Is Investing in a 7-Eleven Franchise Worth It? 🤔

it's a 7-Eleven franchise cost worth the profit potential we're going to go through everything you need to know about franchise costs potential profit if you're looking to open up a 7-Eleven franchise in 2023. so 7-Eleven different ways to spell it Dash just the the numerical 7-Eleven began its sorta in 1927 when Joe C Thompson began selling milk bread and eggs across its stores until then they were only selling uh blocks of ice with growing success of his store's Innovation Joe Thompson was eventually able to buy Southland Ice Company he then converted Southland Corporation a company focus on opening community stores across the state by 1946 a new store model had increased dramatically across several locations his success led the stores extend their operating hours from 7am until 11 pm hence 7 11 7 days a week franchise and began in 1964 after Southland Corporation purchased an additional 100 126 Speedy Mart franchise convenience stores mostly in California 7-Eleven currently has more than 9 000 stores across the United States 10 000 plus across the world of the ones in the United States 7 000 franchise stores as well as initial 1800 or so that are corporate owned and operated additional units and all over the place Europe Asia and in Mexico throughout Latin America if you want to open up a 7-Eleven generally you're gonna buy a 7-Eleven from from corporate where they're gonna find the site build out the site have the initial inventory open up so you can expect to pay anywhere from forty seven thousand up to 1.1 million dollars for a 7-Eleven the franchisor is looking for franchisees prospective franchisees that already have a US Green Card U.S citizenship you also had to add previous management or customer service experience and have an excellent credit history this franchise model is really structured in a way that you receive a full holy stock TurnKey store you have to also have minimum liquid assets ranging from 50 000 to 250 000 plus depending on the store the amount that you're paying to effectively buy the store as well as five to ten years of multi-unit management experience preferably in convenience retail or Food Service Industries so they're pretty selective so the calculations it's a bit of a split profit model but unlike Chick-fil-A where you're getting basically the the the profit the net profit together with the franchisor fifty percent Chick-fil-A fifty percent to you as the owner operator and you only have to invest ten thousand dollars seven eleven corporates taking off the gross profit so imagine you got gross profit nine hundred thousand to 1.4 million dollars per 7-Elevens FDD they're gonna charge you 489 000 plus basically gross profit minus nine hundred thousand times 0.58 divided by the gross profit for the last 12 months they're taking off the top they're taking a lot of money out of the business it's not a standard royalty where it's simple like five percent it could be significantly more than that so just understand where you're getting into and we saw a similar model with Kumon when we originally calculated the royalty we had it way off we were calculating a 12 royalty numerous Kumon franchisees were like no dummy you're reading the FDD wrong our effective royalty is more like 30 so we're not a big fan at vetted Biz when you have complicated ways of paying the franchise War the royalty it should just be a flat percentage as well as if the franchisor is making money on selling you products that's another red flag So based on the median sales estimated for 7-Eleven franchise locations at an average five percent profit margin we expect it's going to take about nine years to recoup your initial capital investment they do have big plans for for 7-Eleven they want to integrate their synergies with the speedway brand leverage skills operational efficiencies Costa savings they also want to expand the digital strategies literally programs in the seven now delivery all these can help you as a franchisee but it's just the financials seem a little tight especially if you had invested like 500k or a million dollars it's hard to have four five six seven elevens you generally own one you generally own two not a lot of margin for a day-to-day manager so just be mindful of that so with the lengthy payback period the long hours in the store it might be worth exploring another business model with split profits we've looked at the pass at Chick-fil-A's business model Raising Canes which is no longer a franchising but they have a really good manager training program where you have a really nice upside as well as Dutch Bros which again is no longer franchising but the store managers apparently make a ton of money so it might be worth if you're looking to get into the to the retail space not to be a business owner but be a very very high paid manager as is the case effectively with the Chick-fil-A franchise where Chick-fil-A operators are making in the range of 200 to 400 000 with just a ten thousand dollar commitment so for me I don't see how the numbers for 7-Eleven add up but don't take my word for it talk to some existing franchisees of 7-Eleven as well as some former ones that recently left the system if you currently own a 7-Eleven or thinking about investing in 7-Eleven we'd love to hear from you shoot me email at Patrick vettedbiz.com thank you foreign

Channel: Vetted Biz | Best Franchise Opportunities to Buy

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Id: YyUcHTY0MG0

Length: 5min 42sec (342 seconds)

Published: Tue Dec 06 2022