What Franchisors Could Learn From The Ongoing 7-Eleven Store Chain Case
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7-Eleven has been witnessing issues with its franchisees for years, and it shows no signs of ebbing. With a number of 9,100 US stores, franchisees believe that the brand is making things increasingly hard for them to be profitable.
Here are a few ways to avoid such problems:
Avoiding private labels
7-Eleven franchisees are concerned about the company’s preference for private labelled items, believing that it is causing their sales to dip, and increasing pressure gradually. At their annual convention in Kissimmee, Florida, last week, the franchisees cited the private-label items as just one way the company had made it hard for them to make money.
Franchisors need to communicate with their franchisees, exchanging views and ideas. Initially, dropping the plan of private labelled products could work in your favour. But if the market demands for it, coming up with a mutual decision can help to stabilize the issue.
Carefully designing a contract
Franchisees are criticizing 7-Eleven for forcing a new contract on them that states how much they have to pay for the goods sold in their stores.
A perfectly designed contract plays an essential role in running a business smoothly. But a poorly designed contract can disrupt the franchisor-franchisee relationship. According to a news report, franchisees are criticizing 7-Eleven for forcing a new contract, aggravating broader tensions over the suppliers.
Franchisors should remain uniform with the alignments of their interest, carefully designing the contract for a happy and prosperous future business.
Splitting profits equally
In the early 2000’s, 7-Eleven and the franchisees split profits equally. But the brand has taken an increasingly bigger cut, which could result in further profits shrink.
The distribution pattern of profits decides the fate of a company in a long run, as it’s all about making money. The company and franchisees should split profits equally, without taking an increasingly bigger cut.
This article was originally published on Franchise India by Shahram Warsi.