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Franchisees Spar With 7-Eleven Over Coronavirus Aid

Coalition seeks additional financial assistance, contract concessions to help weather the pandemic

UNIVERSAL CITY, Texas — Noting that franchisees are seeing “dramatic” decreases in sales with the coronavirus pandemic, the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) has voiced a complaint with 7-Eleven Inc., claiming that the franchisorwhich has committed $95 million to help franchiseesis not doing enough to support them.

In a letter to 7-Eleven Inc. leadership, NCASEF said that “the 7-Eleven system as we know it today has been and will continue to be unsustainable … [and that] many franchisees are in very real danger of not being able to survive the financial fallout from this pandemic beyond May.” It added that “the failure of any significant number of franchisees will have a dramatic and lasting impact on the entire 7-Eleven system.”

NCASEF said that many franchisees’ stores are experiencing sales declines not only because of the pandemic but also because of the contract with 7-Eleven Inc. “Before the pandemic, 7-Eleven implemented a series of unreasonable changes, which continue to negatively impact franchise financials,” the coalition said.

The letter is the latest round in an ongoing battle over that contract. “The reality is that a failure of a massive number of franchisees will not necessarily be due to any failure on their part, but by the failure of the management to accept the very flawed nature of the system and the contract itself,” NCASEF said.

In a response provided to CSP Daily News, 7-Eleven Inc. said it has committed nearly $95 million to support franchisees as they provide their local customers what they need in a clean and safe environment during the pandemic. “We’ve provided direct payment of credits that will result in millions of dollars in cash flow assistance to franchisees in March, April and coming months,” the Irving, Texas-based company said. “These adjustments include direct payments of operations credits to franchisees, waiving the April advertising fee, waiving interest franchisees pay on their inventory and passing along third-party renegotiated maintenance fees.”

7-Eleven Inc. continues to purchase and supply franchisees with cleaning supplies, including soap and hand sanitizer, disinfectant, sink sanitizer, gloves, face masks and shields, thermometers and social distancing floor decals, it said. And it is installing plexiglass sneeze guards at front sales counters to help reduce the spread of the coronavirus.

The corporation has set up a Franchise Financial Solutions Center to further support franchisees and to work with them to navigate individual issues the COVID-19 crisis has caused. It is also helping franchisees obtain loans through government stimulus programs.

NCASEF said the $95 million in support from 7-Eleven Inc. is “very misleading.” It said that “although this support is helpful to alleviate concern in the short term in this situation, any franchisees doing actual analyses of their businesses will realize that much greater support will be needed, both in the short term and the long term. And while this is appreciated, it is also very self-serving.”

The group said that by providing cleaning products, 7-Eleven Inc. is only protecting its brand and trying to keep stores open when some stores should close “due to safety, liability, financial and labor concerns in this pandemic. A $5,000 operation credit distracts many franchisees from making this very important calculation.”

NCASEF said that “to avoid the financial failure of franchisees, [7-Eleven Inc.] must take the following actions immediately until this pandemic is over":

  • Reduce the 7-Eleven charge by 30%.
  • Suspend the advertising fee.
  • Defer all loan payments that franchisees have with 7-Eleven Inc.
  • Reduce all maintenance charges by 50%.
  • Eliminate the credit card fees.
  • Eliminate the interest fees.
  • Lend funds to franchisees to stay above water with 1% interest for five years for any under equity issues.

7-Eleven Inc. did not comment directly on those proposed actions.

Universal City, Texas-based NCASEF is an elected, independent body representing the interests of more than 7,200 7-Eleven franchised U.S. locations.

Operating, franchising or licensing more than 70,000 stores in 17 countries, including more than 9,300 in the United States, 7-Eleven is No. 1 on the Top 40 update to CSP's 2019 Top 202 ranking of U.S. c-store chains by number of retail outlets. CSP will release the complete 2020 list in June.

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