5 ms·

> He said that 7-Eleven had offered to pay for his remaining inventory — owners are responsible for buying their own products from the company at wholesale pric

by geofft 7y ago

> He said that 7-Eleven had offered to pay for his remaining inventory — owners are responsible for buying their own products from the company at wholesale prices This feels like an American MLM scam, just tuned to be actually profitable for the "owner" under normal conditions and therefore sustainable. (Is this normal for legitimate American etc. franchises too, or is this specific to Japan's setup?)

teej 7y ago
I don’t know about convenience store franchises but this is the model for every major fast food franchise in the US.
- m463 7y ago
  I saw the movie "The Founder" (Michael Keaton is Ray Croc of McDonalds fame). They had trouble with francisees offering their own menus, having dirty restaurants and more... Their trick was to become a real estate company who owned the land, and then lease to the franchisee. If there was any problem, they had complete control over the franchise. That said, as a customer the whole POINT of 7-11 is to be always open. (although I wonder what stores are still open 7am-11pm instead of 24 x 7)
p1necone 7y ago
Not really the same thing, but I used to work for a small food business that sold bottled/canned drinks from a fridge via a contract with Frucor (New Zealand), and the prices they charged wholesale to this small business were often higher than what you could buy the drinks for retail at nearby supermarkets.
- retsibsi 7y ago
  Would it have been illegal to buy and resell stock from the supermarkets?
  - maccard 7y ago
    No, but it's usually against the agreement you have with the supplier, which will, like this story, probably end with a terminated agreement. Depending on your local laws, the nearby supermarket might have been selling below cost, so it might not be as huge a pricing discrepancy as you imagine.
- megablast 7y ago
  Not that uncommon, that is why during some sales you see people buying up as much as they can, to stock their own stores.
- wronglebowski 7y ago
  This is what happens when the franchisee's are in what I will refer to as a "predatory" relationship. I've been involved with several Quick Service(Fast Food) Franchisee's in the USA and there's predatory relationships and then there's those where the franchisee's have some type of union or owners organization. In McDonald's the Franchisee's have several different organizations they can join to represent themselves and bring grievances to to corporation. Cost of product is almost always a focus and you'd never be in a situation where you could buy product for cheaper anywhere else due to their scale. It's all about who has the leverage in the situation. I will say that reading that 7-11 offered to buy back all product is a very gracious move on their part. They had no incentive to help him out of the situation he no longer wanted to be in.
shalmanese 7y ago
MLM has a specific definition which this doesn't meet. MLMs are businesses where the majority of your earnings come from the recruitment of new members into your downline rather than sale of a product. 7-Eleven doesn't offer referral bonuses for bringing a new member that are based on a percentage of that person's sales.
- geofft 7y ago
  Yes, I know that, I'm not claiming 7-Eleven is an MLM. I said it's like an MLM in this one way: many of them require that you buy a huge chunk of inventory up front whether or not you sell it, which is one of many abusive tactics of current American MLMs. (So is the actual multi-level bit.) See e.g. question 7 about "inventory loading" at https://www.ftc.gov/tips-advice/business-center/guidance/business-guidance-concerning-multi-level-marketing https://www.ftc.gov/tips-advice/business-center/guidance/bus... Mostly, this guy doesn't seem like an "owner" in the traditional sense to me - he seems to be unable to stock his shelves with inventory from other sources, and he certainly seems unable to set his own hours. He sounds like his work is directed by 7-Eleven. Another common scammy aspect of MLMs is convincing you that you're a small business owner on the path to future profits when you're one of many pawns of the actual business.
  - lazyasciiart 7y ago
    It's a franchise. It's a very common model and while you may not like it, it is not a scam.
    - achompas 7y ago
      But at no point did OP claim it was a scam? They even ask if this is normal for American franchises, instead of accusing 7-11 of predatory behavior.
      - bitxbitxbitcoin 7y ago
        > This feels like an American MLM scam OP pretty directly implied it.
dyst9 7y ago
In the US— It’s a lot cheaper for the franchisee to start than financing his own store. They also pay 50% of gross revenue and the store owners sometimes steal or manipulate the numbers/inventory. Internal theft and CC skimmers on outside gas pumps seems like a huge problem but I don’t know the exact numbers. Sometimes stores get shut down by corporate.
vit05 7y ago
Like McDonald's franchises?

by geofft 7y ago

teej 7y ago

I don’t know about convenience store franchises but this is the model for every major fast food franchise in the US.

m463 7y ago
I saw the movie "The Founder" (Michael Keaton is Ray Croc of McDonalds fame). They had trouble with francisees offering their own menus, having dirty restaurants and more... Their trick was to become a real estate company who owned the land, and then lease to the franchisee. If there was any problem, they had complete control over the franchise. That said, as a customer the whole POINT of 7-11 is to be always open. (although I wonder what stores are still open 7am-11pm instead of 24 x 7)

p1necone 7y ago

Not really the same thing, but I used to work for a small food business that sold bottled/canned drinks from a fridge via a contract with Frucor (New Zealand), and the prices they charged wholesale to this small business were often higher than what you could buy the drinks for retail at nearby supermarkets.

retsibsi 7y ago
Would it have been illegal to buy and resell stock from the supermarkets?
- maccard 7y ago
  No, but it's usually against the agreement you have with the supplier, which will, like this story, probably end with a terminated agreement. Depending on your local laws, the nearby supermarket might have been selling below cost, so it might not be as huge a pricing discrepancy as you imagine.
megablast 7y ago
Not that uncommon, that is why during some sales you see people buying up as much as they can, to stock their own stores.
wronglebowski 7y ago
This is what happens when the franchisee's are in what I will refer to as a "predatory" relationship. I've been involved with several Quick Service(Fast Food) Franchisee's in the USA and there's predatory relationships and then there's those where the franchisee's have some type of union or owners organization. In McDonald's the Franchisee's have several different organizations they can join to represent themselves and bring grievances to to corporation. Cost of product is almost always a focus and you'd never be in a situation where you could buy product for cheaper anywhere else due to their scale. It's all about who has the leverage in the situation. I will say that reading that 7-11 offered to buy back all product is a very gracious move on their part. They had no incentive to help him out of the situation he no longer wanted to be in.

shalmanese 7y ago

MLM has a specific definition which this doesn't meet. MLMs are businesses where the majority of your earnings come from the recruitment of new members into your downline rather than sale of a product. 7-Eleven doesn't offer referral bonuses for bringing a new member that are based on a percentage of that person's sales.

geofft 7y ago
Yes, I know that, I'm not claiming 7-Eleven is an MLM. I said it's like an MLM in this one way: many of them require that you buy a huge chunk of inventory up front whether or not you sell it, which is one of many abusive tactics of current American MLMs. (So is the actual multi-level bit.) See e.g. question 7 about "inventory loading" at https://www.ftc.gov/tips-advice/business-center/guidance/business-guidance-concerning-multi-level-marketing https://www.ftc.gov/tips-advice/business-center/guidance/bus... Mostly, this guy doesn't seem like an "owner" in the traditional sense to me - he seems to be unable to stock his shelves with inventory from other sources, and he certainly seems unable to set his own hours. He sounds like his work is directed by 7-Eleven. Another common scammy aspect of MLMs is convincing you that you're a small business owner on the path to future profits when you're one of many pawns of the actual business.
- lazyasciiart 7y ago
  It's a franchise. It's a very common model and while you may not like it, it is not a scam.
  - achompas 7y ago
    But at no point did OP claim it was a scam? They even ask if this is normal for American franchises, instead of accusing 7-11 of predatory behavior.
    - bitxbitxbitcoin 7y ago
      > This feels like an American MLM scam OP pretty directly implied it.

dyst9 7y ago

In the US— It’s a lot cheaper for the franchisee to start than financing his own store. They also pay 50% of gross revenue and the store owners sometimes steal or manipulate the numbers/inventory. Internal theft and CC skimmers on outside gas pumps seems like a huge problem but I don’t know the exact numbers. Sometimes stores get shut down by corporate.

vit05 7y ago

Like McDonald's franchises?