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Labor Shortage Prompts 7-Eleven Franchisees to Seek Relief From 24-Hour Mandate

NCASEF asking franchisor to “recalibrate” terms of the franchise agreement
National Coalition of Associations of 7-Eleven Franchisees (NCASEF)

UNIVERSAL CITY, Texas — Following a period of restricted hours due to the pandemic, the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) is asking franchisor 7-Eleven Inc. to reconsider its mandate that stores resume 24/7 operations beginning May 24, 2021.

Universal City, Texas-based NCASEF is the umbrella organization for 41 local franchise owner associations; it is an elected, independent body representing the interests of more than 7,200 7-Eleven franchised locations in the United States.

The group described the situation as “very dire,” citing “a crippling shortage of labor, higher operating costs, lower gross margin and lower net profit.”

NCASEF is calling on 7-Eleven Inc. to recalibrate the terms of their current franchise agreement.

Despite the relaxation of COVID-19-related restrictions across the country, employers throughout the service industry are struggling to fill positions, according to the association. The shortage of workers has led some large, national quick-service restaurant chains to keep dining areas closed and other retailers to curb hours of operation, it said. NCASEF estimates that at least 60 7-Eleven stores that are owned and operated by the company are closed overnight.

When the pandemic struck, 7-Eleven Inc. approved franchisee requests to close overnight. Now, franchisees say finding help to staff overnights will be extremely challenging, said the group. Additionally, franchisees in many markets say overnight sales barely cover their cost of labor. With the shortage of available workers, many franchisees will be forced to cover the shifts themselves, causing stress to their health and families. Even with enhanced worker recruitment tools, franchisees say it is hard to compete with other retail companies or delivery services on wages, benefits and flexibility.

“The 7-Eleven franchise agreement allows the corporation to keep more than 50% of the gross profits of each sale. As labor and other direct-store operating expenses keep increasing, franchisees are earning less and working more,” said NCASEF Executive Vice Chairman Michael Jorgensen. “One possible remedy for franchisees is to raise retail prices, but that creates a competitive disadvantage in the marketplace, which can adversely affect sales and profits.”

7-Eleven Inc.’s fresh foods initiative, which follows a broader emphasis in the convenience store industry, creates a demand for more labor, NCASEF said.

“7-Eleven wants to be a place that customers think of for fresh food, but our franchise agreement is based on a convenience-store model, not a quick-service restaurant model. The structure of the agreement is flawed. We need a contract that makes this model workable and profitable for franchisees,” said Jas Dhillon, a Los Angeles area 7-Eleven franchisee and treasurer for NCASEF.

Nearly half of the 7-Eleven stores in the U.S. sell gasoline. 7-Eleven Inc. is making record profits on gas while franchisees get a set commission of 1.5 cents per gallon, according to Jorgensen.

Store employees have to maintain the area around their gas pumps. “Because of today’s extremely tight labor market, many franchisees will struggle to safely maintain a 24-hour schedule, and the company needs to acknowledge that,” said Jorgensen. “Franchisees have nowhere to turn except to 7-Eleven for relief from crippling labor conditions and unfair contractual terms. The corporation knows the pressure we are under.”

In a statement provided to CSP Daily News, 7-Eleven Inc. said, “7-Eleven remains focused on supporting and promoting franchisee profitability, safety and success. Since the start of the pandemic last year, 7-Eleven has provided franchisees with more than $173.5 million in investment, savings and support as they own and operate essential businesses on the front lines of their communities.

“Going back to March 2020, 7 Eleven has engaged and worked closely with many franchisee leaders to support all franchisees’ efforts to attract new store employees. These varied efforts have led to 50,000 new store employees hired by franchisees or 7-Eleven Inc. We continue to make this support available to this day.

“In 2020, average franchisee gross income remained at an all-time high. In fact, 7-Eleven’s support of its franchise business owners has led to franchisees generating over 21 billion in gross income for their businesses over the past 10 years. The 7-Eleven gross profit split model ensures that 7-Eleven as a franchisor remains very focused on supporting franchisee profitability.”

Based in Irving, Texas, 7-Eleven Inc. operates, franchises or licenses more than 72,800 stores in 17 countries, including more than 9,500 in the United States.

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