Fuel Operations! Will Our Franchisees Survive? FAIRNESS Is All We Want ByKenPatel, FOACPresident 7-ELEVEN FRANCHISE OWNERS ASSOCIATION OF CHICAGOLAND ByKenPatel FOACPresident For years and years, before the split was changed, the sale of gasoline at 7-Eleven storeswashelpingthefranchiseesandSEI. But, what about today? All of us who have gasoline stores know exactly what’s going on, andwe are very well awareof the“real deal.” While I am certainly happy that my partner made more money, I must say that I was very disappointed in the end result for my fellow franchisees. Not only did stores lose gallons due to high pricing motives, but franchisees lost their 1.5cent per gallon, aswell asmanyguests (whowouldbuygasandmerchandise!) As of today, here’s where we stand… Thehistoryof ourcompanyisthatgasoline has helped keep 7-Eleven afloat and We have a non-branded gas store, yet thriving. I don’t think any of my fellow our gas is usually priced higher than the bignamebrands likeMobil, Shell, BP, and franchiseeswill denythisfact. Speedway! Toaddfuel tothefire(nopun Back in 2009, franchisees were forced to intended), when we moved away from signtheamendedcontractwherethepolicy CITGO, we lost the “fleet guests,” and for of receiving20-24%of theCPG(cents per years and years we didn't even think of gallon) was removed, andastrict 1.5cent havingafleetprogram! Truthfully, I amjust per gallonpolicywasput intoplace. While veryconfusedonwhat SEI’sstrategyis! it’s true that SEI paidout $30+ millionto franchisees tokeepthemhappy for a few Truthfully, I am years, those funds quickly dried up and confused as to what franchiseessoonbeganfeelingthepinchof SEI’s strategy is. operatingagasolinestore. After the amendments were signed, SEI's policyof fuel pricingchangedfromgallons toGross Profit. What this meant was that therewasaconstantdeclineingallons, but theCPGkeptongrowing. Asaresultof this adjustment, SEI maderecordprofits. I can tell you for a fact that a majority of stores in the Heartland Zone have lost anywhere from 10-40% of the gallons. And, thebleedingisnot stoppinganytime soon. Thepricingstrategyisabigquestion. This story continues on page 2. While it’s not 100% confirmed, the word onthestreetisthatSEI leasesgassitesfrom jobbers. Fromwhat I understand, thedeal that SEI has worked out with the jobbers is that SEI receives 3 cents per gallon. But, whenthegasstationisfranchised, SEI only paysthefranchisees1.5centspergallonand keepstheother 1.5centsfor themselves. Here’smyquestion. Ifthejobberscanafford giving 3 cents per gallon to operate their gas site, whycan’t SEI givethesametoits franchisees? After interviewing several independent gasstoreowners, most of themconfirmed that the CPGon a branded gas site is 22 cents per gallon, andthat a non-branded site typically generates 25 to27 cents per gallon.Whatpercentageareourfranchisees getting?Isthisfair?Ialsointerviewed4BCP siteownersandtheyconfirmedthesame. There’s no doubt about it. Gasoline operationsmakealotof moneyandcanbe veryprofitable. So, whywouldatraditional non-brandedsitelosegallonsandonlyget 1.5 cents a gallon? We understand that SEI owns thegas business, but franchisees deserveafairsharefortheworkthatwedo! Please knowthat I amnot tryingtopoint fingers at anyone. SEI has done very well withits gas business andfranchisees have worked hard to make the gas business a success. I amsure we canall agree that if franchisees are happy, then they will continue to work hard and grow their businesses, whichis theback boneof this company. Please, SEI, hear our pleas andmakesome muchneededadjustments. Gas Stores story continued from page 1. We are not a brandedgas site. We are a private-label brand! And, pricingour gas onthesame level or higher thanthe big brands is creatingadevastatingsituation for our franchisees. Here’s an example that will help illustrate what I am talking about… Let’s take a look at our private brand, 7-Select. Can you imagine CRP on the private label products? Onone hand, SEI preaches tothefranchisees that wehave tooffer valuepricingonour privatelabel products, but then they go ahead and price our gas, whichis alsoprivate label, sohigh! I amsurethatmostofuswouldagreethat withtheloss of gallons, andonlygetting 1.5 cent per gallon, franchises are faced with tremendous hardship. I sincerely hope that SEI takes a closer look at the numbers, re-evaluates the program, and doeswhat’sfair for itsfranchisees. I hope that SEI takes a closer look at the numbers and re-evaluates the gas program. The bottom line is that we have lost gallons and cents. Our national leadership has brought this tothe attentionof SEI’s senior leadership on numerous occasions. Everyone is well awareof thesituation. Thetimehascome for SEI to consider the current issues includinginflation, thecost of goods, the manpower that it takes to successfully operateagassite, andtheminimumwage increases, andbringfortha programthat isfair for everyone. I am confident that SEI’s senior managementhastherightmindsettobring a co-prosperity model back and nurture the partnership between the company and its franchisees. It will certainly be a win-winforall partiesinvolved. Another Winner! CongratulationstoStoreManager SamChenand 7-Eleven#13314. OnMonday, April6th, theIllinois Lottery celebrated their sale of a $1,000,000 winningSt. Patrick’s DayMillionaireRaffleticket andpresentedSamwitha ceremonial check for $10,000, the bonus commission that this store earnedforthesaleof thisbigwinner. “Wetakeprideintakingcareof our customer’s needs,” he continues. “This is why is why we ensure that we have a full inventory of instant ticketsat thecounter andinour lotteryvending machine,” headds. “Customers prefer tocome tothis storebecausewemaketheir experience pleasant. We fill out their play slips if needed, “Selling lottery brings us more business than we know beforehand if they’ve won, and we anything else,” said Sam. “It attracts more are ready tocashtheir prizes if they are under customersintoourstoreandenticesthemtobuy $600. Wewant it tobeas convenient for them aspossible.” additional products.” beyond water One of the Country’s Top 10 Beverages The FOAC Continues Support for Lurie Children’s Hospital FOAC Board members Hashim Syed, Ali Liaqat and Pinak Patel attended the Ann & Robert H. Lurie Children’s Hospital of Chicago Circle of Corporate Champions event earlier this month. The cocktail receptioncelebratedcorporatedonors (liketheFOAC) who committed$10,000or moretothehospital inthelast calendar year. Morethan150representativesgatheredonthe11thfloorconference center, enjoying views of Lake Michigan, cocktails, hors d'oeuvres andspecial guestsfromtheSheddAquarium, all ofwhomwerethere torecognizeandcelebratethehospital’scommunitypartnerships. Announces New Flavors! With the weather finally starting to warm up, BuzzBallz, the wildly popular ready to drink cocktails, has announced their new flavors for summer 2015. A vodka based Iced Tea, Watermelon, Grape, and Pineapplewill all beavailabletobesoldthroughStoller (Glazers) DistributorsstartingMay1. All fourflavorswill remainat15%alcohol byvolumeattheircurrent everyday lowprice. BuzzBallz, basedjust outside of Dallas, Texas, will bebuildingontheirtremendoussuccessfrom2014, sellingover 80,000casesof product inthestateof Illinoisalone! All current flavors will continue tobe sold, however the four new summer flavors will only be available while supplies last. Donot miss out of thenewest lineof BuzzBallz flavors whilebeingoneof thefirst locationstosell themanywhereinthecountry! Tolearnmore, visit www.buzzballz.comor call 877-891-3777. You canalsocontactAnishPatel, theFOACAdministrativeAssistantand hewill behappytoassistsyou– [email protected] Selected as one of the “Top 10 Beverages Catching Consumer’s Attention” in 2014, Protein2o was born from the crazy idea that there’sabetter waytoconsumethetwomostimportantnutrientsto ourbody: waterandprotein. Awaythatdoesn’ttastechalkyandisn’t filledwithcalories, carbsorevensugar. Behold, Protein2o, a crisp, cleanwater that's enhancedwith15gof proteintonourishyourbodyandelectrolytestokeepyouhydrated! Protein2oisthefirstlineofnaturallyflavored, low-caloriewatersthat areenhancedwithproteinandelectrolytes givingyouawaytostay hydrated, whilealsoprovidinganimpressiveamountofprotein(30% RDA) tokeepyourbodyinoptimalhealth. Theirlight, thirst-quenching flavorswill changethewayyouthinkaboutprotein. And with only 70 calories, Protein2o is the lowest calorie proteincontaining beverage available and is the ideal drink for anyone wanting to lose weight, improve their physique, stay energized, or simply live a healthy lifestyle. To learn more, visit www. drinkprotein2o.comorcall 855-290-7820. YoucanalsocontactAnish Patel, the FOAC Administrative Assistant, and he will be happy to assistyou– [email protected] Walgreens To Close 200 U.S. Stores Walgreens, thenation'slargestdrugstorechain, hasannouncedthatit will closeabout 200storesnationwideaspart of acost-cuttingplan. Inaddition, thecompanysaiditalsoplansacorporatereorganization andstreamliningof informationtechnology. Thecutbacks will take place over three years andare expectedtosave $1.5 billion by the endoffiscal year2017. WalgreensspokesmanMichael Polzinsaidthe companywas still finalizingthelist of stores for closureanddidnot haveatimeframefor whentheywouldbeclosing. Theprofitability andleasesituationsofthestoreswilldeterminewhichonesareclosed, he said. The closures represent about 2% of the company's 8,232 drugstores, whicharelocatedinall 50states. Highlights from 7-Eleven’s National Business Leadership Council ByKatenPatel FOACBoardMember Member of theNBLCCHD 7HelpCommittee Last month I attended the NBLC meeting in Dallas at SEI’s headquarters. 45 franchisees fromacross the country make up theNBLC, alongwithzoneleaders andSEI’s upper management team. All 7-Eleven franchisees are welcome toapply tobecome a member of the NBLC, and then 45 are selected fromthe pool of applicants. Since only a very small handful of franchisees participateintheNBLC, I wantedtosharesomeof thehighlights with my fellow franchisees. Following is a brief recap of work beingdonebyeachof thecommittees. Low Volume/ Underperforming Stores Committee • Whatarethetoolsandresourcesavailabletoassistafranchisee inresearchingthefindings? •Erroneous credits applied to stores in prior months will no longer bereversed • Whocananswer questions? •SEI is working to simplify vendor agreements to reduce complexityandrelatederrors • Howcandisputesbehandledfairlyandexpediently? In light of these concerns, SEI has stoppedissuingFIWs while it works withthecommittee(andanoutsideconsultingcompany) onimprovements. Basedontheabove, theexpectedoutcomesare asfollows: • Clearlydefinedguidelinesfor whenanFIWshouldbeissued • Withtheadventof7HELP,themostsignificantchangeistheagree/ disagreeoption. Thisallowsfranchiseestokeepacaseopenwhen theyfeel thattheresponsetotheoriginal caseisnotsufficient. •An Escalation Help Desk is being piloted in Greater LA whereby franchisees can call and speak with someone when communicationthroughtheISPisnot sufficient. Continuous Improvement Committee •An improved communication process with better materials deliveredtothefranchisee Unliketheothercommittees, thisoneisnotassignedtoasingular business objective. Its primaryobjectiveis toworkonissues that have shorter horizons and have an acute impact on franchisee profitability. The committee’s current top priority is audits. Franchisees are concernedwithaudit accuracy andthe needfor increasedcyclecountsfollowingaudits. • Aprocessthat isfair andconsistent • Availablesupport for questionsandconcerns • Adefinedresolutionprocessfor disputes • Aregular reviewof theFIWprocess, withinput fromthefield Actions Taken/Current Status andthefranchisecommunity • Theassetprotectionrandomauditevaluationprocesshasbeen implemented Remodels Committee • Audit verificationreportingisbeingdeveloped What constitutes a remodel? Where will we start? Howwill we decidewhichstores toprioritize? Howwill weincreasesales and • RGISandasset protectiontrainingat BTkickoff meetings profits? Thesearequestions that theNBLCRemodels Committee Next Steps is grappling with. The next steps for the Remodels Committee • CompilestatisticsandsharewithRGIS, fieldteams, operations, includesprovidinginput onthefollowing: andNBLC • Theproposedremodel scopeandwaystomaximizetheimpact • Variancereportingbyitemat theendof audit tothe customer andcommunity in order todrive traffic, sales Franchiseesareconcernedthatlegitimatebusinesscasesforaudit andprofits. •Operational opportunities to be addressed with remodels datechangesarenotconsideredand/oraccommodated, andthat including store simplification, labor-saving opportunities, and thereisnotastandardizedchangerequestprocessforfranchisees. • Franchisees lackconfidenceintheprocess duetocorrections, reversals, anduntimelyentries Actions Taken/ Current Status • 7HELPchangerequest project initiated • Initial audit notificationmovedto45days • EstablishedAPpoint of contact for unresolvedissues Next Step: Establish trend reporting and share with RGIS, field teams, operations, andtheNBLC. Communication Committee TheCommunication • FranchiseeandFClackanunderstandingof theprocessesand Committeeisworkingwith tracking SEI tobeginbuildinga •Funding data is reflected in multiple store reports, making Franchisee-CentricCulture. Belowistheir outlinefor what theybelieve tracking, reviewandreconciliationonerous • Costsupportset-uprequirementsarehighlydetailed, complex, will providemoreopen, honest andeffectivecommunication. andhardtotrack, resultinginerrors Current Future Communicate Engage and Connect Action Plan Ongoing Commitment • Timelycredit processingtothestores Task Force Sr. Leader Full Engagement • Full Franchisee/FCunderstandingof fundingelements FC as Consultant FC as Chief Engagement Officer • OptimizeGP$for thefranchiseeandSEI One Way Messaging True Dialogue Listen Listen, Understand, Respond SSC Oriented Field and Franchisee Oriented Solve SEI Problems Solve OUR Problems Together Thegoals set bythecommitteetoaddress theaboveissues include: • Eliminateerrorsandtheneedfor corrections • RegainfranchiseeconfidenceinSEIfundingand The committee is dedicatedtomakingthe HelpDesk andall its reporting components work for franchisees, and will continue to identify improvement opportunities including such things as escalating Working closely with SEI, progress is therolloutof newtoolsdevelopedfortheEndUserPartGuideand definitelybeingmade: exploringcasecreationusingmobiletechnology. •SEI has been working to reduce errors that create FIW Committee reversals/corrections of billback/ ThecommitteeidentifiedconcernswiththeFIWincluding: scanbackcredits • What promptsanadjustment? •Q1 and full year 2015 promotional • Howcanthefranchiseebesuretheadjustment isaccurate? •Withthe helpof the committee, SEI is revisingthe billback/ scanbackreport for easier trackingtosalesandpurchase • Asimpleandunderstandableprocess SEI defines an underperforming/low volume store as a store that generates less than $3450 APSD merchandise sales. The committee’s first priority is towork with SEI toidentify the root causes contributing to these underperforming locations, storeby-store. Onceidentified, it must bedeterminedif it canbefixed businesssystem. and if so, how? To identify these root causes, the committee is helpingSEI createa survey that will becompletedby theFCand Billback/Scanback Committee theFranchiseeof eachlowvolumestore. Theinformationwill be reviewed on a monthly basis to determine the specific support We process purchases or scan products at the store and we are reimbursed through billbacks and/or scanbacks that SEI has that eachlowvolumestoreneeds. negotiatedwithour vendor partners. CHD/7HELP Committee Theissues identifiedbythecommitteeinclude: The work of this committee began with identifying issues androot causes relatingtothe performance of the Help Desk. Some of the issues identified include: multiple cases being createdfor sameissues duetoprematureclosure, agedequipment putting strain on the system, language barriers when we call in cases, andcommunication of changes toCHD. Work has already commencedtoresolvesomeoftheseissues, includingthefollowing: • SEI has institutedaqualitycontrol andreviewprocess, witha dedicatedqualitycontrol persontoassurebetter accuracyof all processes fundingisbeingcarefullyreviewedupfront Our next NBLC meeting is in August. I will report details from that event in a future issue of our FOAC newsletter. If you have any questions regarding any of the information I’ve shared, please feel free to contact me via email at [email protected]. ByHashimSyed, FOACVicePresident Normally, I am reluctant to attend events like this that are planned by SEI. To be honest, they are usually short on substance with regard to merchandising techniques, newitems, andwhat’s being donetoattract the“yuppie” crowd. Events likethesearedonemostly withguidelines fromSEI Dallas, wherethey oftenignorethefact that eachstoreis different andis facingits ownset of uniquechallenges basedonits location andcustomer base. But thistime, thingsweredifferent! WhenI walkedintothemodel store(locatedat 1349 W. FullertonAvenueinChicago), I was pleasantly surprised. Everythingwas donevery tastefully, anda neweye-catchinglook was featuredby dividingthelongaisles inthe middle(socustomerscouldwalkcomfortablyinbetween) andinteresting, creativedisplays. I wanttorecognizeand congratulateMarket Manager AnthonyBartoli for all of hishardworkandcreativethinking, whichmadethismodel store so welcoming and attractive. Thanks to him, I amquite sure that this store will hold its ownandwill giveour competitors arunfor their money. Franchisee Hitesh Kumar Doshi (whomeveryonecalls Doshi) is very fortunate tohavethisnewandimprovedstore. So What Was Done to the Store? Thisstorewascompletelyreset tohavetheproper flowandschematicsfor thesummer andtheintroductionof the manynewitems comingin2015. Weusethis toshowcasetostoreoperators what thestrategyis behindeachand everysectioninthestore, sotheycanmakesoundbusiness decisions intheir ownstores after attendingour Model Market Event. Thehopeis that stores will usetherecommendedschematics as astrongguidefor settingasection whilestill affordingthemtheabilitytopracticeRetailer Initiativefor local items. Wealsousethisevent toteachwhat isindexinginaparticular segment, sowecanstayaheadof trendsandnot fall behind. Inaddition, wepartnerwithourlocal FreshFoodZoneMerchandisertomakesurewecantell thestoryaround food. Weusedthe“strikezone” approachtotheSandenCase, TheVPI (Value, Premium&Innovation) approachto ourBakeryCasesandtheCore, ZoneFocusandPowerof OneforourFreshFoodTowerattheregister. Wewanttolet our operatorsknowwhat isworkinginthefieldandwhat isontrend. Asfar astheadjustment totheinterior layout, wedecidedtosplit upthe3longgondolaruns. Wedidlose3feet in eachgondolarundoingthis, but it affordedus twothings: one, it providedus withacleanandan“easier toshop” look fromany anglethat a shopper wouldapproachanaisle, andtwo, it affordedus toshowoff threeadditional focusareasbyaddingendcapstoeachgondolarun. Thefeedback fromour guests has beenoutstanding! They arenoticingitems inthestorethat havealways been there, but went unnoticedbecausetheywere“trapped” intheaislethat theywerewalkingin! Manyof our guests usethesamerouteeachtimetheyenter our stores heading to the coffee, fountain or vault. Nowwehavebeenabletoshowcase a different look, and highlight items they didn’t realizethat wehad! Team1914 and myself would like to thank Doshi andhisstafffortheincrediblejobthey did hosting this 2-day event. It was really a pleasure getting to work along such a talentedandwonderful team! ByKenPatel, FOACPresident SEI decidedtoclosemyTinleyPark, IllinoisstoreinJulyof 2014. Tobehonest, I was kindof worriedabout my transfer rights, but thoseworries didn’t last toolong! My ZoneLeader (Mike Scales), my Market Manager (Al Valente), and Dee Hudson (Franchising) wereall veryclearwithmeandhelpedmelocate a storethat I was interestedin. Yes, there were a fewbumps and hiccups along the way, but the local management team stoodbythefranchiseeanddidwhat wasright. I amnowsettledintostore #13324 in La Grange, Illinois and the changeover process was as easy as could be. The store readiness teamalong with the store manager, and business consultant (Chris Jones) deliveredthe smoothest changeover ever! Thestorewas deepcleaned, freshlymerchandisedtothe newplan-o-gram, andall maintenancecases weretakencare of. Chriswasveryhelpful, notonlyonthedayofthechangeover, but hecalledmedailytoseeif I neededanyhelp. Al Valente has visited the store a few times already and has beenvery committedtomy success inLa Grange. I truly feel that theHeartlandZonehas thebest team. It’s very clear that theywant toseetheir franchiseessucceed. ThankyouMikeScales, Al Valente, ChrisJones, DeeHudsonand Sue Swanson. I truly appreciate all that youdidtohelpmake mychangeover easyandcomplete. — Attention Vendors — Would You Like to Make the Most of Your Trade Show Experience? Consider Advertising in our Special Trade Show Newsletter! The FOAC is producing a special expanded newsletter for distribution during our 2015 Trade Show, which takes place on Thursday and Friday, July 30th and 31st at Navy Pier. What makes this year so special is that the FOAC is joining forces with the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) to produce one of the biggest and best 7-Eleven trade shows ever! As one of our VIP vendors, you are invited to advertise in our newsletter, which will reach every 7-Eleven decision maker across the country! Not only will the newsletter be mailed to franchisees throughout Chicagoland and the Midwest, to 7-Eleven’s corporate office, and to 7-Eleven FOA presidents nationwide, but every franchisee attending the show will also receive a copy of this special edition (last year, thousands of franchisees attended the NCASEF convention and trade show; this year they are expecting even more as this is the 40th anniversary of NCASEF!) As one of our advertisers, you are welcome to promote whatever products and deals you would like. This is just one more way for you to get your name and products in front of key decision makers. The form below contains several advertising opportunities from which to choose. Each ad is FULL COLOR. Camera ready art must be provided to the FOAC (a high resolution PDF file is preferred). A full page is 8.5” x 11” (vertical). A half page ad can be horizontal or vertical, whichever you prefer. The deadline for artwork submission is Friday, June 5th. Please secure your ad space by Friday, May 29th. FAX the form below to the FOAC at 831-426-4713. Promote Your Specials! Company/Broker Name: _______________________________________________ Increase Your Sales! Phone: _________________ Cell: ________________ Fax: _________________ Advertise With Us TODAY! Representative Name: ________________________________________________ Address: ___________________________ City: ___________________________ State: _____ Zip Code: ______ Email (required): _________________________ Signature: ____________________________________ Title: ________________ Select your ad location: Inside Front Cover: $1500 Full Page Inside: $1000 Inside Back Cover: $1500 Half Page Inside: $550 Back Cover: $2000 If you would like to be part of our Trade Show Special Edition or have questions, please contact Hashim Syed, FOAC Vice President at 847-293-8551 or email him at [email protected]. Andrew Distribution P.O. Box 1099 Melrose Park, IL 60160 • FOAC Newsletter Editorial Contacts • Editor: Alisa Bay 847-266-9053 • [email protected] Planner/Art Director: Hashim Syed 847-293-8551 • [email protected] The FOAC newsletter is designed and printed by Semper Fi Printing & Promotions, LLC located in Arlington Heights, IL www.foachicago.com • Telephone: 847-353-9999 • Fax Number: 877-387-FOAC (3622) • Email: [email protected] Please call the FOAC Hotline at 847-293-8551 with any problems that require immediate assistance. Other Important Dates Please Add These Events to Your Calendar! FOAC Monthly Board Meetings - the 4th thursday of EVERY month - 4 Thursday, May 14th 4 Thursday, June 18th 4 Thursday, August 20th 4 Thursday, September 17th Please take note, there is no Board Meeting in July. Holiday Inn North Shore - 5300 W. Touhy Avenue • Skokie, Illinois 10:00 am – 4:00 pm • Lunch will be served. When is the last time you attended a 7-Eleven FOAC board meeting? If you can’t remember, then it must have been a very long time ago! If you would like to be more “in the know,” make more money, learn from your fellow franchisees, and grow your business, then we encourage you to make the commitment to attend our monthly board meetings, which are usually the fourth Thursday of each and every month. Not only will you have an opportunity to network with top vendors and other franchisees, but you will also gain valuable information that will help you succeed. Lunch is served for all attendees. FOAC membership is not required in order for you to join us for the meetings, but you must RSVP to [email protected] if you plan to attend. Come see for yourself what the FOAC is all about and learn what we are doing to support each other’s goals and objectives. Board meetings are also a forum where you can freely express any concerns you may have about your store. We look forward to seeing you! 2nd Annual Family Picnic - Saturday, June 13th BusseWoods- GroveLot 18 • ElkGroveVillage, Illinois Charity Golf Outing with the National Coalition Wednesday, July 29th St. Andrew’sGolf &CountryClub• West Chicago, Illinois National Trade Show - Thursday, July 30th and Friday, July31st at Navy Pier The FOAC Joins Forces with the NCASEF! National Coalition of Associations of 7-Eleven Franchise Franchisees Holiday Trade Show and Party - Friday, November 6th HolidayInnNorthShore- 5300W. TouhyAvenue• Skokie, Illinois
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