even if the cost to exhibit is beyond their budgets. So what happens? In order to make up for the money needed to exhibit at the 7-Eleven Experience, the vendors are forced to increase the cost of goods. Who ends up paying the price? The franchisees!
SEI has an obligation, by contract, to provide its franchisees with the lowest cost of goods from SEI-approved vendors. My friends, I can guarantee that this is not happening. In fact, Walmart, Target and other stores’ retail prices are LOWER than what 7-Eleven franchisees are paying as their cost price! Because of this, it is almost impossible for 7-Eleven franchisees to compete in the current economic climate. In fact, SEI is proposing to increase the retail prices even more in order to offset the recent hikes in minimum wages imposed by states and cities across the country. Does this make sense? I don’t think so!
Here’s another problem: this year there will be two 7-Eleven trade shows in Las Vegas—the 7-Eleven Experience in February and the National Coalition’s trade show in July. Do we really need two trade shows in Las Vegas within months of each other? Is it fair to ask the vendors to participate in both? It would have been so much better if SEI and the National Coalition joined forces and produced a joint trade show like the FOAC and the National Coalition did in Chicago last year. Truthfully, the National Coalition’s convention and trade show in July will feature more vendors (with better deals and more new items) than what SEI offered at the 7-Eleven Experience in February.
Knowing the difficult choices that vendors are being forced to make by SEI, it’s time for FOA leaders throughout the country to realize that it’s impossible for vendors to financially support the trade shows and events of all 43 FOAs. I encourage FOAs in the same areas to consider joining forces and producing their shows jointly in order to help vendors reduce their expenses. It’s no secret that vendors are complaining about the financial burden they are subjected to by SEI and by individual FOAs. We must do what we can to help reduce their financial load.
The individual FOAs can only do so much. It’s time for SEI’s upper management to make some changes for the benefit of their franchisees. Receiving the lowest cost of goods is essential for our success. We cannot remain competitive without it. Will SEI do the right thing? Will they stop taking advantage of their vendors and start doing what a good partner should do? Time will tell. I just hope it won’t be too late.
> Here’s The Reality
It’s difficult to see how SEI could possibly negotiate the lowest cost of goods for franchisees when they ask the vendors to financially support the 7-Eleven Experience. Wanting to keep SEI happy, vendors have no choice but to pay our franchisor what they demand, and vendors make up for their loss by adding dollars to the cost of goods sold to franchisees.
What SEI is doing is wrong and unfair. SEI doesn’t need a trade show to deliver their plans to the franchisees. They can do so quite effectively by attending local FOA trade shows in different parts of the country and communicating their message on a more personal level.
In my opinion, at least half a dozen trade shows could be organized by local FOAs in different regions for less money than what vendors are forced to pay SEI for participation in one single trade show. I believe franchisee attendance would increase because the shows would be more conveniently located. SEI would be able to reach and communicate with a lot more franchisees in their local markets, making it far more rewarding for vendors, franchisees and SEI.
Truthfully, I find it embarrassing for a company of SEI’s size and impact (the world’s largest convenience store) to ask vendors for financial support in order to host the 7-Eleven Experience. To me, and to many others, it simply looks like a shake down scheme. SEI should be more mindful of their approach.