On October 26, 1982, Philippine Seven Corp. (PSC) acquired the license agreement to use the 7-Eleven Convenience Store system in the Philippines, with the chief mission to introduce an entirely new retailing concept to the Filipino consumers: operating a chain of 24-hours convenience stores.
Here are the FAQ’s in starting a 7-Eleven Franchise Business
Why the 7?Eleven system?
– The 7?Eleven brand is a global icon — instantly recognized locally and understood internationally. We’re known to customers nationwide for our products, quality, service, cleanliness and value. And we’re the benchmark for retail innovation and technology in the convenience store industry.
What are the differences between the 7?Eleven system and other franchise systems?
– Most franchise systems require royalty payments based on a percentage of sales. With the 7?Eleven system, you pay royalties based upon the store’s gross profit, that is, net sales receipts less the wholesale cost of the merchandise you sell. Under this system, the financial return to you and to 7?Eleven is tied to profitable sales rather than just sales. That’s why 7?Eleven goes beyond helping you increase sales by giving you the tools and support you need to increase your profitability.
What qualifications does 7?Eleven seek in potential franchisees?
– 7?Eleven seeks candidates that possess the ideal mix of personal qualities, professional experience, and financial standing to successfully operate a 7?Eleven franchise.
What is my initial investment?
– Franchise Fee amounting to Php 600,000.00 to be paid upon approval of the application. – Initial Store Supplies (Php 170,000.00), Initial Merchandise (Php 800,000.00), Construction Cost (approximately 2.03 Million Pesos), Advance Rent and Deposit (Depending on the lease terms) are settled before opening the store – Total Cash Outlay will range from 3.5 Million Pesos to 5 Million Pesos. Note: All amounts are VAT exclusive *The above-mentioned investment is just an estimation except on the Franchisee’s Fee.
How long does the franchise qualification process take?
– The entire process, from the first meeting with 7?Eleven to the store opening, can take as little as six months to over a year. The timeline varies largely, depending on the speed of construction, provision of utilities, release of local regulatory permits and licenses, and the schedule of training of the franchisee.
Can a Corporation apply for a 7-Eleven franchise?
– Franchises are awarded to individuals at first, but upon approval, the applicant may choose to be a Sole Proprietor, get in a Partnership, or form a Corporation. But the majority of ownership must be clearly with the principal applicant. In case Franchisee-Corporation, the Corporation must designate a Store Operator, who must own at least 51% of the Corporation, and one Assistant Store Operator.
Does 7?Eleven provide financing for potential franchisees?
– 7?Eleven has an internal financing program that can provide 60% financing of the Initial Merchandise Cost.
How much money will I make?
How much money you make will depend on how well you: -Satisfy your customers’ needs by providing product assortment, value, quality, service, and a clean, safe and friendly environment -Implement all 7?Eleven operating principles -Recruit and develop a top-rate, customer-focused store staff that can effectively communicate with your customers -Monitor your sales trends while managing your expenses
Who will build my store?
– Unlike most franchise systems, 7?Eleven does not require franchisees to build and stock their own stores, its 7?Eleven who provides franchisees with fully stocked, turnkey stores. Applicants may recommend their own general contractor but 7-Eleven will have the final discretion to approve if the contractor is qualified to build the store.
Do all 7?Eleven stores need to be open 24 hours a day?
– 7?Eleven operates its business 24 hours a day, 7 days a week.
What type of equipment does 7?Eleven provide?
7?Eleven purchases and installs the following major equipment in stores: – Sales and Table Counters – Gondolas – Walk-In – Fastfood Tables – Easting Tables and Chairs – Air Conditioning Unit – Open Showcase – Siopao Steamer – Hotdog Steamer – Rice Cooker – Microwave Oven – Glass Top Freezer for Ice – Slurpee Machine – Postmix Machine – Softserve Machine – Ice Maker – Amplifier and Speakers – POS Machine Scanners and Handy Terminal – Tidel Safe and Change Fund – BAT Rack – Juice Bubbler Machine – Coffee Machine – Mini Refrigerator The equipment you receive for your store may vary; depending factors of the trade area, governmental or building restrictions, and may not include all equipment listed above.
Can I suggest carrying my own products, or do I have to carry only what 7?Eleven offers?
– We rely on our Franchisees to tailor their store’s product assortment to meet the needs of their customers. In doing so, we have assembled a list of over 100 recommended plannograms to suite different trade areas. In addition, we do require that each store carry certain proprietary products, such as Slurpee ® and Big Gulp® beverages and 7?Eleven coffee, and other products that are unique to exclusive to the 7?Eleven system. In case, however, that Franchisee wishes to carry other products which are not included in the accredited list, Franchisee may submit the same to PSC for accreditation, subject to supplier’s compliance with the quality, quantity, delivery efficiency and other standard requirements.
What are the key advantages to 7?Eleven franchise system?
– 7?Eleven provides a fully stocked, turnkey operation – 7?Eleven obtains and bears the cost of the major store equipment. – 7?Eleven and you share in the store’s gross profit – 7?Eleven pays for 50% of the electricity. – 7?Eleven provides bookkeeping serivces. – 7?Eleven provides a support structure and Operations Field Consultants, Area Managers and District Managers to help maximize store performance. Most franchisors either do not provide these services, or they require additional fees if these services are available. At 7?Eleven, these services are included.
I have found a location that would be perfect for a 7?Eleven store. Can I turn that into my 7?Eleven store?
– In order to be considered for development as a 7?Eleven store, all potential sites must be submitted to our Site Development Team who will evaluate the site and, if appropriate, work with the developer or landlord to develop the site. If you are the broker, owner, or developer of a particular site that you believe fits 7?Eleven’s needs, you may want to send an e-mail to our PR Specialist in order to submit your site. If you are not already associated with the property, we would ask you to refer the appropriate person to the PR Specialist or to the respective Site Development Specialist. If you own or lease the site, you may be able to convert the site to a 7?Eleven store under our Property Conversion Program.
Will 7?Eleven help me if I don’t realize a profit?
– The profits you make in the store depend on how you satisfy your customers’ needs and how you execute Operational Metrics. However, 7?Eleven may temporarily take over the operation of your store in the event that franchisee income continuously is not sufficient.
What are the criteria for stores seeking to convert to a 7?Eleven Business Types?
The following business types may be candidates for conversion: – Convenience stores – Gas stations with Convenience stores or kiosks that can be expanded – Ground-up development (new real estate sites)
Can a Partnership apply for a 7-Eleven franchise?
– Yes, but the Franchisee – Partnership is required to name and designate its Store Operator who shall also have the authority to bind, manage and operate the Franchised store in behalf of the Partnership as evidenced by a Special Power of Attorney.
Who shall be responsible in acquiring all licenses, permits, bond required to open the 7-Eleven store?
– Franchisee shall be responsible for securing all licenses, permits and bonds that are required by any regulation or law and PHIL-7 for the operation of the Store or any portion thereof.
Who shall bear pre-operating expenses?
– All pre-operating expenses shall be for the account of the Franchisee, such as but not limited to: a) rent and other administrative charges, b) utilities, c) security services, and d) all other costs actually incurred during the construction of the Store until the Store is finally turned-over shall be for the account of Franchisee.
What will be the penalty in the event that Franchisee fails to commence training or discontinues training upon its own initiative?
– Any and all amount paid to PHIL-7, including the construction cost, shall be forfeited in favor of PHIL-7. Any expense incurred by Franchisee in connection with Franchisee’s effort to obtain a franchise for a 7-Eleven Store, including, but not limited to, out-of-pocket expenses, shall be solely at franchisee’s own risk, upon Franchisee’s own judgment, and not in reliance upon any statements or representations made whatsoever.
About the Existing Store Franchise
What are the qualifications to become a 7-Eleven franchisee?
Must be at least 25-60 years
Has at least 72 units in any College Course or Graduate of any Vocation Course (Experience in Retail and in Fastfood industry is a plus)
Must be willing to undergo full-time 3-5 months training
Has the ability to fund the required investment
Must be willing to devote time to oversee day-to-day store operations and take on a role of a Store Operator
Must be willing to work within the 7-Eleven Franchise system and standards
How much is the investment?
Your investment will vary depending on the average daily sales and gross profit of the store that you will be applying for. Total investment is less than half a million.
What are the inclusions of the investment?
Franchise fee which is equivalent to 1 day average daily sales of the store for the past 12 months
Refundable deposit (Performance Guarantee Deposit or PGD) which is equivalent to 3 days of the average daily sales of the store for the past 12 months.
How long is the ROI?
The return of investment will be conservative of less than a year, depending also on store management. Remember that your goal as a franchisee is to improve sales and profits and that will also improve your income.
What will be the operating expenses I need to pay as a franchisee?
A Franchisee is responsible for the following operating costs out of their share on the gross profit split:
Employee Related Expenses
Cleaning and Selling Materials
Local Business Tax
How are franchisees selected?
Interested applicants will undergo a Franchise Certification Program for three to five months, which is a combination of classroom and in-store training.
Applicants should pass the District and Zone Managers’ interview.
Do I get to choose which store I want to franchise?
Yes. You may choose a store listed and pre-determined by Philippine Seven Corporation.
How long is the franchise term?
The franchise term is 3 year renewable for another 3 years. The eligibility of renewal will also depend on franchisee’s evaluation.
What would happen if I want to terminate my franchise contract before the agreement is up?
The performance guarantee deposit (PGD) will be refunded with interest and Philippine Seven Corporation will take over as a corporate store. PSC shall also have the right to collect closing fee.
Do I need to have a retail experience?
Since FC3 is focusing more on the franchisees’ management of the store, having a retail experience or background is a plus.
Do I need to play an active role in operating my store?
Yes. As a part of the qualification, franchisee must be willing to devote time to oversee day-to-day store operations.
Do you assist franchisees to recruit and train staff?
The franchisee is responsible for the hiring of employees and all payroll expenses. Training program will be provided for the initial staff 6 days prior to the store turnover. Franchisees are also required to obey all relevant laws and legislation as an employer.
Can a Corporation and Partnership apply for a franchise?
At this time, no. It is best encourage that the franchisee should be also hands-on in the store operations.
What will be the penalty in the event that Franchisee fails to commence training or discontinues training upon its own initiative?
Failure to commence or discontinue training shall be subject to forfeiture of franchise application and franchise fee.
7-ELEVEN FRANCHISE PROCESS
STEP 1: INITIAL CONTACT
Complete the online inquiry form and attend our franchise briefing every Mondays and Thursdays at 10 AM or 2 PM at 7/F Columbia Tower, Ortigas Avenue, Mandaluyong City.
STEP 2: PRE-QUALIFICATION
Select your site from our list or if you already have a location, 7-Eleven will help you evaluate your site.
STEP 3: PREPARATION OF BUSINESS PLAN
After selecting your location, kindly let us know the ability of your store.
STEP 4: INTERVIEW WITH THE APPROVAL COMMITTEE
A three-level interview for our future franchisees. Let us know you more!
STEP 5: MEMORANDUM OF AGREEMENT SIGNING
After passing series of interviews, legal documents will be prepared for you to study before you sign, ensuring your full understanding of 7-Eleven franchise.
STEP 6: TRAINING
Prepare for your one month training and get to know 7-Eleven operations.
STEP 7: STORE OPENING AND TURN OVER
In a span of four to six months, you can now operate your own 7-Eleven convenience store.
If you do not have access to the internet, please contact Philippine Seven Corporation and an application will be forwarded to you:
The Franchise Manager
Philippine Seven Corporation
7th Floor, Columbia Tower,
Ortigas Ave., near corner EDSA,
Hotline: +63 (02)726-9968
Fax : +63 (02)705-5229
Mobile : +63 (920)950-8651; +63 (917)871-1686