COVID-19 prompts freeze in 7-Eleven franchising

The COVID-19 pandemic has prompted leading convenience store player Philippine Seven Corp. (PSC) to pull out tables and chairs from its branches and freeze its franchising program until the public health crisis is resolved.

“I’m honestly thinking of returning franchisee deposits because expansion is on hold until the situation gets clearer,” Victor Paterno, president of PSC that operates the 7-Eleven chain in the country, told the Inquirer.

This could be a way out for franchisees—but only for those who have not broken ground yet and not for stores that are already operational—given the current challenges arising from COVID-19, he said.

“We will just be making a general offer to return deposits to anyone who wants to change their mind since conditions have changed. For those that remain, we’ll have to go site by site to see whether it still makes sense,” Paterno said.This offer will cover PSC’s investor package that requires a P600,000-fee plus building costs, which usually reach around P2 million.

Paterno is bracing for the country to stay under general community quarantine until a vaccine is found, or unless the government invests more in testing and contract tracing. “It is because of this that we’ll soon be pulling out our seating to make room for shelving,” Paterno said in a post dated May 26.

As of March 31, PSC had 2,916 7-Eleven convenience stores, mainly in Metro Manila and in major towns and cities in Luzon. Of these, 55 percent consisted of franchised stores.

Based on its first quarter report, the enhanced community quarantine disrupted PSC’s supply chain as movement of goods and manpower was hampered by the establishment of checkpoint systems in different local government units. The absence of public transportation also affected the ability of its employees to access its stores. Out of its total store network, 65 percent operated during daytime, while only 10 percent remained 24/7 operational and about 25 percent were temporarily closed as of end-March. INQ