Philippine Seven Corp. (PSC), the country’s leading convenience store operator, has rolled out its simplest and most affordable franchising package to date—one that requires only P300,000 in cash outlay from franchisees who will be screened based on their willingness and ability to run these stores full time.
With this new scheme, PSC seeks to farm out mature corporate-owned 7-Eleven stores to franchisees, in turn freeing up more resources to open more stores and cement its market-leading position in the local convenience store business.
This year, PSC plans to invest P3.5 billion to open around 400 new 7-Eleven stores and renovate others.
The company ended last year with 1,995 stores, further expanding to 2,071 stores as of end-May, thereby securing a 70-percent market share.
“We’re also looking at franchising our existing stores. We have a new franchise package—which we’re testing and we’ll be rolling out this year—with a very low minimal investment,” PSC president Jose Victor Paterno said in a briefing on the sidelines of the company’s stockholders’ meeting.
“Basically, we want people who are willing to work in the stores. The idea is to get ex-employees, people who have managed QSRs (quick service restaurants), people with real skills but not much capital,” Paterno said.
Paterno said the move was also meant to boost efforts toward “financial inclusion” and the idea of giving opportunities to people with skills.
The P300,000 outlay, Paterno said, was basically just a deposit that the prospective franchisee would eventually get back.
It’s just an assurance that the new investor “won’t run away with the weekend sales,” he noted.
Under this package, he said the franchisee would take over an existing corporate store—one that has already operated for at least one year – while PSC will waive charges on electricity and maintenance.
However, the profit share of the franchisee under this package is lower compared to other packages where they put in greater capital and take on more risk.
To date, PSC has converted 50 of its corporate-owned stores into franchises under the latest package, but so far involving only the “internal” network—employees or existing franchisees.
The same package will be offered to more people this year, he said.
Around two-thirds of new 7-Eleven stores in the country are franchised. Of the total network, around 55 percent are franchised.
PSC believes that when franchisees are actively involved in running their stores, revenues per store tend to increase.
The retailer booked P1.17 billion in net profit last year on the back of P31.76 billion in system-wide sales.—DORIS DUMLAO-ABADILLA