The relationship between corporations and the companies or individuals who own outlets are ideally complimentary but are often complicated. Such is the case with 7-Eleven and its franchisees. According to the storeowners, the corporation has taken an increasingly bigger cut of the profits since the early 2000s, when the company and the franchisees used to split profits evenly.
Franchisees cry foul
There are other demands that have rankled storeowners as well. These include:
- A $50,000 franchise renewal fee
- The requirement that stores remain opened on Christmas
- The demand that all franchisees use suppliers who may not guarantee the best price
- Those who do not renew in 2018 could see profits shrink further
A symptom of a bigger problem
It is every franchise owner’s worst nightmare to buy a bad franchise. It would seem that 7-Eleven is crossing the line from what was once a good franchise opportunity. However, this could also simply be the new economic reality. According to a story in the New York Times, the 7-Eleven stores are not as profitable as they once were, citing changing consumer habits as the reason for this — pricing is an issue because consumers are willing to shop at big-box stores for cheaper prices.
Diverging interests now apparent
Typically, in the past some corporations have operated some stores themselves, which aligned the interests of the corporation and the franchisees. That practice is dying out, so the franchiser is more likely to focus on its own bottom line than that of its retail partners.
Sometimes owners need outside help
Owners of every kind of business are speaking about the increasingly challenging marketplace. As this dispute between 7-Eleven and retail partners shows, the changing complicated relationship with corporations and business owners is not immune. While there are strict standards and guidelines to running a franchise, having a business law attorney look over your arrangements and practices can help find solutions to difficult business challenges involving staffing, contracts and even meeting your bottom line.