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Noted tensions on display for one iconic franchising model

On Behalf of | Aug 7, 2018 | Business Formation & Planning |

If the hat you wear as a commercial principal is marked either “franchisor” or “franchisee,” you obviously covet smooth company-local operator interactions in your business relationship.

Candidly, you don’t want to be associated with a franchise that is fraught with tensions and summary changes that impact adversely on the bottom line.

Let’s focus on the storied 7-Eleven franchise model for a moment, which the New York Times did recently in a national report. That company has many thousands of locally operated outlets spanning the country, including multiple Connecticut stores

Reportedly, things aren’t cordial and upbeat these days between the 7-Eleven corporate level and franchisees. In fact, notes the Times, the management-operator relationship “has been deteriorating for years” and has soured to the point where many franchisees are contemplating a pulling of the plug on their businesses.

The cited underpinnings of their discontent are many and varied. Among other things, they include dismay concerning these issues/matters:

  • Demand that stores feature 7-Eleven private-label offerings that customers don’t always prefer
  • Requirement that specified vendors be used in lieu of local operators’ more informed choices
  • Insistence that certain items be stocked that have a comparatively small profit margin
  • Ultimatum that franchisees hurriedly renew contracts and pay a $50,000 fee to keep their businesses intact

“The alignment of interests for 7-Eleven has changed,” says a national spokesperson for franchises in the United States. He and other critics of recently mandated policy adjustments state that the company has grown less concerned with franchisees’ welfare and has grown greedy in its take of the profits.

It’s now a “my-way-or-the-highway franchise system,” stresses one advocate for a U.S. franchisee coalition.

The business dynamic across many American industries is frenetic and in flux these days, owing to regulatory changes, new consumer preferences and a host of other factors. Time will tell how entities like 7-Eleven fare going forward.