#10 on the Franchise 500: How 7-Eleven Plans to Double In Size In the U.S. By 2027
This story appears in the January 2019 issue of Entrepreneur. Subscribe »
Franchised:1964
Total units: 67,000
Cost to open: $47.1K–$1.2M
By almost any measure, 7-Eleven is a giant success. The brand, which has been franchising almost 55 years, now has 67,000 locations worldwide -- with nine times as many U.S. locations as its nearest U.S. competitor, AmPm, and eight times as many worldwide units as another competitor, Circle K. And that’s nothing compared with its ambitions. “Our growth plan is very aggressive,” says executive vice president Chris Tanco. “It’s to more than double in size [in the U.S.] by 2027, which would be our 100th birthday.”
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To get there, 7-Eleven intends to evolve to meet its evolving consumer. For example, it’s testing a delivery service in 24 markets, available through its 7NOW mobile app. The company also hopes to roll out a “scan and pay” program next year, allowing customers to skip checkout lines by scanning and paying for items with their smartphones.
But it appears that to keep growing, 7-Eleven will also need to resolve a long-standing and increasingly noisy confrontation with many of its franchisees. The news coming out of the brand in 2018 has been largely unflattering -- so much so that many Entrepreneur readers may be surprised to see 7-Eleven in our top 10. (It did drop from #2 last year to #10 now, but its growth and revenues were strong enough to keep it toward the top.) And the year ended on a particularly sour note, with the Board of the National Coalition of Associations of 7-Eleven Franchisees announcing a vote of “no confidence” in corporate management.
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Many franchisees say they’re being increasingly squeezed by the company, and they offered its updated franchisee contract as evidence: It contains a $50,000 renewal fee, which can in some cases be higher than franchisees have been paying currently. (The company counters that the fee is not due for 15 years.)
The company has publicly denied pressuring store owners and prioritizing corporate profits at franchisees’ expense. In an interview with Entrepreneur, Tanco says that 7-Eleven’s franchise model aligns the company’s motivation with that of its franchisees. “We want profitable sales, we want to negotiate with vendors for the lowest cost of goods, [and] we want to drive a higher gross profit margin, because we share in that gross profit.” The coming years will show just how well everyone can get along.
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