I was just wondering the franchise business for 7-11 is worth doing or not? Here are some details I got from 7-11 website.

THE SCHEME IS AS FOLLOWS:
1.TERM
The Franchise Programme is for tenure of 10 years. (With an option to renew for another 10 years)

INTIAL FRANCHISE FEE, LICENSE FEE & SECURITY DEPOSIT
Franchising Fee -RM 100,000 (Non Refundable)
Stock Purchases – RM 100,000 (approximately)
Security Deposit – RM 50,000 (Refundable)

PROFIT SHARING RATIO
7-Eleven and Franchisee shares gross profit on about 50:50.

INCENTIVES
A 2% incentive from monthly sales turnover will be given to the franchisee.

STORE OPERATING EXPENSES

From the share of gross profit, 7-Eleven will be responsible for:
• Auditor cost
• Store rental
• Depreciation
• Store Insurance & license
• Electricity Charges

From the share of gross profit, Franchisee will be responsible for
• Store Staff cost
• Cash and inventory shortages
• Water & telephone charges
• Store Maintenance
• Store supplies (straws, plastic bags, cups, etc.)
• Store miscellaneous expenses (stationery for staffs, travel expenses, etc.)
• Royalties - RM1,000 (only applicable on the 6th year onwards)


Do we get to choose our location? Can we pick existing stores? Is there any analysis for typical business revenue for a 7-11 store in KL ?

This post has been edited by darkearth: Apr 8 2010, 06:45 PM

to your questions above. Yes, Yes, Yes.

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Added on April 8, 2010, 10:42 amAnyway, just call up the HQ line. they will be able to furnish you with more information.

Do know that good store selection are running out.
Last i heard, they have over 100+ confirmed franchisee with another 100 from Pernama retiree taking over the stores.
http://www.pernama.com/ln6_events.html#top

This post has been edited by king_majesty: Apr 8 2010, 10:42 AM

you can only pick existing store.
no, you cannot pick any store, only the stores that 7-11 willing to let go as franchise.

what if they release store that are not making money .
there is no store that is not making money, just making less but never losing money

this is a stupid scheme... yes, u get to choose which store you wan.. my fren said they already do an analysis on each store, Berjaya will hold the top 10 profitable store, like all around Bukit Bintang... i think Cosway also doing something like that right...

why is it a stupid scheme?

Janick1437: Its either the scheme is stupid or the company is stupid to allow you to take a huge profit cut from their top 10 earning stores.

nicely said

What kinda of average monthly revenues and profits are we talking about here?

There is this KK store like 7-11 opening up everywhere. Anybody knows if they are profitable?

With that kind of money investment and a 50-50 profit sharing, won't it be better to open you own kedai runcit in a housing estate or something?

Unless theres a big discount on distributor price or rental fees, then in long run it might be good. I've seen 7-11 opening in Lumut together with whole rolls of Kedai Runcit, many also 24hours. But 7-11 looks the cleanese but is also the most expensive, less choices.

You mean "Orange" ?

*purely coming from a academic angle*

Don't forget, 50-50 sharing will cover your misc expenses. Maintenance? rental? .
There are alot of items you will not be able to source cheap as you do not have the purchasing power or economics or scale.
other things you need to consider is buying into the brand name, training(shortening learning curve)

Too many choices might not be a good thing either. 20/80 rules states that 80% of your profit comes from 20% of your items.
as long as you have your core fast moving products.

Generally 7-11's business model is trending towards Differentiation rather than Cost Leadership or Market Seg. so it is normal for the goods to be expensive. Only hyper market can compete in CL.
example of why 7-11 is practicing Diff. (Slurpee, Coffee, Fresh Food, ATM/Reload/Fax Services etc)

There are many 7-11 Stores that are loosing money. As a unit, their books show negative cash flow in operating income.

Last year the standard practice is to franchise the top 50 profitable stores as a marketing scheme to attract investor. If you have missed this opportunity then don't bother getting in.

Dear all,

Few questions here:

1) How many staff is needed to run this 7 eleven and how much is their salary per month? I heard that some of the staff asked to do overtime as well. According to my research, for the 24 hours we need 5 staff. 1 morning, 2 evening, and 2 night.


2) How much is the estimated profit for every month? Since now AMBANK is offering to loan max RM175k for a max tenure of 5 years @ 7.3%, i expecting that we need a gross profit of RM10K after deducted the 50:50 profit sharing with 7-e.

This RM10K will used for:
i) Staff salary
ii) Maintenance except (IT & Aircond)
iii) Water and phone bill
iv) Staff travel, stationery expenses
v) Other costs like straws, cups, etc

Is it possible for us to get net profit of RM3K?


3) Regarding incentive 1% of sales royalty, from 1-5 years will paid by 7-e. But start from 6-10 years, it will paid by us. Since we finished paid our loan starts from year 6, we can earn more money but due to this incentive which can consider as quite high, is it worthy?

For example:
Let say sales of the month = RM200K
1% of RM200K = RM2k

If our gross profit still maintain as RM10K, then our net profit again will remain the same.


I hope experts and those who running the business can give suggestions on this.

Appreciate your reply.

malaysia's 7-11 suck big time, just compare with SIN and THAI !
berjaya will only let you have their biz if it is not profitable . . .

i prefer KKmart anytime ...

if you are retiree, then ok, if you are fighter, i suggest not.

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Added on February 1, 2011, 6:59 amjust ask the staff of the store that u intend to take over, you need 10 staff minimum for a 24 hours store my friend.


This post has been edited by thechallenger: Feb 1 2011, 06:59 AM

saw their advertise front ddor 7-11.
salary for their staff is 800pm.. few months back.. not sure now

bump !!!

After investing 250K you get 3K??? Why take so much risk? Buy gold or property and sell after 5 years and you will have better profits.

But only investing by getting loan..

Just rm75k, every month Rm3k..

Property is a very good investment, but now LTV 70%. For us to get loan 90%, we need to show our active income which is preferred by financier. Since working don't have many free time and therefore i prefer to run a business which is proven working and able to earn at least rm3k per month for me.

Does anyone know how much is the gross profit for 7-e before or after 50:50 profit sharing with 7-e?

Thanks

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Added on February 4, 2011, 4:03 pmbump bump !!!

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Added on February 6, 2011, 1:25 pmbump bump !!!

This post has been edited by logezzz: Feb 6 2011, 01:25 PM

Orange is own by the guy who runs RM 2 store.

One of my broker friends claim he finds location for Orange to rent the place. Some rental are just ridiculous for the convenient shop to sustain.

In my mind:
1. The owner is trying to brand his convenient store, which in the ends if he really do sell the business, it might worth something.

2. Or just purely run the business for the sake of business, as he has too much money.