ORLANDO, Fla. _ Franchisees for hundreds of 7-Eleven stores gathering this week in Central Florida say not everything is heaven at the world's largest convenience store chain with the deadline approaching to accept a new agreement to stay in business.
Franchisees are just discovering the details of the new deal, which starts in 2019 and requires for the first time a renewal fee of $50,000, a bigger share of profits to the corporate parent and for stores to stay open on Christmas. It could have a huge impact in the Orlando area, where 7-Eleven has more than 100 stores.
"It's going to be costing me $20,000 a year per store just in profit sharing," said Michael Jorgensen, who runs three stores in the Tampa area. "The morale of the franchisees is really low, and they are the ones connecting with consumers."
The dispute is growing among the more than 1,100 franchisees at the Gaylord Palms Hotel in Kissimmee for the annual convention of National Coalition of Associations of 7-Eleven Franchisees. In Florida, it would impact more franchisees at more than 700 stores, the biggest convenience chain in the state.
Dallas-based 7-Eleven America did not respond to requests for comment.
7-Eleven' s owner Seven & I Holdings is based in Japan, but has about 11,600 stores in the United States. It's home to iconic offerings such as Slurpee frozen drinks, Big Bite hot dogs and Big Gulp fountain drinks. But behind those stores, franchisees say, is a hardworking group of entrepreneurs, many of whom are immigrants and have invested $300,000 to $700,000 just to get a store.
7-Eleven requires franchisees to renew agreements every 10 years. It's a standard practice with franchises to allow them to cut ties with underperforming stores. This is the first time since 2004 that the agreement has changed, Jorgensen said, and the changes have alarmed those that run stores.
One of the new provisions causing heartburn is the $50,000 renewal fee. 7-Eleven franchisees will also have to give a bigger share of profits back to the corporate parent, as much as 59 percent for more profitable stores.
That's up from about 50 percent a few years ago, NCASEF said. At 7-Eleven, franchisees and 7-Eleven corporate split gross profits instead of sales. The franchisees share also pays for wages, utilities, maintenance and paying down debt.
"In a lot of places it's not economically feasible to operate a store under this deal," said Jas Dhillon, vice chair for the group and a franchisee in Los Angeles. "But the agreement has been handed down to us take it or leave it."
The new deal also would require legal disputes to be fought in Texas and limit franchisee representation on oversight boards.
