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President’s Message

January 2016

Thank heaven for a wonderful 2015 and the increase in sales that came with it. Now 2015 is behind us and we are looking forward to another prosperous year in 2016 with increased sales and gross profit. 2016, however, comes with its own challenges, many of which are beyond our control. There is, for example, the $1 per hour increase in the minimum wage and the new requirement in California for the franchisee to pay the mandatory 3-day per year sick leave for each employee. This loss of franchisee income is not shared by 7-Eleven and is the sole burden of each store owner.

As a business person I would like to have a plan in place to recover these losses and go beyond to make 2016 even better than 2015. I have received numerous calls from other franchisees regarding this issue as well. Some of the plans to accomplish this include ideas from 7-Eleven, Inc. 7-Eleven wants to drive customers into the stores with value offerings to the customer. In the month of January a 50¢ promotion for small coffee will help drive customers into our stores. Beginning in February there will be a 10¢ per cup increase in coffee. This increase in retail will help improve our gross profit dollar in the hot beverage category. In addition for the year there will be increased funding by vendors on promotions.

At the store level the franchisee can revisit their work schedule to make sure they have appropriate labor hours allocated for the business. There may be places to cut some hours without jeopardizing their business.

As many of you are aware stores in the Greater Los Angeles Zone are currently getting remodeled. There are also expanded assortments in merchandise along with guided replenishment. We are hoping that remodeling stores, expanded merchandise assortments and guided replenishment will increase sales and help grow our businesses, and therefore improve our bottom lines.

For those not aware 7-Eleven, Inc. has hired an independent company to conduct interviews of various franchisees regarding the new contract. They are getting feedback from franchisees to see what they want to see in the new agreement. The corporation has not disclosed anything as of yet but I will keep you informed.

Just a reminder that the 7-Eleven Experience Day in Las Vegas will be February 2nd through February 5th. Also, National Coalition Board of Directors meeting will be on held in Monterey Bay February 15th – 19th.

~MSL


February 2016

NCASEF Meeting Update

At the National Coalition Meeting in Monterey in February Greg Franks (SVP Ops), Jeff Schenck (Franchisee Communications and Advisor to CEO), Bruce Maples (Sr. Director Franchise Support), & Mike Crist (Project Leader – Holistic Review) gave a presentation regarding the 2019 Agreement Process.

  • Franchisees were assured that all promotions in the center of the store will be fully funded by vendor.
  • Promotions on the wall are not fully funded by vendor, but moving forward vendors will participate more in these promotions

Major Franchisee Concerns:

How to handle the minimum wage increase

Pricing:

  • Coffee is going up 10 cents P2
  • Increase in Hostess / Nutrition bar prices
  • Increase in retail prices throughout the entire store
  • Greater LA 7-Eleven is targeting “Urban Promo Pricing” to all stores

2019 Agreement

  • 2016 – SEE mentioned that a third party is collecting information by interviewing some franchisees which are part of a CEO Round Table, NBLC and some national board members
  • 2017 – Gather, combine and draft new agreement with information collected from third party interviews
  • 2018 – Roll out new agreement to certain franchisees to work out any changes, start final draft
  • 2019 – New agreements will be given to franchisees

Remodel of Store + ETA (Expand the Assortment) Project

During last summer’s visit of SE1 __ management team announced complete remodel of Greater LA Zone stores.

  1. Moving central POS to against wall
  2. Increasing cooler door height (new, taller door)
  3. New floor
  4. Coffee island and hot food __
  5. New sign

The understanding was “ETA” was part of this remodeling so store operations are not interrupted and there will be less inconvenience to our guests. But now we are learning the ETPA Project is going to start ___ major remodeling. This will interrupt store operation and ___ and guest ___ or ___ ETA and remodel.

Employment Practice (Labor & Employment Laws)

Renewal Requirements by National Counsel – Eric Karp

  1. SEI decides to keep store open – SEI sole judgement
  2. Food Service Standard Compliance
  3. Notice of Renewal 9-12 months in advance
  4. Renewal / Commitment operation permitted by law
  5. Not in Material Breach
  6. Minimum New Worth maintained previous 12 months
  7. 3 or less Breach Notices previous 24 months
  8. Complete training SEI Specifics
  9. Pass store operation review
  10. Sign the current franchise agreement – “may differ”

Maintenance Cost

  • There will not be an increase in maintenance costs at this time. Charges will be addressed again in May 2016

Facebook

Connect with 7-Eleven on Facebook. We will share 7-Eleven Promotions and pictures from meetings and events

https://www.facebook.com/FOASC

FOASC App

We now have our app up and running for Apple and Android. Please download the new app to stay in the know about upcoming events, communicate with other franchisees and connect directly to us via our Facebook page.


 

March 2016

In the Summer of 2015 Joe DiPinto and his senior management team attended the FOASC members meeting and announced the planned remodeling of the Greater Los Angeles zone stores. The program “ETA” (Expand The Assortment) was later added to the remodeling plans. Phase one has since been completed, and the second phase of the remodeling, including the ETA project, will begin soon.

The remodeling projects consist of relocating central sales counters against the wall, new floors, taller vault doors, new exterior store signs (if permitted by local ordinance), new wall coverings and electronic hot foods menu. If a particular store does not need remodeling only the ETA component will take place.

The Greater Los Angeles franchisees are excited about hot food expanding into chicken sandwiches and hot melt sandwiches. We are aware cigarette and beer sales are declining lately so the effort is to replace those lost sales with other items, such as fresh food. The culture of 7-Eleven has been to stock shelves and ring sales with minimal labor. Under those conditions the stores can be managed with a GP of 35% or more. However, with the introduction of sandwiches and hot melts, which will expand to cheeseburgers, the entire operation is more labor intensive. We would therefore like to see a higher GP in these categories. Also, because these are new products launching in the stores, much of the public is not fully aware that they are available. We would like to see aggressive advertising and increased display space so that our guests can be enlightened to the existence of these products and have a fair opportunity for purchasing them. The strategy as it currently exists will have excessive write-off’s which will likely lower overall GP. We are therefore requesting that 7-Eleven corporation assume more of the write-off’s for the initial months following the launch of these new products so that the franchisees, in fear of losing GP, will not be reluctant to have a full display of these new products.


April 2016

This week we had our Board of Directors and Members Meeting in Diamond Bar, CA. The hot topic of discussion at the BOD Meeting was labor cost for preparing the new hot foods. With such low GP, are franchises making any money? The business model of 7-Eleven is to buy product, stock it and sell it for a profit. The new model includes preparing food, much like a “food service”. Some members feel as though SEI is not considering the labor cost aspect for franchisees.

One of our guest speakers, Mark Stinde of Asset Protection spoke about robberies being on the rise across the country. Stephen Kellison, Zone Asset Protection Manager mentioned being in a preliminary stage of working with an outside vendor to provide a patrolling service nationally. This has been tested in four store in Los Angeles, four stores in Florida and eight more throughout the other markets. A 6% shortage decrease was shown in all the test stores. SEI is working with an attorney and is close to being in the testing phase of “Digital DNA” which is a system that can identify people with solely a digital data base. Lastly, a third party monitoring system has begun a small test of cigarette packs with GPS tracking installed, which alerts law enforcement upon leaving the store.

Norm Hower, Vice President of Greater LA Zone, talked about Joe Anderson working with the marketing team on Market 2173 gradually expanding into Urban Promo Pricing. He also mentioned how SEI is interested in optimum funding and has been “putting the pressure on vendors” for fully funded vault promotions. Another topic Norm spoke on was Remodeling. 150 remodels are schedule until July / August 2015. Expand the Assortment (ETA Project) is coming early 2016. Field Consultants have the remodeling schedules and are currently being trained on the process. One of the last issues addressed by our guest speakers was the matter of Food Handlers Certificates being required or not. In conclusion, the requirement depends on the city the store is in. Most cities do not require eac h employee to carry the certificate, but only one manager. Check individual city guidelines to confirm.

Twenty-eight franchisees throughout entire country including FOASC Honorary Chairperson, Nick Bhullar and Jawad Ursani under Keith Jones’ leadership are meeting with congressperson in Washington, DC this week to discuss the “SNAP” program policy. The change in EBT has been proposed by USDA which states that if hot food sales make up more than 15% of your total fresh food sales the store can lose its eligibility to accept EBT (also known as Food Stamps). If this passes, the store will lose all the EBT sales, so our representatives went to Washington, DC to attempt to put a stop to this change.

Our Trade Show is coming up next month in Pasadena. We will be giving away $25,000 total in raffle prizes. We are encouraging all franchisees to attend and bring friends and family. Also, we all understand the importance of ROI, so please participate to support our vendor partners.


January 2017

We has a successful 2016 year and held a great first Board of Directors Meeting of the 2017 year.

With a very successful trade show, fruitful member meetings and an under budget holiday party, our business checking account balance has significantly increased from December 2015 to December 2016. All outstanding 2016 invoices have been paid or have a pending payment status.  Over 275 vendors have been contacted and sent 2017 event information. Four vendors (Hershey, Shamrock, Kellogg’s & Vixxo) have paid in full for 2017 package deals.

The 2017 Events Schedule has been approved, uploaded to our website and sent out to the vendor partners, FOASC directors and members.

  • BOD Meetings: January, March, September & October
  • Member Meetings: February, April, June. August & November
  • 2017 Trade Show: May 17 – Pasadena Convention Center
  • Charity Golf Tournament: Sept 20 – Industry Hills
  • Holiday Party: Details TBD by committee

2017 Committees have been assigned:

  • Golf Tournament: JB Sethi, Nick Bhullar & Gursharan Nat
  • Scholarship: Barry Gauthier, Mann Sachdeva & Byron Bennett and/or Jassi Randhawa
  • Membership: Billu Samra, Mann Sachdeva & Nick Bhullar
  • Trade Show: All FOASC BOD to participate in obtaining new vendors

The number one concern of franchisees is the new 2019 Agreement. A fair agreement is detrimental to the livelihood of so many 7-Eleven store owners. Last year National set up a “2019 Agreement Committee”. The goal of the committee is to discuss and negotiate what franchisees would like to see in the agreement. FOASC has two Directors on the National 2019 Agreement Committee board: FOASC’s former president and honorary chairman, Nick Bhullar along with Jawad Ursani, in the 7-Eleven system for over 30 years. Nick and Jawad are actively involved in meetings with SEI Executives regarding franchisee concerns, which are outlined in order of importance as:

  • GGPS
  • Gasoline
  • Long Term Contract
  • Renewal Fee

The four main points 7-Eleven considers when negotiating agreement terms are:

  • Balanced Economics
  • Protect the 7-Eleven brand
  • Independent Contractor Status
  • Marketable Agreement

The board has approved a contribution on behalf of FOASC to the National 2019 Agreement Legal Fund in the amount of $40,000 and/or $100 per store.

Please note, all franchisees are expected to know and follow the state Paid Sick Leave laws. Click here for more information.

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