Top 4 Reasons to NOT Buy a 7-Eleven Franchise


Here at Franchise city we are brokers and
help people find the right franchise. A lot of that has to do with educating investors
as we try to do in these videos on our Youtube channel. One of the brands we are frequently asked
about is the 7-Eleven Franchise. 7-Eleven stores can be found on almost every
street corner and they are one of the most visible franchise brands. Many people think that means it must be very
successful, and that 7-Eleven stores will make you rich. But what does 7-Eleven’s corporate success
mean to you as an individual franchise owner? If your dream is to buy a 7-Eleven and you
really want to invest intelligently knowing both sides of the story let’s look at 4 reasons
you might not want to invest in a 7-Eleven franchise. 1. 50% or more of Revenues to 7-11. 7-Eleven is an “Operator Model”, or what we
like to call “buying a job”. So 7-Eleven buys the store, land, building
and equipment and then leases it back to you – the franchisee. 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% of your revenue. Franchise owners often find they have to work
in the store themselves in order to make any money at all. Its interesting how 7-11 describes this arrangement
on their website ” A gross profit split means we are invested” and you can see in the image
here. 7-Eleven in my opinion is misleading buyers
by not disclosing they take at least 50% of your gross revenue upfront. And if you think 50% is bad wait until your
store starts earning more money. Unlike many other franchises that reward you
for doing well with a declining royalty – 7-Elevens fees go up the more money you make. so 52% 55% 56% and on and on. How much does a 7-Eleven store owner make? Well a lot depends on what you are selling
as some items have much higher margins but a very approximate estimate is 5% of store
sales so a store doing $1,000,000 in sales would generate about $50,000 for the owner. There are more accurate ways to forecast 7-Eleven
franchise earnings but that will give you a ballpark. Now you know why you often see owners working
in the stores. You can see in these images taken from their
website nowhere do you hear about this until much later in the process and AFTER you have
completed a 7-Eleven application. If 50% profit share is so great, why not disclose
it? And viewers make note of this tactic because
it is what we call the “Puppy Dog” sales tactic. Once a buyer falls in love with a particular
franchise early in the process and has all these positive visions of owning the franchise,
it is very difficult later down the process to change their mind even after seeing things
like 50% share of revenues. We see this frequently with our own clients
where we show negative franchise attributes like massive failure rates or franchisee dissatisfaction
yet they hold on to this false idyllic vision that was instilled on them early in the process. Never let emotions guide you through the franchise
process. 2. Lack of Control. One of the benefits of franchising is that
you have a nice blend of owning your own business with the support of an established brand. With most franchises you maintain a decent
level of control. It’s no secret however that the 7-11 business
model has been considered by many actually as an employee/employer relationship rather
than franchisor/franchisee. It’s interesting that David Kaufmann, a lawyer
representing 7-Eleven stated: �I frankly think there is no merit to the argument that
7-Eleven is an employer instead of a franchisor. And 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. I think it is specious and insulting to claim
that 7-Eleven is targeting these franchisees� I guess there is 2 ways to view this. One is they are targeting people who just
don’t know any better and using them – another is that they are giving them an opportunity. That’s up to you to decide. However ask yourself why we don’t see any
franchise industry experts, investors, or celebrities buy a 7-Eleven. The SBA (Small Business Administration) also
shunned 7-Eleven. For those of you who don’t know the SBA is
a government organization that provides support to entrepreneurs and also guarantees loans
on most franchises. A few years ago in an email to Franchise Times,
FRANdata President Edith Wiseman said the U.S. Small Business Administration has �identified
issues within the 7-Eleven franchise agreement that they would have to overcome to obtain
SBA financing,� including excessive fees, the requirement that store receipts are deposited
into the franchisor�s account and the fact that the franchisor owns the assets of the
business and provides its payroll services. So again we are seeing elements of what many
consider to be excessive control. 7-Eleven stores are also not eligible for
the E-2 investor visa as the US Department of Immigration dept. has also decided the
lack of control makes 7-Eleven a poor investment for E-2 investor immigrants. 3. 24/7 Lifestyle. As a 7-Eleven franchise owner you are legally
obligated to keep your store open 24 hours a day 7 days a week. Because 7-Eleven is just about everywhere
do you think the best neighborhoods are available? Keep in mind that every year there are 7000
robberies at gas stations and 15,000 at convenience stores – is that something you want to bring
into your life? 4. Gouging and Perceived Unethical Practices. If you take 2 minutes to search online you
will find no shortage of owners and ex-owners quite displeased at 7-Eleven. Take a scroll through Unhappy Franchisee’s
website on this page – I’ll post the clickable links down below. You will find comments from actual owners
on many topics related to their negative experiences to do with gouging, unethical practices, hard
work for low pay, and many more. Or how about this franchise owner pushed out
by 7-Eleven who ultimately opened up a competing store across the street called 6-Twelve? Interesting story
how he had to throw out food nobody wanted to the tune of $200 a day but 7-Eleven forced
him to do so. Or what about this news story “7-Eleven takes
bite out of American Dream”. There is lots more if you take the time to
research. So is 7-Eleven a good choice – they will provide
you the positives, and there definitely are positives, we have given you some of the negatives
now it’s up to you to decide. If you would like to get the real story on
franchises that nobody else talks about don’t forget to like and subscribe and leave your
franchise comments and questions below. If you are currently looking for a franchise
give your broker a call at franchise city.

100 comments on “Top 4 Reasons to NOT Buy a 7-Eleven Franchise”

  1. phlodel says:

    My parents bought a 7 Eleven store in 1965, when they were known as Speedy 7 Eleven. At that time, they were open from 7 AM to 11 PM. The profit cut taken by the company was 40%. In the three years my parents owned the store, the cut went to 60%. Dad had to work the store 7 days a week, 12 hours a day. After he was beaten death one morning, the company ran the store to keep it open. They "lost" $35,000 in 6 weeks. In 1968 dollars.

  2. MiroBG says:

    this was … englihtening. The 7-11 near me is in a hot location and always busy. I watched them go from Active to Under contract on Loopnet twice only to come back and lower the price. Wondered what's up considering there are always people shopping even at 3am.

  3. Brian The Explorer says:

    Very nice video. I didn’t know 7-11 corporation was that sneaky and dirty. I guess it best to get a lawyer before getting into a franchise. No wonder why items in 7-11 is much more expensive than in a supermarket.

  4. George Fedelski says:

    This is a pile of balonie, Everyone that works at the 7-11 I go to has a new car one guy even has a Cadilac CTS

  5. Marcus M. says:

    Just to see a burnt out 7-11 clerk at the counter who works 12 hours a day 7 days a week between several stores was enough for me to say no thanks to ever put ANY money into franchising…..in fact I think I might never go back into a 7-11 because of poor business practices and exploiting immigrants.

  6. David Reynolds says:

    Wow! This is pretty informative. Now I know why the vast majority of 7-11s as well as other convenient store franchises are run by immigrants. That is because immigrants are more easily and legally fooled by the franchisers than those who are natural born in this country. Who in their right minds would go into business on a 5% or less profit margin?

  7. Jonathan Palmer says:

    Atlanta doesnt have 7/11

  8. Dal Bailey says:

    I was chatting with one guy who was corp management, but they were wanting people to invest $25K to start….So that $150K is puzzling.

  9. Abu Ali BH says:

    7-11 sounds alot like Uber. Both scams.

  10. Ronald C Krause Jr says:

    Since the bad neighborhood perspective was brought up in this (and other) presentations…

    Why not also bring up the grave importance of how a franchise investor should also have truly epic levels of insurance.

    Besides the bathrooms, every corner of that business should be covered by cameras. A camera that will clearly watch every employee, every customer, help to catch any type of theft, customer issues, and the best one yet – provide cover and documentation of accident claims and major crime.

    If one single customer or one single employee has an accident claim; despite any claims of legal protection such as LLC; one can face both civil action and even criminal prosecution. One could easily lose the entire business, and even personal assets could be on the line.

  11. RenchRage says:

    Any ideas on Fudrukers

  12. Ric Nyc says:

    Thank you for opening people's eyes! That's disgusting! Is this supposed to be called "Capitalism"?

  13. Kevin Olesik says:

    7-11 's are robbery targets …

  14. FreedomFighter 2017 says:

    A former neighbor of mine lost everything over a franchise he and his wife had … it was heartbreaking to watch their house being repossessed along with everything else they had … heard later that their marriage ended in divorce …

  15. RealestRealist says:

    UNBELIEVABLE …. Are people who have access to cash and credit actually that markedly stupid in real reality?! I don't think I would have fallen for that deal when I was nine!! Geeze

  16. RealestRealist says:

    What ever happened to SUB & STUFF … ? Their French fries were wonderful

  17. RealestRealist says:

    Amazing .

  18. Tiberian Fiend says:

    (((David Kaufmann))) is proud he's helping 7-Eleven import the foreign hordes… why am I not surprised?

  19. Jeff Bourke says:

    7-Eleven had massive issues in Australia. Massive, massive issues.
    Now they are upfront about the charges on their franchise website.
    http://franchise.7eleven.com.au/benefits.html
    Wow they have "guaranteed gross income"…. how can you go wrong?

  20. Attila Vidacs says:

    Sounds like buying into a franchise is a terrible idea

  21. Reid Wallace says:

    Just look into the eyes of a 711 owner and you can tell there must be better investments out there.

  22. John Douglass says:

    yeah 7-11 is also known for planting a company store next to any really successful franchise store and siphoning off more of their revenue. I worked briefly at a 7-11 and as only a lowly clerk I knew their franchise agreement was a raw deal

  23. demendez says:

    in Taiwan, have a 7/11 is scream & money. Is the country with more 7/11 vs total population.
    Maybe US 7/11 is not good, but taiwan is amazing. People do ALL in 7/11, pay all bills, print, scan, pay tag, eat, drink tea, coffee, lunch, dinner, buy toys, etc etc etc…

  24. llVIU says:

    wait, 7/11 takes 50% of the profit or 50% of the money you make? Because 50% of the profit is far more than just 50%… it's more like what, 75%? 90%? I mean if you LOSE money, then what does 7/11 take from you?

  25. Walter White says:

    Apu would disagree

  26. Hug Savage says:

    I live in Alabama and have been all over the south never have I ever seen a 7-11

  27. Kenneth T says:

    Thanks very informative

  28. Charley Mitchell says:

    Change to a warmer filter, to much blue.

  29. vegasbob007 says:

    Whaty about a Cumberland Farms franchise ?

  30. Jason L says:

    Is there any difference between the franchiser/franchisee relationship and feudalism?

  31. G H says:

    The local 711 near me is promoting everywhere that the store is for sale. Now I see why

  32. Clamp-On Multimeter Channel says:

    The one by my house just closed in June. The biggest part was it was on a busy street. Now I know why it closed.

  33. illogically insane says:

    Besides forced remodel you have completely forced promotion's. When they do buy one get one free with drink the owner has to employ twice as many people and use twice as much food and for half the cost and nothing extra from Subway to the owner it's just another day to subway

  34. doctor jones says:

    Dang it😯❗i just bought 7 of these with contracts for eleven more already signed😖❗looks like i'll be working 24-7 for the next 7-11 years😩😳❗anyone want to buy eleven franchises from me😯❓i'll sell you eleven for the price of seven😏👍👌✌and you can have my wife to😕😄❗✌👌👍but i'm keeping my dog😄😛😏😸😽👍👌✌

  35. Alan Hovanec says:

    Wanted to add a little context that may have been missed. Full disclosure I am not currently a franchisee, but am a corporate employee researching it. Yes, they take a 50% split of profit, however the franchisee is not responsible for rent, utilities, property taxes, advertising, etc. The franchisee is responsible for payroll, maintenance, cash variation, shrink, and some other misc costs. Yes, this is more inclined to buying into a job than an actual business, however you do not have to pay for a building, equipment, setup vendor relationships, taxes, etc. You do have control over your store. You can modify the prices as you see fit and do not have to rely on the SRP. The only requirement in that department is you have to order from their approved vendors for 85% of your store's inventory. Most stores have around 2500 items, which means you can bring in 375 items from wherever you want. Most franchised locations earn between 30-35% gross profit. So on a two million dollar store you can expect to earn $600,000-700,000 before the split and $300,000-$350,000 after split. Payroll makes up the bulk of any business's cost. If you run a 2-2-1 scheduling model to account for the 24/7 hours you can expect to pay $150,000 or so depending on your state's minimum wage along with how well you retain a competent staff. The other costs will shake out to be around $50,000 per year give or take based on quite a few variables. That leaves the franchisee $100,000-$150,000 profit for this scenario. So, that isn't a bad profit for not having to pay rent, utilities, setup vendor relationships, develop your own branding, purchase equipment, etc. This is a turn key business, however that comes with a cost. If you would like to earn a better profit margin then you will have to invest considerably more than it costs to get into a 7-Eleven franchise and then cross your fingers you can compete with the other businesses that have a leg up right out of the gate simply because they have brand recognition.

    Just like real estate and other businesses; location is everything. If you are trying to buy into 7-Eleven's with low customer counts, poor foot traffic, and in area's that are not growing then don't expect to make much money. If you don't buy into a two million dollar store then you will have to work long hours to make a decent living. Be choosy in the location and make sure you get into one that you can grow by 8-10% per year and you can earn six figures working 45-55 hours per week.

    I am in the process of exploring franchising and I am still not 100% sold that it is for me. I do know that it does have a lot of pro's and the comments to this video seem to be focused solely on the negatives. I can say with 100% certainty that 7-Eleven is NOT a hands off franchise business. You will need to have lots of input and likely run your store if you only buy one. If you buy more than one you will need to be in and out of them often. Location, location, location. Buy into the right area and you will do just fine.

  36. Kilo Byte says:

    "Interesting customer base" Ah yes, I believe the liberal media refers to them as "urban youth".

  37. just me says:

    I managed a 7-Eleven store in Florida. Looked at buying the store, but after I worked the numbers they gave me, the only way you can make money is to have your family working there. That's why you see only Pakistani and Bangladesh people buying them.

  38. Sambhu Singh says:

    Why your title is so depressing?

  39. This is the Beginning says:

    Why not just open up your own convenient store . Like the neighborhood deli. A store is a store, right.?

  40. This is the Beginning says:

    Many think 7-11 is a American owned co. But its actually is a Japanese owned company. That about says it all.

  41. Mike MakesRight says:

    The channel ought to be called No franchise in any city.

  42. griffen98 says:

    Thank you for your honesty

  43. brainey001 says:

    Well it depends there are some stores with insanely high gross profit, sales of 4 million a year and over a million in pure bottom line profit… They are very rare but they do exist and a 50/50 split in those stores will be very profitable

  44. Lincoln Rockwell says:

    This guy sounds exactly like bill whittle in his sentence delivery and tone.

  45. bbpage889 says:

    Good friend was a store manager of two in San Diego and the owner ended up working the stores with his wife and 2 kids. He has been trying to sell them for 3 years now. Said it was the worst thing he ever had done.

  46. Nigel Danclar says:

    Awesome awesome educated video thank you you have a new subscriber and potential client.

  47. Clout Head says:

    What is the difference between being an employer and a franchiser? I’m curious to know why 7/11 is so adamant in saying they’re not an employer.

  48. Phillip Borbon says:

    Crazy I have been seeing 7-eleven small business ads on my Facebook, good thing I seen this. Thanks

  49. LV Teach Me says:

    7 Eleven: Sharecropping
    Also, in personal life: Once a person has a certain belief/opinion of someone-no matter what new info presented-they will not want to accept counter intellegence.

  50. joeskis says:

    Mandatory 24/7? Cities decide whether or not a place of business can be open 24hours. How can 7-11 force that?

  51. MrDagr8rylz says:

    Quiznos tried to reel me in, with their "own a franchise for $12k" promotion I was like this guy said "in love" in the very beginning of the process I had to really think about it, the price is too low. And Quiznos eventhough the sandwiches are way better then subways Quiznos are always empty. Then I did some research joined some forums and literally every single franchise owner of Quiznos had horror stories to tell about Quiznos corporate office and royalties, I'm very surprised that Quiznos is still around.

  52. omkar chauhan says:

    50% of profits.
    Sounds to me like the worse trade deal in the history of trade deals.

  53. Felix Rodriguez says:

    What about a 5 guys franchise?

  54. 1968196859 says:

    slavery, plain and simple. thanks.

  55. ThomasAwesome says:

    They don't just target immigrants. They target military veterans too. Trying to get in on that VA loan for small business.

  56. ExtrovertedCenobite says:

    And the number 1 reason NOT TO OWN a 7-11 is because it is owned by SEVEN & I HOLDINGS, a Japanese company that is as SLEAZY as can be. They are nothing but a bunch of greedy scumbags. Do NOT get involved with these sleazebags.

  57. Sean Stitt says:

    Is my tv broken?

  58. CARTIOLOGY FILMS says:

    Now I know why all 7-eleven owners in Los Angeles areas are Indians.

  59. Money Mike says:

    I knew a guy with a no name gas station that was busy all the time. The only profit was the gambling machines.

  60. weaktech says:

    you lost me after you said "a educated"

  61. Jameson Oscar Winnie says:

    I don't know how I found this channel but I'm big on entrepreneurship and business even though I have no interest in owning a franchise of any type but only critique is I wish to video stating color the entire time and not move to Black and White. If you can make a video on the five most important metrics to look at as success for any business including a franchise or artistic Endeavor that would be a cool video that I would like to see

  62. Resplendent Moron says:

    Wow. I will never shop at a 7-eleven again.

  63. Michael Hartman says:

    Please recommend a franchise. Just name one. Surely there's one good franchise!?!

    Btw Iive in Toronto Canada and I am aware of only 1-2 7-11's. No where near being on 'every corner'

  64. Augustuvi Primce dea.V. says:

    My mom thought about buying one as her retired job, guess better not

  65. GuinnessandPizza says:

    I once walked into a 7-11 and bought a snickers…it was melted.😐

  66. Bill X says:

    Never walk into an agreement that you cannot walk out of without getting hurt. Most businesses are predatory, so heck with Shylock franchisors like 7-11.

  67. David Garcia says:

    7-11 type of business are not safe – a cousin of mine owned a 7-11 store he was robbed numerous times, then finally he was hit in the head and lost over 50% of his memory and ended up losing the business!!! he had no insurance etc… to fall back on basically he lost everything and could not work anywhere ended up on SSI after his claim was denied twice!!!

  68. Kamran Khan says:

    I want to start my own business but videos like this scare me to start anything. In what business there is less risk of losing money?

  69. Benoit Bvg says:

    Please do a "Top 4 reasons this channel keeps appearing in my recommended section even though I never even considered owning a franchise and am currently living off of French taxpayers' euros" and I might consider subscribing.

    Might.

  70. Tamara Walker says:

    50% profit!! I make more than that hustling!! I really want to own a franchise but glad I found out more. What's a good franchise to ow

  71. aden ibrahim says:

    Your making me hate franchise

  72. Garcel says:

    The old bait and switch… Unmoral buisness tactics

  73. David Cleland says:

    My tip of you want to be a seven eleven manager buy 3 or 4 locations close together and manage them

  74. gurkirpal singh says:

    I am a 7 eleven multiple franchisee , just want to add to you guys knowledge that franchisee does split gross profit dollars with corporate but doesn’t pay rent , utilities, expensive maintenance, and accounting expense. Vs in many other franchises you pay for utilities, rent , construction cost. All said 7 eleven is an affordable franchise as compared to many other models. Yes its got issues but is it all that bad !! Probably not. There is no easy money out there.

  75. Steelmonger888 says:

    Don’t need your advice to not open a 7/11.

  76. Tim Tresch says:

    Honestly, this made me never want to shop at 7-11 again.

  77. Blakpepa says:

    My mind is completely blown by this!!!! I had no idea that 7/11 was an operator model and not a franchise model and the cost involved

  78. Anklebiter 91 says:

    Also be aware here in vegas the money is in your gaming machines. Not store merchandise

  79. Youtube Veterinarian says:

    My guess is the immigrants take on the challenge because you have to work really hard and most lazy shithead americans aren't going to rise to that occasion

  80. habibbi alikafe says:

    7-11 paid me $92.50 to not badmouth them about 9 months after quitting. Strange

  81. AB says:

    IMHO a clean shiny convenience store is a clean shiny convenience store, I don't think the average consumer cares about branding. And will corporate be there to chase off armed robbers? How about protection racketeers? Will they make you sign a no compete if you just want to be a cashier and learn the ropes? I feel sorry for the poor people who bought one and just wanted an honest day's pay for an honest day's work.

  82. J W says:

    It's like working for Negan from TWD

  83. Tausif khan says:

    How is shell franchise ??

  84. Menuman says:

    Great video and informative.

  85. Matthew Rosenthal says:

    OK, can you tell us which Franchises to buy, instead of what NOT to buy?

  86. The_Other _Seto_Kaiba says:

    Only sign the agreement with 711 if you can get their CEO and top board executives to operate your personal store 24/7 and no one else. They will surely love that and hate you for it for stringing them along thinking you will be purchasing one and then deny them at last minute.

  87. james says:

    I haven't seen a 7/11 in about 20 years lol

  88. Joey Jojo says:

    owning any franchise doesn't seem like a good idea! thanks for the good info

  89. Вася says:

    I feel bad for stealing their gummies now

  90. Green Giant says:

    The thumbnail looks like an agitated Jewish man. You could be the next Jerry Stiller. 🤣

  91. Amer Khaqan says:

    Nice video. Your suggestions are inline with my personal research. But surprisingly, your website recommends AAMCO which as per my research is even worse than 7/11, I can write a whole page on what is wrong with them and their model, similarly, MACO is not good either.

  92. John Lennon says:

    Just another franchise "opportunity" that is nothing more than a modern day version of being an"indentured servant".
    However, in the 21st Century you are now PAYING your overlord to enslave yourself. LOL

  93. Rocket Man says:

    The Blue Man lives

  94. Dawn Ureta says:

    Thank you so much for an eye opening, planning to franchise but have to think about more.

  95. Antonio Costa says:

    Do about a Snap on Tools franchise please

  96. Erik Brickman says:

    We live in Stratford Ontario Canada and we used to have 3 7-Eleven stores but today only 1 out of 3 locations remains by a shell gas station located directly across Erie Street at an intersection of Erie Street and West Gore Street and is doing just well.

  97. Kim Him says:

    I'm looking for things to buy. Any suggestions.

  98. Stuey Griffith says:

    Reason #5 Infinite access to frozen coke will no doubt lead to ETERNAL BRAIN FREEZE!!!! 😲😲😲

    which let's be honest. that's not such a bad way to go! 😉

  99. alexsilvacorp says:

    That's a terrible deal. If you are invested by sharing 50% of GROSS profit, you should also share 50% of any loss in the P&L. Just saying.

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