7-Eleven corporate can take 50 percent of a franchisee's revenue.
  • 7-Eleven corporate can take 50 percent of a franchisee's revenue.
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A 7-Eleven store closed its doors around the end of July, and is now boarded up. It was located on University Avenue at Herman Avenue in North Park, across the street from CVS Pharmacy. Before 7-Eleven moved in, the storefront was occupied by a financial company branch office.

That store had been dealing with shoplifting for sometime, according to an employee I talked with a while back after I saw a shoplifter leaving the store with some snacks. She said they could do nothing about it; employees couldn’t chase after a petty thief, and calling SDPD was useless for such crimes.

In recent years I have noticed homeless individuals and shady characters hanging out in front of this store, or close by. That could have scared away customers, wanting to avoid unpleasant confrontations.

Angela Landsberg, executive director of North Park Main Street said, “I do not know if 7-Eleven has plans for another operator to take possession of the property. The former 7-Eleven has a 10-year lease that was not fulfilled.” Landsberg hopes the company will keep “the boarded-up building free of trash and graffiti until the space is filled.”

René Vidales, chair of North Park Planning Committee, told me: “My two cents is that they could not sustain their business without securing a liquor license. Their business model is probably set up that way. How many 7-Elevens do you know that don't sell liquor?”

Franchise City does not see a 7-Eleven franchise as a good investment for most people. The website advises: “Despite the relatively large investment you will make, typically $150,000 or more, 7-Eleven corporate will take close to, or in same cases, over 50 percent of your revenue. Franchise owners often find they have to work in the store themselves in order to make any money at all.”

You rarely see a Caucasian owner of a 7-Eleven franchise, due to the long workdays required. Quoting a lawyer for 7-Eleven corporate, Franchise City indicated: “7-Eleven has taken folks from Pakistan, India and Vietnam, taught them how to operate a store, and introduced them to the American economic system.”

The amount the owner will make varies by location and by other factors. But “a very approximate estimate is 5 percent of store sales, so a store doing $1 million in sales would generate about $50,000 for the owner,” says Franchise City.

Attorney Seth Kaplowitz is a lecturer in finance with SDSU’s Fowler College of Business. Kaplowitz addressed the importance of location: “A business can fail based on any number of factors ranging from pure management, financial stress, embezzlement, and/or poor location. If customers perceive that visiting the location is easy and convenient, that business will draw clientele. If the location of the business is perceived as inconvenient and more of a hassle than it's worth to make a trip to that location, it will be passed by.”

Corporate communications at 7-Eleven Corp. did not immediately reply for comment on this particular store closure. Their website states this about franchisees: “How well you operate your store and serve your customers will definitely impact your profit margin. Sometimes a store underperforms, and in these cases, 7‑Eleven does have a short-term income support program that provides temporary financial support if gross income falls below certain levels.”

Another North Park 7-Eleven is located at University Avenue and Texas Street. Unlike the closed store, it does sell liquor, beer, and wine.

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Comments

AlexClarke Aug. 10, 2018 @ 6:36 p.m.

Most franchises are great for the franchisor but not too good for the franchisee. I have attended several franchise opportunity meetings in which they make a great sales pitch but the bottom line is that the franchisor sees your money first. Aside from the percentage they take there are a hundred other ways they get most of your money. Of course 7-11 goes after immigrants who are easy to convince and who will not stand up to corporate greed.

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dwbat Aug. 10, 2018 @ 7:16 p.m.

While not having any experience with franchising, I would have to agree with you. I've read that some fast food franchisees aren't happy with low-price specials they are required to sell. Apparently there's little or no profit with these loss-leaders, but HQ forces them to comply. The typical prlce point for these (at Jack, Wendy's, KFC, etc.) seems to be $5 or so.

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danfogel Aug. 13, 2018 @ 8:37 a.m.

Depends on the organization and the franchise agreement. Not all promotions are honored by all locations. If you read the small print and see the phrase "at participating locations", or something similar, then you know. For example, Taco Bell has a promo with MLB teams in the west. If the score a certain amount of runs, then the next day you get 3 free tacos with the purchase of a large drink...at participating location. Arizona DBacks have had that for 4 or 5 years, and after the first year, the Tucson franchise owner stopped doing it. I know a McDonalds franchise owner in Arizona. Some promos they do some they don't. Then again I have been told by someone who owns Rubios franchises that all locations run the same ones. Again, it depends on the company. In my experience, at least in fast food, franchisees have more say than you might thing they do.

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dwbat Aug. 11, 2018 @ 8:09 a.m.

I think a lot of people do, too. I also miss Revivals in Hillcrest, as I shopped there regularly. It was certainly cleaner than Baras, and merchandise was definitely displayed better.

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Scott Marks Aug. 11, 2018 @ 2:34 p.m.

Speaking of Baras, looks like there is another vacant retail space available for rental in Hillcrest.

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dwbat Aug. 11, 2018 @ 2:50 p.m.

It'll take a week just to clean the stink out of that space. I can't imagine any business wanting to rent it for any purpose. I'm thinking it's likely a tear down.

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Visduh Aug. 10, 2018 @ 8:49 p.m.

I don't doubt that franchisors tend to stack the deck in favor of themselves. There have even been rebellions, one of them locally a couple decades ago, by McDonald's franchisees. (No, they are not all licenses to print money.)

My take would be that 7-Elevens tend to do best in more affluent areas. University Avenue in North Park isn't affluent at all. Where people are mostly interested in quick gratification and are not price conscious they will dart into a 7-Eleven. Add in the shoplifting and the grab-and-run larcenies, and you have a problem. Maybe a large and nasty-looking bouncer type of of security guard could stop much or most of the rip-offs, but then you have to pay him or her a decent wage, and there goes more of the profit margin. With no support or backup from he SDPD, and I'm sure that is the case, the easiest way out was to just quit, close it up, and leave.

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dwbat Aug. 11, 2018 @ 8:20 a.m.

Yes, and when the homeless continually parked themselves and their belongings in front of the store, it didn't add "curb appeal" to that 7-Eleven. Of course, they do the same outside the CVS across the street, often sitting right under a "No Loitering" sign.

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dwbat Aug. 18, 2018 @ 1:22 p.m.

I walked by 7-Eleven at University Ave. and Texas St. today. It looks like the homeless and sleazy street people are hanging out there now, since they lost the other location on University. One of them was riding a yellow Ofo bike (likely disabled and stolen).

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dwbat Aug. 12, 2018 @ 11:14 a.m.

I guess for a McDonald's franchise (like the ones on University Ave. in Hillcrest, and at El Cajon Blvd. and Texas), it's an ongoing chore just to keep their bathrooms clean. The homeless hang out around those two places constantly. [No, I don't eat there but I travel in those areas often.] I wonder what residents of the nearby luxury Broadstone apartments at Texas and Howard think of McDonald's there with its homeless problem and the nearby nighttime "street people" who are often petty criminals.

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dwbat Aug. 20, 2018 @ 3:30 p.m.

By coincidence, the U-T just ran a story on 7-Eleven franchisees in SoCal (http://www.latimes.com/business/la-fi...">http://www.latimes.com/business/la-fi...). The story said the new owners (Seven-Eleven Japan Co., Ltd.) have changed the franchise contracts, and some franchisees in the area are selling their stores. Seven & i Holdings Co. is the holding company for the new owners.

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danfogel Aug. 20, 2018 @ 6:23 p.m.

Well, the parent company Seven & i Holdings Co. and 7-Eleven Japan have been the majority owners since the mid 90's when Southland sold them about 75% ownership for about1/2 Billion dollars and Seven & i Holdings Co. has been the holding company for at least a decade, so I don't know that "new owners" is an accurate description.

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dwbat Aug. 20, 2018 @ 10:10 p.m.

You're correct. That ownership info was new to me.

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danfogel Aug. 21, 2018 @ 8:56 a.m.

Of course I'm correct. Why else would I provide information unless it was correct information? Just because something is "new" to you doesn't mean it is actually new. For someone who outwardly appears so fastidious when "correcting" others, apparently when it comes to yourself, not so much I guess.

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dwbat Aug. 21, 2018 @ 9:35 a.m.

Actually, I welcome corrections. It doesn't bother me at all. On the other hand, some participants here have a hissy fit when their information is corrected.

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danfogel Aug. 21, 2018 @ 12:46 p.m.

????? My comment was not to whether you like being corrected or not, it was the fact that while you appear to be fastidious about correcting others, you apparently are not fastidious about the correctness of the information you provide. Hence the reference to "new " owners when they have owned the business for at least a decade.

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dwbat Aug. 21, 2018 @ 4 p.m.

I rarely make mistakes. Being human, occasionally I do. End of discussion.

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danfogel Aug. 21, 2018 @ 4:33 p.m.

“It is unwise to be too sure of one's own wisdom. It is healthy to be reminded that the strongest might weaken and the wisest might err.” ― Mahatma Gandhi

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danfogel Aug. 21, 2018 @ 4:34 p.m.

“All men make mistakes, but a good man yields when he knows his course is wrong, and repairs the evil. The only crime is pride.” Sophocles

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danfogel Aug. 21, 2018 @ 4:35 p.m.

“Success does not consist in never making mistakes but in never making the same one a second time.” ― George Bernard Shaw

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danfogel Aug. 21, 2018 @ 4:40 p.m.

He person who makes few mistakes makes little progress.

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danfogel Aug. 21, 2018 @ 4:44 p.m.

Making mistakes is not a problem. Denying ones is a problem

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danfogel Aug. 21, 2018 @ 4:46 p.m.

“Mistakes are the growing pains of wisdom.”

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danfogel Aug. 21, 2018 @ 4:47 p.m.

And finally (for now) “Einstein even made a few mistakes. Have you seen his hair?”

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