7-Eleven franchises are one of the biggest names in the convenience store industry. Established in 1927, there are now more than 8,500 7-Eleven franchises across the United States and Canada giving them a substantial portion of market share. 7-Eleven franchises were recently named number 4 on Entrepreneur magazine's list of "Top 10 Franchises" for 2013. So with so many locations and awards to brag about, is a 7-Eleven franchise a good investment?
If you think about that question, what we are really asking here is are convenience stores a good investment and if so, is a 7-Eleven franchise the best franchise option for you to choose? From experience, I can say, yes I think you get a lot of "bang for your buck"¯ with a 7-Eleven franchise. Before we talk about 7-Eleven specifically, let's talk about convenience stores as a whole first.
Despite the economy, convenience stores for sale have remained profitable by catering to the changing needs of the consumer. Take coffee for instance. In the past, many consumers would think nothing of hitting up the Starbuck's drive-thru for their morning cup of coffee, spending $4 or more, just on a drink. Now that people are more focused on watching every dollar they spend, convenience stores like 7-Eleven franchises are competing with big name coffee companies for that daily business by offering a more affordable coffee alternative. The same is true for many other products. Additionally, most convenience stores are small making it easy to get in out quickly, appealing to the customer that only needs one or two items.
Now, keep in mind, I've seen an argument opposing what I just said. In an article I read recently, one expert felt that because of the high unemployment rate there are less people traveling to and from work each day, therefore fewer customers are frequenting convenience stores. I am sure that could be true in some areas, but for the most part I think the convenience store business has held up well in these tough economic times and will continue to be a good business when it is in a high traffic location and it is managed correctly. Now let's talk about 7-Eleven franchise businesses specifically.
Visit 7-Eleven's website and you will quickly see that they devote some resources toward attracting, educating and supporting franchisees. They offer seminars to see if a 7-Eleven franchise would be a good fit for you and their site contains a lot of information about the franchising process in general. This is a good sign for a potential franchisee. It shows their commitment to their partners and the level to which they are willing to help.
The site mentions the franchise fee which ranges from $10,000 - $1,000,000 depending on a number of things but for that price, you are getting a good amount of name recognition, ongoing support, and are able to work with a company that has been in the industry for years. Being in the industry for years has given them valuable knowledge that can be hard to come by.
One thing that really stands out to me about a 7-Eleven franchise is that while there are ongoing royalties that need to be paid to the franchisor, you pay royalties based upon the store's gross profit. Under this system, the financial return to you and to 7-Eleven is only tied to your profitable sales, not just your sales alone. This is different from many other franchises which charge royalties based on a percentage of total sales. The 7-Eleven system could ultimately mean a more profitable business for you as a franchisee.
Backed by a powerful brand, a support system for franchisees and a royalty system that makes sense, I think a 7-Eleven franchise is a good investment. The downside is, they are a 24/7 operation and that is non-negotiable for all franchise owners so be prepared for some staffing challenges as that is a lot of shifts to cover. But use the support of the 7-Eleven franchise system and learn how to staff efficiently and it shouldn't be a problem!
About This Contributor: Peter Siegel, MBA is the Founder & Senior Advisor (ProBuy & ProSell Programs) at BizBen.com (established 1994, 8000+ CA businesses for sale, 500 new & refreshed postings/posts daily) working with buyers, business owners/sellers, business brokers, agents, investors, and advisors). Reach him direct at 925-785-3118 to discuss strategies regarding buying, selling, (or financing a puchase of) California convenience store businesses.
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