How a strong franchisor sets up franchisees for success

07 September 2020

Featured in Inside Franchise Business, 07 September 2020.

The impacts of Covid-19 have shown more than ever the importance of having a strong and supportive franchisor sitting behind a franchisee allowing them to get on with running their business in the knowledge their franchisor is navigating the fast changing business landscape with them.

7-Eleven General Manager Retail Operations, Braeden Lord, said that the 7-Eleven team has worked together to safely provide fuel, food, and essentials locally during the pandemic.

“Safety of our customers and teams was our first focus. We quickly established a Covid-19 response team with representatives from all parts of the business including safety and retail operations. Meeting daily, or more as needed, the team reviewed the latest government information, adapted existing processes, created new processes, rolled out new safety equipment and importantly, provided information updates to our franchisees across the country. We also had our team in the field supporting stores to adapt to the new environment,” Mr Lord said.

“The response team drove the swift introduction of a special Covid-19 Leave Initiative in March, fully funded by 7-Eleven. This ensures anyone who needs to access paid sick leave due to Covid-19 could access it, regardless of whether they have leave entitlements.”

This shared way of working together is an example of how 7-Eleven Australia’s model works differently to many franchise businesses.

The 7-Eleven difference

“At the core, the success of our franchise model is the sharing of the gross profit derived from store sales. Stores and the support office are jointly rewarded by profitable sales. As a franchisor we pay the rent, utilities, equipment, technology, marketing, maintenance, training systems, HR systems, and provide field support.  With all this cost and distraction off a franchisee’s mind they are free to concentrate on employing a great team,” Mr Lord said.

Albeit wages are a significant cost in operating a 24/7 business, Mr Lord said that the 7-Eleven system has safeguards in place to ensure franchisees can fund a fully costed roster even when business is tough, such as during Covid-19.

“It is vital that our businesses can afford a fully costed roster at award rates, including paying the franchisees for the hours they work in the store. To support franchisees, we have a Minimum Gross Income mechanism where we top up the income of stores who might be experiencing a downturn in gross profit below the required threshold to support the wage costs.

“An unfortunate outcome of Covid-19 is an increased number of stores that are receiving income support. The peace of mind provided by the financial support for stores that need it strengthens the partnership.” he said.

“This practice of financial support demonstrates how we work together the good times and the bad.  Coaching a franchisee on how best to achieve profitable and sustainable business performance involves a need based individual approach to every store. Adapting the coaching as maturity of the store and franchisee alter through the relationship will be a key to the future success.” Mr Lord said.

“As our customers’ needs and lifestyles rapidly change, our close working relationship with franchisees places us in the best possible position for enduring success.” Mr Lord concluded.