SAN ANTONIO — Members of the executive board of the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) visited Tokyo for a series of meetings with Japanese 7-Eleven franchise owners, who are pressing for a change to the 24/7 convenience-store culture as they face what they say are shrinking profits and corporate leadership that they claim has demonstrated an unwillingness to engage in substantive communication.
“Our association has maintained communication with several leading Japanese franchisees over the past couple of years, and they invited us to Tokyo so we can share information and ideas,” said Executive Vice Chairman Michael Jorgensen, who was joined on the trip by Vice Chairman Rehan Hashmi and Treasurer Jaspreet Dhillon. “7-Eleven operators in the U.S. are struggling with many of the same issues. Like us, they love the brand but are frustrated with their situation.”
Dhillon, a Los Angeles franchisee, said, “By strengthening our alliance with Japanese franchisees, we are sending a message to 7-Eleven that they can’t ignore us. At the end of the day, we want the same thing. We want the 7-Eleven brand to be successful, and we want to be personally successful. We need to work together to make that happen.”
“The coalition continues to be out of touch with 7-Eleven franchisees," 7-Eleven Inc. said in a statement provided to CSP Daily News. "The fact that they are on a trip to Japan illustrates their lack of connection to the concerns of everyday franchisees in America. During the past 10 years, the 7-Eleven brand has generated over 15 billion dollars in earnings for franchisees across the country. In fact, average franchisee gross income is at an all-time high. The opportunity with the brand is tremendous as attested by the 4,700 franchisees that signed a new 15-year franchise agreement in the last 12 months and continued robust interest from entrepreneurs looking to franchise with this system.”
A labor shortage in Japan has put franchisees at odds with 7-Eleven’s parent company, Tokyo-based Seven & i Holdings Ltd. Along with the issue of 24/7 operations, Japanese franchisees are exceedingly concerned about the losses they face from food waste connected to 7-Eleven’s emphasis on fresh food and hot food, according to NCASEF. These products tend to have higher gross margins but carry materially higher labor costs and create losses when franchisees bear the cost of food disposal, the group said.
“We know that encroachment is also a major problem in Japan,” said Hashmi, a Chicago franchisee. “Japan’s convenience-store market is saturated. Franchisees face growing competition for sales—sometimes from other 7-Eleven franchisees who have been sold a store in close proximity to another. Franchisees have complained about the practice but tell us the company has been ignoring them.”
7-Eleven is the top c-store chain in Japan, with more than 21,000 stores.
The Japan Fair Trade Commission launched an investigation into the country’s convenience-store industry focusing in part on whether the 24/7 operating model and other restrictions are putting some franchisees at a disadvantage.
“[The] experience and treatment of 7-Eleven franchisees in Japan closely mirrors the challenges faced by 7-Eleven franchisees in the United States,” NCASEF General Counsel Eric Karp said in a letter to the Japan Fair Trade Commission’s chairman. “There is a substantial disparity in economic and legal power between franchisors and franchisees.”
7-Eleven corporate has had an ongoing, contentious relationship with some of its store owners. NCASEF has issues with 7-Eleven’s new franchise agreement, which the group said gives 7-Eleven more control over its operators. NCASEF’s board took a vote of “no confidence” in 7-Eleven management in late 2018, and it urged its members to boycott 7-Eleven’s annual trade show.
San Antonio-based NCASEF is the national trade association for 7-Eleven franchise owners. Founded in 1973, it is an elected, independent body composed of 41 franchise association members who represent more than 4,400 7-Eleven owners in the United States.
Irving, Texas-based 7-Eleven Inc., a unit of Seven & i, operates, franchises or licenses more than 66,000 stores in 17 countries, including about 9,100 in the United States. 7-Eleven is No. 1 in CSP’s 2019 Top 202 ranking of c-store chains by number of company-owned retail units.