Avanti July/August 2019

July/August 2019

T H E

V O I C E

O F

7 - E L E V E N

Integrating Acquisition Stores With Branded Gasoline Into SEI’s System

Hold The $1 Coffee: Franchisees Set Prices, Not SEI Why We Need An Independent National Coalition, Part 3: How To Maximize Effectiveness Of The National Coalition

Change Is Good, But Know What Lies Ahead Third Party Payroll Providers Benefit Franchisees And SEI All In On Gasoline?

F R A N C H I S E E S

W H AT A

STELLAR CONVENTION!

Visit NCASEF.com To Read Dispatch

PRSRT STD U.S. POSTAGE PAID Philadelphia, PA PERMIT No. 5634

THE VOIC E OF 7-ELEVEN FRANC H ISEES

July/August 2019

Contents 31 Integrating Acquisition Stores With Branded Gasoline Into SEI’s System

HIGHLIGHTS Page 26

By Jay Singh, NCASEF Chairman

Page 53

35 Change Is Good, But Know What Lies Ahead

By Michael Jorgensen, NCASEF Executive Vice Chairman

39 All In On Gasoline?

By Eric H Karp, NCASEF General Counsel

45 Third Party Payroll Providers Benefit Franchisees And SEI

W H AT A

By Paul Lobana, NCASEF Vice Chairman

STELLAR CONVENTION!

47 Why We Need An Independent National Coalition, Part 3: How To Maximize Effectiveness Of The National Coalition

Long Beach, California

By John R. Irvine Jr., Franchisee, Detroit, Michigan

AVANTI is published by the National Coalition of Associations of 7-Eleven Franchisees for all independent franchisees, store managers and interested parties. National Coalition offices are located at 1001 Pat Booker Road, Suite 206, Universal City, TX 78148. For membership information, call 702-249-3301 or e-mail nationaloffice@ncasef.com. AVANTI Offices are located at 116 Bellevue Ave., Suite 304, Langhorne, Pennsylvania 19047. For advertising information, call Sheldon Smith at 215 750-0178 or fax to 215 750-0399; online, send messages to sheldon.smith5@verizon.net. The views and opinions expressed in the articles and columns published in Avanti Magazine are those of the authors and do not necessarily reflect the official policy or position of the National Coalition of Associations of 7-Eleven Franchisees, its officers or its Board of Directors.

EN TM PA R DE

By Tom Ayres, Witmer, Karp, Warner & Ryan, LLP

TS

49 Hold The $1 Coffee: Franchisees Set Prices, Not SEI

Member News...............................18 Bits & Pieces...........................................20

Legislative Update.......................................28 SEI News......................................72 Vendor Focus................................76 Franchisee Calendars..................78

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NATIONAL COALITION OF ASSOCIATIONS OF 7-ELEVEN FRANCHISEES

SEI Posts Record 1st Quarter Operating Income Seven & I Holdings, in a July review of its financial results, said that its 7-Eleven U.S. operation reported the highest operating income in its history and posted a 3.4 percent comparable store sales increase in the first quarter, reported the Dallas Morning News. For 7-Eleven's U.S. stores, the sales momentum continued this spring, with same-

that it sees more potential and will invest in U.S. store renovations, as well as stress store cleanliness and customer service.

Seven & I reported a first-quarter profit increase of 21.5 percent to $482 million.

Total revenue declined 0.2 percent to $14.76 billion.

Jatinder Singh NATIONAL CHAIRMAN

702-249-3301 • jays@ncasef.com

Michael Jorgensen EXECUTIVE VICE CHAIRMAN

347-251-1828 • mcjorg@yahoo.com

Paul Lobana

SEI’s Dallas Lab Store Opens

VICE CHAIRMAN

818-203-2527 • paullobana@aol.com

SEI’s 6,300-square-foot lab store in Dallas opened in early July, featuring 20 fueling spots, Scan & Pay technology, indoor and patio seating, a made-to-order coffee bar, a cold-treat station, and much more, reported CSP Daily News. The store is a collection of standard c-store fare mixed with cutting-edge technology and merchandising areas intended to prove what works and what needs more time for development. Company COO and Executive Vice President Chris Tanco told the publication the purpose of the lab store is to “generate viable, innovative ideas, then

“Seven & I Holdings said its 7-Eleven U.S. operation reported the highest operating income in the company’s history.” store sales up 5.2 percent in April and 2.8 percent in May, the company stated.

7-Eleven's U.S. operating income of $161 million was up $31 million from a year ago, Seven & I said, adding that the U.S. business allowed the Tokyo-based retailer to post profits that exceeded its guidance for the three months ending in March.

While fresh food and the company's 7-Select private brand products drove the improved results, Seven & I stated

NATIONAL OFFICERS

Rehan Hashmi VICE CHAIRMAN

847-845-8477 • rehan711@yahoo.com

Ajinder Handa VICE CHAIRMAN

425-438-8381 • ajinderhanda@hotmail.com

Jaspreet Dhillon TREASURER

310-892-2106 • jaspakam@gmail.com

Eric H. Karp, Esq. GENERAL COUNSEL

617-423-7250 • ekarp@wkwrlaw.com

John Riggio MEETING/TRADE SHOW COORDINATOR

262-275-3086 • jrpinc@charter.net

Sheldon Smith AVANTI PUBLISHER ADVERTISING MANAGER

215-750-0178 • sheldon.smith5@verizon.net

continued on page 20

Sheldon Smith PUBLISHE R & ADVERTISING SALES 215 750-0178 SHELDON.SMITH5@VERIZON.NET

The National Coalition Office The strength of an independent trade association lies in its ability to promote, protect and advance the best interests of its members, something no single member or advisory group can achieve. The independent trade association can create a better understanding between its members and those with whom it deals. National Coalition offices are located in Universal City, Texas.

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John Santiago ASSISTANT EDITOR 215 750-0178 AVANTIMAG@VERIZON.NET

1001 Pat Booker Road Suite 206 Universal City, TX 78148 Office 210-971-9211 E-mail: nationaloffice@ncasef.com

The Voice of 7-Eleven Franchisees July/August 2019 © 2019 National Coalition of Associations of 7-Eleven Franchisees Avanti Magazine is the registered trademark of The National Coalition of Associations of 7-Eleven Franchisees.

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test, learn and incorporate them into stores in the future.”

“According to Convenience Store The new store is also the News, 7-Eleven (9,280 stores), first 7-Eleven in Dallas to feaCircle-K (7,021 stores) and ture the Laredo Taco Company Marathon Petroleum Corp. (5,875 foodservice brand, which SEI acquired along with the Stripes stores) operate 14 percent of the c-store chain from Sunoco in c-store industry’s total stores.”

2018. Other features of the Dallas lab store include: News, these three players now control a • Made-to-order coffee drinks, coldsignificant portion of the U.S. convenpressed juices, smoothies and aguas ience store market. In all, they operate frescas.

14 percent of the industry’s total stores • The Cellar, an alcove dedicated to an exand account for 35 percent of the stores panded selection of wines and craft beers. operated by the Top 100 chains.

• A growler station that features a rotating selection of local craft beers, ciders and ales on tap.

• A frozen-treats bar with frozen yogurt, ice cream and multiple toppings.

• Cookies, croissants and other products baked in-store daily.

• Scan & Pay technology that allows Seven & I Holdings’ first-quarter customers to skip the checkout line and net profit rose 21.5 percent to 52 billion pay for their (non-age-restricted) puryen ($482 million) for the year, boosted chases on their smartphones. by healthy overseas convenience store • Restaurant-style indoor and patio operations, reported Market Watch. Opseating. erating profit of the overseas convenience store business increased 37.7 percent for the quarter ended in May. But operating profit for domestic shopping center business declined by 30.6 percent, and domestic department store 7-Eleven has business suffered losses in the first quaronce again taken ter. Overall revenue declined 0.2 percent the #1 spot on to Y1.6 trillion in the first quarter. the Convenience Store News Top 100

Seven & I Profits Rise Thanks To Overseas C-stores

7-Eleven #1 On Top 100 C-Store Chains List

ranking. The list is the industry’s longest-running accounting of the largest convenience store chains by U.S. store count. 7-Eleven came in with 9,280 stores, followed by Circle-K parent company Alimentation CoucheTard at #2 with 7,021 locations and Marathon Petroleum Corp. with 5,875 stores. According to Convenience Store 20

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7-Eleven Makes Top 100 Retailers List 7-Eleven has made it onto Stores Magazine’s annual Top 100 Retailers list, which ranks the retail industry’s largest companies according to sales. 7-Eleven is continued on page 22

Actor Hugh Jackman, best known for his role as Wolverine in the X-Men film series, said he was fired from his job at 7-Eleven in Australia when he was a teenager, reported Fast Company. While he says his customer service skills were top notch, his manager ultimately fired him for talking too much to the customers. • Friday was the busiest day for fuel and convenience retailers in the second quarter of 2019—claiming 16.54 percent of visits, reveals a new GasBuddy study examining gas station and convenience store foot traffic. Saturday came in second with 14.94 percent, and Thursday came in a close third with 14.31 percent of visits. • Wawa, which currently has 16 stores in four states with Tesla Superchargers, plans to double the number of chargers by the end of 2020, reported the Philadelphia Inquirer. The convenience store chain began opening charging stations in August 2017. • Uber is actively testing a monthly subscription pass that combines rides, Eats, bikes and scooters, reported Tech Crunch. The pass costs $24.99 per month and includes a fixed discount on every ride, free Uber Eats delivery and free JUMP (bikes and scooters) rides. • Burger King launched its plant-based Impossible Whopper nationwide on August 8, after a test run at locations in St. Louis proved to be highly successful, reported CNBC. Those Burger King locations saw traffic outperform national averages by 18.5 percent during the pilot test.

• Japanese convenience store chain FamilyMart apologized after video went viral on social media of rats scurrying about one of continued on page 24

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THIS DAY IN NATIONAL COALITION CONVENTION HISTORY The National Coalition’s convention and trade show, the centerpiece of all Coalition activities for the year, has been held continuously for 44 years, a testament to both the efforts of franchisee leaders and to the longevity of the 7-Eleven system.

For many years the convention has been held during the summer months so families and children can attend.

Here’s a brief look back at four conventions covered in Avanti magazine over the last 40 years.

1981

Six years after the formation of the National Coalition, in the first full year of Avanti’s existence, the convention was held at the Hacienda Hotel in Las Vegas, October 25-30. Editor and future Coalition Chairman Joe Saraceno spoke about how franchisees and franchisors needed to become “experts at balancing and understanding each other’s needs and interests.”“Why Attend the National Convention,” was the title of an article in that issue, and highlighted the fact that franchisees are professionals and need to be part of a group that is constantly growing, learning, and changing.”

1992 17 years in, new National Coalition Chairman Ted Poggi in his Avanti article praised Southland’s commissary approach as innovative and with the potential to keep 7-Eleven ahead of competitors for years. He also urged the company to accelerate RESTORE, reinvest in POS equipment, and come forward with a fairer contract.

The convention that year was held at John Ascuaga’s Nugget in Reno Nevada.

2002 At 28 Years the National Coalition relinquished its own convention to help 7-Eleven celebrate its 75th Anniversary at Ellis Island in New York.

Several thousand franchisees attended to celebrate 75 years of 7-Eleven history and innovation at “A Passport To Freedom,” held at the New York Hilton, Madison Square Garden, and Radio City Music Hall. It was 7-Eleven’s largest-ever corporate, franchisee and vendor gathering.

2011 35 Years after the formation of the National Coalition, Chairman Joe Galea in his Avanti column lamented the status of the franchisee-franchisor relationship and the disbanding of the President’s Leadership Council. Business Transformation was the buzzword, and franchisees were getting used to a new 2010 agreement. At the national convention, held at the Gaylord National Harbor Hotel in Washington, D.C., the Coalition holds its largest convention ever and gives $100,000 each to Hire Heroes USA and the Muscular Dystrophy Association.

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the highest ranked among the seven cstore chains on the list, coming in at No. 29 with $16.51 billion in retail sales in 2018. Second is Couche-Tard at No. 36 with $12.46 billion, followed by Giant Eagle at No. 53 with $9.13 billion, AAFES at No. 62 spot with $7.5 billion, Speedway at No. 84 with $5.19 billion, ExxonMobil at No. 94 with $4.76, and Shell Oil at No. 99 with $4.22 billion in retail sales. Taking the top three spots on the list are Walmart 22

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($387.66 billion), Amazon ($120.93 billion) and The Kroger Company ($119.70).

C-Store Retailers Optimistic About Summer Sales Most U.S. convenience store operators have experienced strong sales during the first half of 2019 and expect that

warm weather and low gas prices will contribute to robust sales during the three months of summer, reveals the quarterly NACS Retailer Sentiment Survey. Three in four (75 percent) convenience retailers said their first-half merchandise sales were higher than the year-earlier period, while only continued on page 24

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5 percent said their sales were lower.

Convenience retailers also reported stable fuel sales, with 70 percent reporting same or higher fuel sales than the yearago period.

Convenience retailers are overwhelmingly positive about sales: 83 percent said they are optimistic about their business for the third quarter, a 12-point erate 500 or more stores in India over jump from the second quarter but similar the next five years. Under the agreeto optimism levels in summer 2018 (86 ment, the India 7-Eleven percent) and 2017 stores will be set up by Fu(83 percent). Con“A recent NACS ture Group, which will venience store sales survey reported convert some of its existpeak in the sumthat 75 percent of ing small grocery stores to mer months with the U.S. brand. Future c-store retailers warmer temperaGroup said 7-Eleven’s tures, longer daysaid first-half entry into India will modlight hours and merchandise sales ernize the small-retail enmore people taking were higher than vironment and bring family vacations greater convenience to a year earlier.” and spending time shoppers. outdoors.

Consumers also tend to spend more when gasoline prices are low, and this year the national average price per gallon of gasoline is nearly 20 cents less than a year ago. C-store operators also are exploring new opportunities to serve customers at the pump: 27 percent said they have installed or are considering installing electric vehicle chargers.

Mumbai To Be Home To India’s First 7-Eleven 7-Eleven is set to make its India debut this year and the first store will be opened in Mumbai, reported the Financial Express. SHME Food Brands Private Limited, which is an arm of Future Retail, signed a master franchise agreement with Seven & I Holdings in February and plans to develop and op-

SEJ Shuts Down Mobile Payments App Over Security Flaw Just two days after it launched its 7pay mobile payment app on July 1, Seven-Eleven Japan was forced to shut it down when thieves exploited a simple security flaw and customers lost over half a million dollars, reported Business Insider. The third parties—suspected to be Chinese cybercriminals—accessed 900 customers' accounts and ripped them off to the tune of about $510,000. SevenEleven Japan promised to compensate users for the money they lost.

The security issue was that 7pay only required the user's email address, phone continued on page 62

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its stores in Tokyo’s popular Shibuya district, prompting it to close the outlet until further notice, reported Reuters. • Supermarket giant Kroger is partnering with U.K.-based Ocado Solutions to build a largely automated, digitally enabled warehouse in metro Atlanta to help fill online orders, reported Global Atlanta. • Amazon has applied for a liquor license that would allow it to open a store selling beer, wine and spirits in San Francisco, reported Business Insider. In addition to a brick-and-mortar store, the 200-square-foot location on the site of one of the company's warehouses would give Amazon a hub for delivering alcohol purchases to Amazon Prime customers in the area. • Circle K has announced that is now offering delivery service across the Houston area via its partnership with Texas-based on-demand delivery company, Favor, reported Click2Houston.com. • Nestlé SA has found a way to create chocolate without adding any sugar, relying on leftover material from cocoa plants for sweetening as consumers look for natural and healthier fare, reported Bloomberg. • UBS Group AG predicts the ‘fake meat’ plant-protein market will swell to US$85 billion by 2030 from US$4.6 billion now, with the broad market for agriculture technology set to reach US$700 billion from US$135 billion, reported Bloomberg. • The maker of Arizona Tea is entering the market for marijuana vape pens and cannabis-infused gummies and drinks, reported CNBC. Arizona Beverage recently inked a deal with Dixie Brands—which makes and sells marijuana-laced drinks, chocolates, gummies and topical creams—to manufacture and distribute products branded with Arizona’s name. • McDonald's is developing drive-thru menu boards with predictive abilities that show food offerings based on time of day, weather, current restaurant traffic, and trending menu items, reported QSR Magazine. It can also instantly suggest and show adcontinued on page 32

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NCASEF

HIGHLIGHTS

Your National Coalition is Committed to Franchisee Interests

What killed Alabama’s Fair Franchising bill?

Many of you are probably aware of the news that the Speaker of the Alabama House of Representatives pulled the plug on a new fair franchising bill.

Recently, a bill modeled after the California bill that passed in 2015 moved through the Alabama State Senate.

The Coalition of Franchisee Associations (CFA), of which we are a member, helped push for passage of this bill. The Protect Alabama Small Business Act, as it was called, had

ical franchisee. He is also the former CEO of Pizza Hut and the second vice chairman of the IFA. An opinion article Barr wrote for the IFA appeared in the Wall St. Journal with the headline: “Franchisees like me are in union crosshairs.” It said unions back the bill because it weakens the franchise industry.

“The new system would drive up the cost of franchising, making national brands less likely to strike deals with local businesses. Unions “The new system would drive up the cost of imagine these brands would franchising, making national brands less opt to open and operate local likely to strike deals with local businesses. stores themselves. This would make employees easUnions imagine these brands would opt to ier to organize, and give the open and operate local stores themselves.” unions a toehold in right-towork states like Alabama. a Republican sponsor in the House and Senate (Alabama’s More likely, national brands will choose to leave the state, legislature is controlled by Republicans.) Yet, despite strong setting Alabama back economically.” support, the bill was never brought to the floor for a vote.

The fact is, that franchisees everywhere are struggling According to the CFA’s lobbyist in Alabama, there were defto maintain profits as franchisors pass along additional initely enough votes in the two chambers to pass the bill, business costs, in addition to higher cost of labor and supbut the Speaker didn’t want it. Some speculate he caved to plies. Franchisees are the ones who invest in the brands; pressure from the International Franchise Association they should be treated fairly. What’s more, franchising is (IFA), which desperately fought the bill after it had cleared a strong and successful enterprise—and remains so in the Senate. states like California that have already passed fair franWe shouldn’t be surprised that the IFA pulls out all the chising laws. stops to defeat initiatives that would make franchising The National Coalition supports CFA’s efforts to get more equitable for franchisees. After all, the IFA represents more states to consider fair franchising laws, and is hopeful franchisor interests; not the interests of franchisees. In Alone day the federal government will take the necessary abama, IFA launched a misinformation campaign, comsteps to protect people like us to embody the American plete with “fake news,” about how unions and trial lawyers Dream. What happened in Alabama should serve as a cauwere behind the bill and how it would damage franchised tionary tale. When franchisees don’t come forward to exbusinesses in Alabama. The IFA used a franchisee to front plain to the public and the legislature why we need laws to the propaganda. David Barr is a Kentucky Fried Chicken restore fairness to the system, we all lose. franchisee in Georgia and Alabama, but he is not your typ-

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Legislative Update House Passes Bill To Raise Federal Minimum Wage e U.S. House of Representatives, in which the Democrats have a majority, recently voted in favor of a bill to gradually raise the federal minimum wage to $15 per hour, reported Fox Business. e legislation would increase the national minimum pay rate to $15 per hour over the “THE U.S. HOUSE RECENTLY course of six years PASSED A BILL TO GRADUALLY through scheduled RAISE THE FEDERAL MINIMUM annual increases. It WAGE TO $15 PER HOUR BY 2025.” would reach $15 by October 2025. Aer 2025, the minimum pay rate would be tied to inflation. e bill was approved by a margin of 231 to 199. e current federal minimum wage is $7.25 per hour, unchanged since 2009. e bill will need to be passed by the Republican-led Senate and signed into law by President Donald Trump, which Republican lawmakers say will not likely happen.

Federal Bill Prevents Online E-Cigarette Sales To Minors Two federal lawmakers recently introduced the Preventing Online Sale of ECigarettes to Children Act, which seeks to prevent online sales of e-cigarettes to minors by applying the same measures already in place for cigarettes and smokeless tobacco products purchased online, reported NACS Online. e legislation, which is supported by the National Association of Convenience Stores, would require online sellers of e-cigarettes to: • Require verification that an adult with ID is present to take delivery of the product.

• Label shipping packages to show they contain tobacco products.

• Comply with all state and local tobacco tax requirements.

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San Francisco Bans E-Cigarette Sales San Francisco Mayor London Breed on July 5 signed an ordinance that effectively bans e-cigarette sales within the city— the first of its kind in the United States, reported CNN. e ordinance states that “no person shall sell or distribute an electronic cigarette to a person in San Francisco” unless that product has undergone premarket review by the U.S. Food and Drug Administration. To date, none have. is includes sales in brick-and-mortar stores, as well as online sales shipped to a San Francisco address. e ordinance also applies to flavored tobacco products in addition to e-cigarettes, but does not ban the use of vapes among people 21 and older. According to the measure, the policy becomes “effective” 30 days aer being signed, and it becomes “operative” six months aer that. However, the Coalition for Reasonable Vaping Regulation more recently was able to get the issue on the November ballot, so residents of San Francisco will get to vote on whether the new ordinance banning the sale of electronic cigarettes will stand, reported CBS News.

Ohio Lawmakers Seek To Stop Plastic-Bag Bans & Taxes Some Republicans in the Ohio legislature want to stop local governments in the state from taxing or banning plastic bags and other disposable containers, reported e Columbus Dispatch.

House Bill 242, currently working its way through the legislature, would prohibit local governments from imposing a tax, fee, assessment or other “A bill in the Ohio kind of charge on the use of “auxiliary legislature would containers”—i.e. plastic grocery bags, prohibit local takeout food containers and paper governments cups—the sale, use or consumption of from imposing a such containers, or based on receipts for tax, fee, assessthe sale of such containers. ment or other Several pro-business groups have kind of charge on expressed support for the bill, including the use of plastic the Ohio Chamber of Commerce, NFIB grocery bags, Ohio, the Ohio Manufacturers’ Associatakeout food tion, the Ohio Council of Retail Mercontinued next page

containers and paper cups.”

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Legislative Update chants and the Ohio Beverage Association. Opponents of the measure have expressed concern about the potential environmental impact of the bill.

Connecticut Raises Tobacco Buying Age To 21 Connecticut Governor Ned Lamont recently signed a bill raising the legal age to buy cigarettes, cigars, vaping pens and other tobacco products in the state from 18 to 21, reported e Middletown Press. is fall, the state Department of Mental Health and Addiction Services will be responsible for conducting

unannounced compliance “NEW YORK, CONNECTIchecks on e-cigarette dealers and CUT, AND OHIO HAVE referring violators to the DeJOINED THE 16 STATES partment of Revenue Services, TO RAISE THE TOBACCO which could impose penalties.

PURCHASE AGE TO 21.”

Under the legislation, the department can levy fines of up to $300 for a first offense; up to $750 for a second violation; and up to $1,000 for each subsequent offense. Fines for a second or subsequent violation apply within 24 months of the first offense. e new law further increases—from $50 to $200—the annual license fee for cigarette dealers. It also boosts the penalty for each day a cigarette dealer or distribucontinued on page 61

Integrating Acquisition Stores With Branded Gasoline Into SEI’s System

BY JAY SINGH, CHAIRMAN, NCASEF

Of the three different types of 7Eleven stores—traditional, acquisition, and Business Conversion Program (BCP)—acquisition stores that come with brand name gasoline like Exxon or Chevron seem the most troublesome to operate. The reason being that these stores are not fully integrated into 7Eleven’s electronic system and the franchisee often ends up having to use two different cash registers: one for gas and the other for in-store sales.

These acquisition stores usually have either Chevron or Exxon branded gasoline because SEI decided at the time of purchase to keep the gas brand name. Therefore, our employees have to ring the gas on the 7-Eleven register then go to the gas register provided by those companies. If the customer does not use the full amount of gas they requested, then our employees have to refund them on both registers. Same thing with the car wash, too. There is also a different credit card machine provided by Exxon or Chevron to process their gas-branded credit cards.

So you have two transactions—one on the 7-Eleven cash register and one on the gas register, and it’s a big job of balancing both registers.

Recently, the company has taken a step toward integrating the two systems, but only for the gas summary.

Since they are not fully integrated, we

still have the gas registers called Passport for Exxon or Nucleus for Chevron. The really difficult part comes when the gas register goes down, because then the franchisee has to call the Exxon or Chevron help desk, which leads to a long hold on the phone and gas sales suffer.

Lately, there has been another problem when the gas register goes down: the total sales for the day does not populate on our ISP. Even though the cash

summary is integrated, island sales and car wash sales do not populate. As a result, the franchisee has to go to the gas register to print everything for all three shifts and do everything manually, even for car wash sales.

Then comes the second part, where the franchisee has to call the help desk to get the cash summary completed.

Sometimes the Exxon credit cards do not populate, too—it shows big varia-

“Lately, when the gas register goes down, total sales for the day does not populate on our ISP. As a result, the franchisee has to go to the gas register to print everything for all three shifts and do everything manually, even for car wash sales.”

“Acquisition stores with brand name gasoline are the most troublesome to operate as these stores are not fully integrated into 7-Eleven’s electronic system.” tions. So the franchisee has to call the help desk for assistance. These are timeconsuming tasks, whether you have to call the gas company help desk or the 7Eleven help desk. It takes a lot of time and effort to match everything. An added disadvantage to all of this is that it is easy for employees to steal without being discovered. The shortage will be shown, but it is easy for them to get away with it because it is a big job for franchisees to match up sales and catch dishonest employees.

In some cases when you call the gas company help desk, they cannot dial in and a technician has to come on-site. If the tech guy has to update the software on the gas registers, it could take anywhere from 6 to 24 hours, and that is a big loss in sales even though franchisees get only 1.5 cents commission. The gas summary sometimes can only be completed two to three days later when the gas register is fixed. In other cases, if a maintenance guy for the gas pumps comes and is not fully trained, you can lose the saved data. It is hard for the help desk to retrieve that data. Again, the help desk is needed to complete the cash summary correctly. continued on page 32 AVANTI J U LY | A U G U S T 2 0 1 9

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Integrating Acquisition Stores With Branded Gasoline Into SEI’s System continued on page 31

Throughout this process the fran- Chevron helps get their customers and chisee is the victim because he has to pay branded credit card holders to pump for gas shortages, cash shortages, and more gas at our stores, there should be a variances created by the system. The better solution. Those acquired stores should be fully wrong reports generintegrated into ated by gas registers “Throughout this process the the 7-Eleven create big shortages for franchisee is the victim because system so franfranchisees ranging he has to pay for gas shortages, chisees do not from $100 to $500, and have to go franchisees are obli- cash shortages, and variances through all these gated to pay for that. created by the system.” problems.

We need to have the branded gas registers integrated into _______________ the 7-Eleven system so gas and car wash Many thanks to San Antonio Board sales can automatically be populated in Member Arundip Singh for his valuable the ISP. This is SEI’s responsibility be- input on this article! cause the major portion of gas sales inJAY SINGH come goes to corporate and franchisees CAN BE REACHED AT 702-249-3301 only make 1.5 cents. Although keeping OR JAYS@NCASEF.COM the brand names like Exxon and

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ditional products based on the current selections in a customer’s order. • Subway is exploring the plant-based protein trend with a meatless meatball sub, reported CNN Business. The sandwich chain will start selling the product, made with Beyond Meat's plantbased protein and available for a limited time, at 685 restaurants in the United States and Canada in September. • A new study from Oxford Economics claims up to 20 million manufacturing jobs around the world could be replaced by robots by 2030, reported BBC News. About 1.7 million manufacturing jobs have already been lost to robots since 2000, including 400,000 in Europe, 260,000 in the U.S., and 550,000 in China, it said. • Dollar General is turning to a new strategy to push its budget-conscious shoppers to spend more at stores and attract wealthier customers hunting for bargains by expanding into home continued on page 65

Change Is Good, But Franchisees Need To Know What Lies Ahead With 7NOW

BY MICHAEL JORGENSEN, EXECUTIVE VICE CHAIRMAN, NCASEF

Lao Tzu, the ancient Chinese philosopher, sometimes referred to as Confucius, is claimed to have said, “If you do not change direction, you may end up where you are heading.” As we are all keenly aware, retail stores are fighting now more than ever for each and every customer. The retail landscape, while still growing, is shifting. Change for c-stores is not only necessary, it needs to happen quickly.

In the good old days, not that long ago, we could easily identify who our competition was and what they were doing.

Through our daily experiences we could identify how they were changing their businesses, their product offerings, and their prices to drive sales in a particular area.

Today, with the growth of digital, the trajectory of e-commerce, and the expansion of additional “competitors” into our sales channel, our business has changed forever.

According to the most recent NACS data, convenience trips per week are down from 3.6 in 2014 to only 2.5 in 2018.

In an article for Total Retail, Linda Mihalick writes, “In its simplest definition, convenience is often measured by time and effort. In our current time-starved culture, this definition is continually expanding and changing.” She continues, “We presently live in an on-demand and always-on society, where digital is center stage. Consumers want speed, but they also want ease and simplicity.” So when we look at convenience, it makes sense that the next phase involves ordering via smartphone, tablet or some other connected device, with the customer either coming in to pick up or getting it delivered to wherever he or she may be.

Over the past 90-plus years, 7-Eleven has created and defined convenience. In fact, we’ve been the indisputable kings of the convenience store in innovation, in sales, and by sheer store numbers. At the most re-

cent NCASEF Board meeting in Long Beach, Leroy Kelsey, Research Director at NACS, presented a slide summarizing the shifts in the U.S. using data

by Commerce Sales, and it showed retail sales up 4 percent thru March 13 of this year. E-Commerce sales were up 16 percent over that same period.

In an effort to avoid ending up where we were headed, our franchisor has again innovated and developed 7NOW, their re-

“7NOW is the right direction, but it raises some concerns that should be addressed before we get too far down the road.”

sponse to the changing retail environment and today’s digitally enabled consumer.

While not available nationwide yet, customers in many areas can now order some of their favorite products “day or night” without leaving their couch—or the beach for that matter. Over the past year, 7-Eleven has continued to adapt and expand this state-of-the-art application and the orderable products available for customers. By building 7NOW from the ground up, 7Eleven maintains the extremely valuable

data and communication channel to the customer and ensures we will not be tethered to any third party delivery providers long term. Unfortunately, franchisees do not share in any revenue or profits derived exclusively from the ownership of this very valuable customer data.

There is no doubt that we need to adapt to the changing landscape and that 7NOW is the right direction. However, 7NOW does still raise some concerns that should be addressed before we get too far down the road.

7-Eleven currently utilizes third party delivery providers to deliver 7NOW orders, but the 2019 contract spells out the fact that the company can dictate, at any time, that franchisees must obtain vehicles and engage personnel who can make deliveries.

This is an added expense to the franchisee that is not shared. This is a concern about the store level profitability of 7NOW. While utilizing the third party delivery providers, 7-Eleven is currently offsetting some of the delivery costs with upcharges to the customer. 7NOW stores can see this breakdown on their 48A on the page titled Computation of 7NOW Delivery Cost. The report shows that the third party delivery costs are being offset in three ways: continued on page 36

“Currently, any difference, or gap, in delivery costs will be covered by 7-Eleven out of their corporate expense line, but there is no guarantee they will cover that gap forever.”

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Change Is Good, but...

1) A retail premium on delivered products. This is a markup price that the consumer pays for items offered through the 7NOW App. For example, the retail price at the store for a Snickers bar may be $1.99, but on 7NOW it is $2.39. That additional $0.40 is not shared GP but instead is accounted for separately to offset the delivery fee.

2) Small basket fees for purchase totals that don’t meet the total threshold to qualify for free delivery. This is actually an upcharge to meet the minimum purchase requirement for free delivery. For example, delivery is free if you order over $20. If the order comes to $15.99, the customer pays the $20 and the $4.01 gets applied here.

Again this is not shared GP. 3) Delivery fee a customer knows up front they will pay to have products delivered via 7NOW. Currently, any difference, or gap, remaining between the total of the offsets and the total delivery costs will be covered by 7-Eleven out of their corporate expense line. But there is no guarantee they will cover that gap forever. Right now delivery is a small percentage of our busi-

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continued from page 35

ness, but what happens when it becomes a large percentage of our business? As we continue to promote our 7Rewards loyalty program, 7-Eleven is growing its customer database, making our customers their customers.

We already have a customer count problem today. It is scary to imagine fewer customers visiting our stores because we are delivering to the very customers who once upon a time were visiting our stores, but we may be doing so with added expenses and thinner margins.

The carpet can be pulled out from under us at any time. We have no guarantees, because everything not spelled out in the agreement about delivery SEI will attempt to control by the operations manual, and SEI contends that the operations manual can be changed at any time. This could prove costly for franchisees. It’s better to promote transparency and ask now when the program is still developing rather than when it is a large part of our business.

Franchisees need assurances up front that we will have guaranteed profit from 7NOW deliveries. Although 7-Eleven is now covering any gap in costs, everything can be put on the franchisee to recoup the investment. We need a more concrete financial picture before we get much further down the road. Who will end up paying for the delivery? What about the additional expenses such as packaging and equipment? Additional liability?

I’ll get in the car and I like the direction, but we should all check the tire pressure, windshield wipers and fluid and make sure we put on our seatbelts. We should know we can handle the tight curves and see clearly so that we are all safely secured for the long ride ahead.

“Franchisees need assurances up front that we will have guaranteed profit from 7NOW deliveries.”

MICHAEL JORGENSEN CAN BE REACHED AT

JORGENSEN.NCASEF@GMAIL.COM OR 347-251-1828

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All In On Gasoline?

ERIC H. KARP, ESQ., GENERAL COUNSEL TO NCASEF

For several years, SEI and its publicly held parent company have been on something of a buying spree of gasoline based assets. As far as we know, this trend began in December 2010 with the acquisition of 183 properties from Exxon Mobil Corporation in Florida, followed by entry into the wholesale fuel business with the 2012 acquisition of the assets of TETCO. The next year saw the acquisition of 145 stores and a wholesale fuel dealer business through multiple transactions for just under $150 million. In November 2015, SEI announced the acquisition of retail sites in Florida. Then came the January 2018 blockbuster acquisition of 1,030 Sunoco convenience stores located in 17 states

total revenue of SEI fell from 2.9 percent in 2016 to 2.25 percent in 2017 and 1.82 percent in 2018.

According to public filings of SEI’s parent company, there were 4,392 gasoline stores in the United States as of March 31, 2019, constituting just under 46 percent of the total. An escalating number of store closures were also reported, rising from 149 stores in its fiscal year ended February 28, 2017, to 251 stores in FY 2018, and 349 in FY 2019, and another 175 are slated for closure in the current fiscal year. If that projection holds true, SEI will have closed 924 stores in the United States over a four-year period.

At the same time, there has been increasing turnover of stores in the United States. The number of transfers involving franchisees selling their “According to public filings of SEI’s parent units, and in company, 7-Eleven had 4,392 gasoline stores many cases leaving the in the United States as of March 31, 2019, system, has constituting just under 46 percent of the total.” risen steadily, rising from for $3.3 billion in cash, the largest acquisi- 105 in 2014 to 365 in 2018. On top of that, tion in the history of the company. the blended gross margin of company This strategy has very much turned 7- stores and franchise stores has been on a Eleven in the United States into as much a largely downward trend. The blended gross gasoline retailer as a convenience store com- margin was 36 percent of revenue in 2007 pany. It has made very clear SEI’s intention and had fallen to 34.2 percent in 2018. That to grow that portion of the business, and the blended gross margin has fallen over just parent company’s willingness to devote mas- the past three years from 34.8 percent in sive amounts of capital to growing the gaso- 2016, a loss of 6/10ths of 1 percent. line business. Comparatively, crumbs from The picture on SEI’s side of the ledger, the table go to improving the existing fran- particularly as it relates to gasoline sales, is chised stores. According to SEI’s parent much rosier. SEI’s 2011 gasoline revenue company, capital expenditures on existing was just under $9 billion, but by 2018 it U.S. stores “and other” as a percentage of grew to more than double that amount or

“7-Eleven’s gasoline strategy has very much turned 7-Eleven in the United States into as much a gasoline retailer as a convenience store company.” $18.2 billion. SEI’s gross margin on gasoline rose from $535 million in 2011 to $1.56 billion in 2018, an increase of just about an even $1 billion. Moreover, SEI’s gross margin as a percentage of revenue on gas sales has also increased by impressive amounts over those last seven years. In 2011 its reported gross margin on gasoline was 5.8 percent. In 2018 it was 8.29 percent.

Among the questions every franchisee should be asking are these: • Why was Sunoco willing to divest itself of such a large portion of its retail gasoline portfolio in the United States, notwithstanding the fact that those gasoline stations typically pump about 1,500 more gallons per day than SEI franchised stores in the United States?

• Did Sunoco think that it was more important to have a guaranteed customer for its wholesale gasoline than it was to be in the retail fuel business?

• Does Sunoco have concerns about the long-term prospects for retail gasoline stations in the United States?

• Does Sunoco know something that SEI doesn’t know but that the franchisees should know before they consider becoming a franchisee of a gasoline store?

There are indications within the industry that the number of gasoline stations continued on page 40

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All In On Gasoline? continued from page 39

to buy and operate an electric vehicle than an internal combustion vehicle. Another analyst suggested that electric vehicles will also surpass conventional vehicles by 2030.

Self-driving cars are also part of the equation, although a New York Times article published on July 17, 2019 suggested

cations, including workplaces, parking in the United States has been in steady degarages and supermarkets. This means cline for years. According to an article on among other things, that any 7-Eleven Slate.com/business published in 2016, the store in the United States could offer elecnumber of gasoline stations declined by 25 tric charging, not just those that are curpercent between 1994 and 2013. This artirently functioning as gasoline stations. cle suggested that And according to an article published on Axios.com on November 21, 2018: “As more electric and autonomous ve“7-Eleven reported an escalating number of hicles take to the streets, consumers may store closures, approximately 924 stores in soon be able to skip the mundane task of stopping for gas. The disruption of other the United States over a four-year period.” types of retail, like big department stores, the rising use of natural gas and electricity that a pedestrian fatality in Tempe, Ari- suggests this transition could push the to power automobiles will further reduce zona has slowed the industry down a bit. multibillion-dollar market of gas stations demand for gasoline and thus the viability Elon Musk of Tesla was quoted as saying and convenience stores towards collapse.” of the gasoline station. that he expects to have as many as 1 milMoreover, even if all of the 7-Eleven An article published on Teslarati.com lion autonomous robo taxis in use by the gas stations would eventually face market on April 4, 2018 suggested that back in end of 2020. Some experts are skeptical pressure to convert to providing electrical 2015, the number of electric vehicle charg- that the development of self-driving cars charging stations or other fuels such as ing stations in Japan surpassed the number natural gas, and with of gas stations. The same article suggested the assumption that SEI “SEI’s 2011 gasoline revenue was just under $9 billion, that the largest oil companies, such as Shell, is aware of these trends believe that gasoline demand will continue but by 2018 it grew to more than double that amount and that it just might to grow in developing countries for some possibly be conducting time, even as it shrinks in the so-called or $18.2 billion. SEI’s gross margin on gasoline rose private internal discuswealthy world, meaning the United States from $535 million in 2011 to $1.56 billion in 2018, an sions about the converand similar economies. He reported that sion, the economics of increase of just about an even $1 billion.”

Shell is expanding its global network of any arrangement begasoline stations in such places as China, will occur that rapidly, but if the future is tween the franchisor and the franchisees India, Indonesia, Russia and Mexico. not here, it’s certainly on our doorstep. have not surfaced.

Other authors have suggested that the In an article published on Inverse We raise these questions because most transition to electric vehicles is inevitable and .com on October 15, 2018, entitled, “The certainly they have long-term implications around the corner. National Public Radio, in End of the Gas Station: How Electric Cars for not only SEI’s sustained and massive ina broadcast on February 16, 2019, quoted Will Transform the Rest Stop,” the author vestment in gasoline retailing, but also for one analyst stating that about a year from states that “gas stations are already under how the economic model of convenience now, it will become comparable or cheaper enormous pressure to stay relevant,” and stores coupled with gasoline stations may cites a Reuters article suggesting that the face equally massive disruption in the notnumber of electric vehicles could hit 125 too-distant future. While we have consis“Does Sunoco know million by the year 2030. States the author, tently, but without success, attempted to something that SEI “In short, the gas station’s days are num- engage SEI in open, transparent and conbered.” Moreover, the author quotes the structive dialogue on a wide range of issues, doesn’t know but that the account manager of an outdoor architec- the future of gasoline retailing cries out for franchisees should know ture firm to the effect that gasoline sta- a very high level of communication and tions will not have an easy time partnership with franchisees. before they consider converting to electric charging stations, becoming a franchisee ERIC H. KARP because those charging stations can be CAN BE REACHED AT and are being installed in many other loof a gasoline store?”

617-423-7250 or ekarp@wkwrlaw.com

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Vice Chairs’ Forum

THIRD PARTY PAYROLL PROVIDERS BENEFIT FRANCHISEES AND SEI

BY PAUL LOBANA, NCASEF VICE CHAIRMAN, PRESIDENT, SOUTHERN CALIFORNIA FOA

According to our new contract, about the employees and how they want you have two or more stores, and you payroll is now the franchisee’s responsi- to be paid: rapid payroll card, check or di- signed the new agreement on one store, bility. This effectively transfers payroll rect deposit. We are good with that. The and the other store has several years left processing from SEI to a third party franchisee can call in the payroll, they can on its agreement. If all your stores have provider, either ADP or Payality. There’s text it, or they can download Payality’s the same EIN number, and you choose a very simple reason our franchisor software and send the payroll info from to go with Payality in one of your stores, made this change: they don’t want to be their computer at home. Franchisees can 7-Eleven will not pay for ADP in the perceived as a co-employer of our store also buy a system from Payality so em- other stores. In other words, they don’t workers. This is very unwant you using ADP for derstandable, as it shields some stores and Payality “THE MAJOR DIFFERENCE BETWEEN ADP AND SEI from any labor or legal for the other stores. If you PAYALITY IS THAT IF YOU USE ADP, 7-ELEVEN issue between a franchisee stay with ADP, they will WILL PAY ALL OF THE PAYROLL COSTS FOR and a store employee. pay for all of your stores.

YOUR STORE(S) FOR FIVE YEARS.” Thankfully, the transiPayality is $99 per tion to the third party paymonth, so the savings to a roll companies has been very ployees can check in with their franchisee is approximately $1,200 per smooth with barely any isfingerprint. This is a great year times five years, or $6,000 in total. sues. Franchisees who use feature with Payality. I haven’t If you have three stores, the cost would ADP can have the payroll heard any negative feedback be $18,000, so it’s a little bit of leverage money withdrawn directly with either service. It appears to get more stores to stick with ADP. from their general funds, so franchisees are happy to go The move to a third party payroll they don’t have to create a separate along with this change. provider is not good or bad, it’s someADP account.

Both payroll companies are similar thing that we had to do based on the new I haven’t heard any negative com- and both transitions were almost seam- agreement. The message here is that ments about ADP. Franchisees are send- less. There were some small hiccups, but every franchisee has to make the right ing all of their employees’ hours and all that is to be expected with any change. decision for themselves, and for their their employee information to the 7- There were some small training issues. I businesses. 7-Eleven has been in the Eleven system, and ADP is picking it all personally had to make about four or press numerous times over I-9s and unup and making the payroll exactly as it five calls to the help desk, but after a documented workers. This contractual was before. A few of my FOA members week we were ready to promove now takes the heat “IF ALL YOUR had a couple of issues, where ADP did cess my payroll. off of SEI and transfers STORES HAVE not process a few paychecks because the We did discover one more responsibility for THE SAME EIN social security number provided did not minor difference between payroll to the franchisee, NUMBER, THEY match the employee name. It was sent using ADP and Payality, and which to date hasn’t been DON’T WANT back to the franchisee to correct and was this applies to me, and to the an inconvenience.

YOU USING ADP then processed correctly. people who signed under the FOR SOME With the second provider, Payality, same criteria I am going STORES AND PAUL LOBANA the franchisee has to open an account and through. I signed the new CAN BE REACHED AT PAYALITY FOR PAULLOBANA@AOLCOM OR set up all of their employee data at one contract in one of my two THE OTHER 818.203.2527 time. That includes all of the information stores in April of this year. Say STORES.” AVANTI J U LY | A U G U S T 2 0 1 9

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Franchisee Guest Column

WHY WE NEED AN INDEPENDENT NATIONAL COALITION, PART 3: HOW TO MAXIMIZE EFFECTIVENESS OF THE NATIONAL COALITION

By John R. Irvine Jr., Franchisee, Detroit, Michigan We have identified that franchisees are lucky to have a 44-year-old association of fellow franchisees in place. So how do we take this asset that we have and maximize it to give it teeth and raise it to the level of having the ability to take on any foe and defeat them? We don’t want the best lawyer that we can afford, we want the best legal minds in the country working to defend our rights. When we lobby for fair franchise legislation, we want to go to every fundraiser of every politician important to our cause.

Here is a list of my recommendations to maximize this tremendous asset we have called the National Coalition: 1. Raise the dues by $40 per month. $40 per month will go to a “Legal and Legislative Fund.” The money will be used for no other purpose but for what it is intended—legal and legislative objectives. If the National Coalition represents 4,500 stores that would be $40 x 4,500 = $180,000 x 12 = $2,160,000. I can hear the howls of “We can’t afford that.” Looking at the 2019 agreement, you can’t “not afford” it. Instead of taking the kids to McDonalds once a month, make them a peanut butter and jelly sandwich.

2. Grow the membership. Any group of franchisees with 15 members or more can be recognized as a member FOA of the National Coalition. FOAs tend to be run by cliques. In the old days, one clique would lose an election and the next day they would start a new FOA. In Detroit,

at one time I think we had four FOAs running. The point is I would rather have four FOAs running and all being members of the National Coalition than having the losing cliques simply quitting involvement with the National Coalition.

3. Have one major convention once per year in Las Vegas. Have four regional trade shows sharing the profits with all FOAs. Maximize vendor support with central and local planning—na-

The National Coalition is the last best hope to save this franchise. I believe that the 2004 agreement stabilized the company and led to an unprecedented period of success for both franchisees and the company. In contrast, the 2019 agreement is unsustainable over time and incentivizes franchisees to hold down sales and profit. The 2019 agreement is a disaster, for both franchisees and 7-Eleven, Inc.

“I BELIEVE THAT THE 2004 AGREEMENT STABILIZED THE COMPANY AND LED TO AN UNPRECEDENTED PERIOD OF SUCCESS FOR BOTH FRANCHISEES AND THE COMPANY.” tional vendors handled at the national level and interested local vendors handled at the local level.

4. Build a website that changes daily with news important to franchisees. Produce video highlights of all national and local events to show non-participating franchisees what they are missing out on. The website should include a chat room where every franchisee can express his opinion, ask a question, answer a question, inform about a potential problem, and disclose success stories.

5. Quarterly National Coalition meetings should be held at the cheapest central location that can be found.

Traveling to exotic locations is an expense that does not serve the membership and is an unnecessary expense.

I hope I answered the question “Why is an independent National Coalition important?” I have been a 7-Eleven franchisee for 48 years, and it has been an interesting ride. Just remember that whatever your local FOA or the National Coalition becomes or accomplishes is only possible with the support of individual franchisees. With 7-Eleven franchisee intervention, together, possibly we can save the system, or we can just let it die and look for new opportunities. God bless America, and God bless all the 7Eleven franchisees world wide, because we need God’s help. ______ To read Parts 1 and 2 of John Irvine’s threepart series on an independent National Coalition, see the March/April issue of Avanti, page 51, and the May/June issue, page 51. Avanti is available at online at www.issuu.com.

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Vendor Guest Column

HOLD THE $1 COFFEE: FRANCHISEES SET PRICES, NOT SEI

By Tom Ayres, Witmer, Karp, Warner & Ryan, LLP

With SEI promoting a $1 coffee program nationwide, franchisees are likely asking themselves: “Am I obligated to participate?” The short answer is “No!” The Franchise Agreement contains several provisions that clearly state that franchisees set prices—not SEI. Franchisees can decide for themselves whether it makes economic sense to participate, but they should feel confident knowing that SEI cannot force them to charge only $1 for coffee.

We have been told by a number of franchisees that they have had to affirmatively ask their Field Consultant how to work around the pre-programmed $1 coffee in their POS system because SEI is not volunteering that important piece of practical information. This is unfortunate because it undermines the clear and unequivocal right of franchisees not to participate in these and other deep discounting initiatives.

First and foremost, Paragraph 15(f) on page 10 of the January 2019 Uniform Store Franchise Agreement that deals with Suggested Retail Selling Prices states, “We may suggest retail selling prices for Inventory items and services that you offer at your Store. You have no obligation to sell Inventory items and services at our suggested retail selling prices, but you agree to accurately and timely report to us your actual retail selling prices as required by this Agreement.” Prior versions of this paragraph of the franchise agreement have the same language, although it may be found on a different page.

Second, Para“AM I OBLIGATED TO PARTICIPATE IN graph 12(c)(3) on THE NATIONWIDE $1 COFFEE PROGRAM? page 8 that deals THE SHORT ANSWER IS ‘NO!’ DO I HAVE with Bookkeeping TO OFFER 7-ELEVEN PROPRIETARY and Financial MatPRODUCTS AT A PRICE SET BY SEI? ters states: “You AGAIN, THE SHORT ANSWER IS ‘NO!’ also agree to keep us currently advised electronically or in writing, as we prietary Products at a price set by SEI?” specify, of all your actual retail selling Again, the short answer is “No!” While prices (which you alone will set) and of Paragraph 15(c) on page 10 indicates all discounts, allowances, and/or premi- that franchisees must “maintain in the Store at all times a Reasonable and Repums you receive.” resentative Quantity of all ProThird, Paragraph 19(f) on page 16 priety Products,” there is similarly says that franchisees nothing that says that they agree to “properly record all must be offered at a particular sales of Inventory at the time price set by SEI. The definition of sale at the retail prices you of “Reasonable and Representative Quantity” on page 47 also says noth“THE FRANCHISE ing about price, just the minimum numAGREEMENT CONTAINS ber of units for each SKU. SEVERAL PROVISIONS The same is true of Nationally/ReTHAT CLEARLY STATE gionally Promoted Products and Exclusive Products under Paragraph 15(e).

THAT FRANCHISEES The same Reasonable and Representative SET PRICES—NOT SEI.” Quantity requirements apply and there is set and generally offer customers of the no indication that SEI may set the price Store.” It’s worth noting here that the def- or that any portion of this subparagraph inition of “Inventory” on page 46 says overrides section 15(f).

Still not sure? Check out the Frannothing about price. And check out the how “Retail Book Inventory” is defined chise Disclosure Document that SEI must on page 48, which states that as part of furnish to every prospective franchisee the calculation, SEI will “add[] the retail and submits to state regulators. Item 11(a) value (based on your then-current retail on page 34 refers to Paragraph 15 in the Franchise Agreement and states: “We will selling prices) of subsequent Purchases.”

Franchisees may be asking them- provide a list of Recommend Vendors on selves, “Do I have to offer 7-Eleven Pro-

continued on page 50

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Vendor Guest Column continued from page 49

the 7-Eleven Intranet, indicate the type of merchandise you should sell, and suggested retail selling prices. As an independent contractor, you can select merchandise for your store and the vendors you buy from, and establish the retail selling prices for your merchandise (except for consigned gasoline).”

What about other products that have pre-printed prices on them? This is tricky as a practical matter, but as a legal matter there is nothing in the Franchise Agree-

ment that requires you to use the preprinted price on any product. Our law firm has brought this issue to the attention of SEI in the past as this practice is not permitted under the franchise agreement as drafted by SEI. One last point: there are two exceptions to prices franchisees can set—(1) gasoline and (2) car washes. For those

“WE HAVE BEEN TOLD BY A NUMBER OF FRANCHISEES THAT THEY HAVE HAD TO AFFIRMATIVELY ASK THEIR FIELD CONSULTANT HOW TO WORK AROUND THE PRE-PROGRAMMED $1 COFFEE IN THEIR POS SYSTEM BECAUSE SEI IS NOT VOLUNTEERING THAT IMPORTANT PIECE OF PRACTICAL INFORMATION.”

franchisees that offer gasoline and car washes, they must sign amendments that expressly state that SEI will set the prices at which they will be sold. However, the right to set these prices by SEI is not without limits, and from our perspective, must be exercised in accordance with the implied covenant of good faith and fair dealing.

You may want to keep a copy of this article at the ready in your store should your Field Consultant or anyone in SEI state or imply that you are not entitled to set the retail prices within your store.

If you have any questions regarding pricing in the contract, reach me at tayres@wkwrlaw.com.

W H AT A

STELLAR CONVENTION! Without question, the National Coalition’s 44th Annual Convention and Trade Show will go down in the books as the biggest and most successful to date! • More than 2,500 people—including 661 vendors and 1,840 in franchisee groups—gathered in Long Beach, California from August 5 to 8 to partake in informative seminars, a blowout trade show featuring the newest and bestselling products our vendors have to offer, great dining events, a charity silent auction, and a day at Disneyland! continued on page 55

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continued from page 53

The convention kicked off with an outdoor cocktail reception at The Cove at the Long Beach Convention Center, featuring food trucks and live music provided by a mariachi band—an event that was a tremendous hit with attendees.

Equally popular were the Franchisee Day at Disneyland and the Night on the Queen Mary. Seminars included the State of the Coalition address conducted by the NCASEF officers, and the Legal Forum with NCASEF General Counsel Eric Karp

Major Thanks To Our 2019 Major Sponsors DIAMOND ELITE Anheuser Busch

DIAMOND Coca-Cola McLane PepsiCo

PLATINUM Vixxo VPX Sports/ Bang/RedLine

and Attorney Shannon Liss-Riordan, who is representing franchisees in the California lawsuit, as well as Subway franchisee and advocacy consultant Keith Miller, who recently testified in front of a U.S. Senate subcommittee on the need to increase Federal Trade Commission oversight of franchising. continued on page 56

GOLD Red Bull

SILVER Advantage Solutions JUUL Labs Keurig Dr Pepper MillerCoors MONSTER Nestle Waters

BRONZE Aon Risk Services Barbot Insurance Services BIC blu/Fontem Ventures Constellation Brands CROSSMARK Dean Foods

Ecolab Glanbia Performance Nutrition Heineken InComm Jack Link's Kellogg's King Palm Mars Wrigley Mondelez Navajo Perfetti Van Melle Ruiz Foods Serendipity Brands Swisher Ultimate Sales & Services Uptime Energy AVANTI J U LY | A U G U S T 2 0 1 9

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Above: Chairman Jay Singh, General Counsel Eric Karp, and all the officers of the NCASEF spoke on “the state of the Coalition” at the Wednesday morning seminar.

The two-day Trade Show was a smashing success for both franchisees and our exhibiting vendors. Franchisees placed roughly $2 million worth of orders, thanks to the great show deals and innovative products offered by our vendors. With their orders, franchisees also received entries into the multi-prize raffle featuring a Mercedes GLA Crossover SUV as the grand prize. Congratulations to the grand prizewinner Kevin Nijjar, vice president of the FOA of Greater Los Angeles!

“This year’s convention was another huge success and a great show of unity,” said Chairman Jay Singh. “We would like to thank the National Coalition members and our vendors for their participation and support.” continued on page 59

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Thank You To Our 2019 Exhibitors 4Keeps Roses 5-Hour Energy Acosta Sales & Marketing Advantage Solutions Anheuser Busch Aon Risk Services AriZona Beverages Atkinson-Crawford Sales Co. Aurantiaca Bang Energy Barbot Insurance Services BIC blu/Fontem Ventures Blue Bunny Ice Cream Bon Appetit Brownie Baker CAB Enterprises Campofrio Canarchy Craft Brewery Collective Canlock Chillhit Labs

Cima Confections Corporation Coca-Cola ConAgra Brands Constellation Brands Cookies United CROSSMARK Convenience Dean Foods Double AA Consulting Dri Mark Products Drink Recess DS Tiger/Rancho La Gloria Margaritas Eastland Food Corp Ecolab F1rst Choice CBD Fiji Water Glanbia Performance Nutrition Golden Nest Heineken Hershey Company InComm Jack Link's

Johnsonville Sausage JUUL Labs KanPak Kellogg's Keurig Dr Pepper King Palm Kretek International Mars Wrigley McLane MillerCoors Mondelez MONSTER More Labs Mother Parkers Tea & Coffee MSIG Nature's Bounty Navajo Nestle Professional Nestle Waters Nutriair Oxygen Plus Pabst Brewing PepsiCo

Perfetti Van Melle Promark Pure Distribution/ Iceland Spring Water Red Bull North America RJ Reynolds RRW LLC Ruiz Foods Serendipity Brands Sparkling ICE/Talking Rain Spike SRP Companies Stryve Foods Swedish Match Swim Across America Swisher The Venders Ultimate Sales & Services Uptime Energy Vixxo Wind River Sales & Distribution AVANTI J U LY | A U G U S T 2 0 1 9

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Right: NCASEF gave Swim Across America a check for $60,000 to help support cancer research.

The convention culminated with the Grand Banquet and Charity Auction Night. During this event, the NCASEF oďŹƒcers presented Swim Across America with a check for $60,000, and handed out Franchisee and Vendor Appreciation Awards. The guest speaker for the Grand Banquet was entrepreneur and rap artist Master P (Percy Robert Miller), founder and CEO of No Limit Enterprises. This was one convention that franchisees and vendors will not soon forget!

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Legislative Update tor operates without a license to $50, up from $5.

Tobacco Purchase Age Now 21 In Ohio Ohio is raising the minimum age to buy tobacco products from 18 to 21, reported the Associated Press. e new law will take effect in October aer Governor Mike DeWine signed it in mid-July. e new law also applies to rolling papers, fil”THE NEW LAW ters and other smoking and vapALSO APPLIES TO ing accessories. Ohio is one of 18 ROLLING PAPERS, states that have raised the miniFILTERS AND mum age for purchasing cigaOTHER SMOKING rettes, cigars, electronic cigarettes AND VAPING and other tobacco products. NaACCESSORIES.” tional statistics show Ohio has one of the highest rates of adult smokers at just over 21 percent. Backers of the new law say the goal is to prevent children from starting to smoke.

New York Raises Smoking Age To 21 New York will raise its smoking age from 18 to 21 under legislation signed into law on July 16 by the state’s governor, reported Time. e change, which takes effect on November 13, will apply to the sales of traditional tobacco products as well as electronic cigarettes and vaporizers. Sixteen states have approved raising the smoking age to 21, though in some the changes won’t take effect until later in 2019 or in coming years. In addition, hundreds of local communities around the nation have made the move to 21. In New York State they include New York City, Long Island, Albany and a dozen other counties.

FDA Proposes New Cigarette Health Warnings e FDA recently released a proposed rule seeking to include graphic health warnings on cigarette packaging and advertise-

ments, reported NACS Online.

Public comments on the proposal are currently open and are due to the FDA by October 15. e proposed rule would require the new cigarette health warnings to appear on the top 50 percent of the area of the front and rear panels of cigarette packages and at least 20 percent of the area at the top of cigarette advertisements. e proposal would also require retailers to ensure that warning labels on cigarette packages are not obscured by stickers or other labels, and that the health warnings on cigarette advertisements be rotated quarterly. e warnings would be required to appear on packages and in advertisements 15 months aer a final rule is issued.

Indiana City Adds E-Cigs & Vape Pens To No-Smoking Law e Columbus City Council in Indiana recently approved adding e-cigarettes and vape pens to the city's smoking ordinance, reported RTV6 Indianapolis. In 2012, the Council passed an ordinance prohibiting smoking in all indoor businesses, including private clubs and bars. e amendment adds electronic smoking devices. Council members have become concerned over the increasing number of teenagers using e-cigarettes and vape pens. Once given final approval, violation of the amended ordinance would carry a $50 fine.

Pennsylvania Considers Raising Smoking Age To 21

Pennsylvania could be the next state to raise the minimum age to purchase tobacco products, reported KDKA 2 Pittsburgh. Legislation was recently introduced by Representative Marty Flynn and co-sponsored by Representative Dan Frankel that would effectively raise the minimum age to purchase tobacco products from 18 to 21. House Bill 536, An Act amending Title 18 (Crimes and Offenses) of the Pennsylvania Consolidated Statutes, in minors, further providing for sale of tobacco, was introduced in December 2018 and referred to the committee on health on March 1, 2019. If passed, Pennsylvania would join 15 other states along with Washington “The proposed rule would require the new cigarette D.C. to put a law on the books health warnings to appear on the top 50 percent of the area of the front and rear panels of cigarette packages.” raising the age to 21.

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number, and date of birth to reset a password, and would then send a link to reset the password to any e-mail address you choose. This allowed unauthorized parties to send the reset link to their own e-mail addresses, create their own passwords and access that account, without any sophisticated hacking technique. From there, a thief could walk into any Seven-Eleven store that accepts 7pay and make purchases with somebody else's account.

Seattle’s Sugar Tax Generates More Revenue It appears Seattle’s sugary beverages tax, which was imposed in 2018 and roughly doubles the price for a 12-pack of soda, is generating more revenue than city officials expected, reported the Seattle Times. City bureaucrats estimated consumption would likely plunge up to 40 percent, but instead the program brought in 49 percent more money than predicted in the first year ($22.4 million versus $15 million estimated). Furthermore, the city budget office said revenues will be 8 percent higher this year

“Seattle’s sugar tax generated 49 percent more money than predicted in the first year.” than last (to about $24 million) and will continue to go up, though at a slower rate, in 2020. This is a major problem for the soda tax, the article states, because its primary purpose is to curb consumption of sugary drinks—especially among kids—as a way to fight obesity and its related illnesses.

Global C-Store Sales To Reach $4.9 Trillion In 2022 Global convenience store retail sales reached US$3.256 billion in 2017, rising 6.7 percent over 2016, and are projected to register a CAGR of 8.5 percent over the forecast period 2017-2022 to reach US$4.902 billion in 2022, reveals the “Global Con-

venience Stores Retailing, 20172022” report.

Increasing consumer affinity towards smaller format stores that offer convenience is driving sales in the channel, the report states. Moreover, the global recovery in economic growth, coupled with rapid urbanization, has contributed considerably towards the growth of convenience stores in the past few years. Against this backdrop, convenience stores are projected to gain share of the total retail market. Sales through convenience stores reached 20 percent of the total retail sales in 2017 and are projected to gain share to 22 percent in 2022.

$15 Minimum Wage Would Cost 1.3M Jobs A study conducted by the Congressional Budget Office has found that raiscontinued on page 65

Want to talk to other franchisees?

To find the FOA closest to you. Visit www.NCASEF.com to contact any one of the 43 local Franchise Owner’s Associations nationwide. Want to talk to someone at the national level? Call the NCASEF Vice Chairman in your area: The National Coalition has Franchise Owner’s Association member organizations in all 33 states in which 7-Eleven operates.

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Paul Lobana, Vice Chairman, President, Southern California FOA

Rehan Hashmi, Vice Chairman, Vice President, Alliance Of 7-Eleven Franchisees

paullobana@aol.com 818.203.2527

rehan711@yahoo.com 847-845-8477

Ajinder Handa, Vice Chairman, President, Greater Seattle, FOA

National Office

425-438-8381 ajinderhanda@hotmail.com

nationaloffice@ncasef.com 210.971.9211

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furnishings, kitchenware and party supplies, reported CNN Business. • Pepsico is switching up the packaging for some of its water portfolio as it works to remove plastic from its supply chain amid a growing concern from consumers over the material’s environmental footprint, reported Fortune. Beginning next year, the company will sell its Aquafina and Bubly water brands in aluminum cans, and Lifewtr will be packaged in only recycled plastic. • Coca-Cola will sell an alcoholic drink—the first in the company’s history—nationwide in Japan after a successful yearlong test run, reported CNN Business. CocaCola’s Lemon-do alcoholic soft drink will be launched in October and may be the only product of its kind for some time, the company said. • Total sales of all legalized cannabis in the U.S. is projected to jump from $8 billion in 2018 to $41 billion by 2025, according to a new Nielsen study. Projected sales include $35 billion for marijuana products and $6 billion for hempderived CBD products. • A new law in California allows diners to bring their own reusable takeout cups and containers to restaurants, part of an ongoing effort to reduce dependence on single-use plastics, reported Restaurant Hospitality. The new law also opens the door for reusable containers at temporary food facilities, such as those used at events and festivals. • For the fourth year in a row, Chick-fil-A has been named America’s favorite restaurant based on customer satisfaction, reported Fox News.

The fast-food chain topped the American Customer Satisfaction Index for limited-service restaurant chains. • Customers using Walmart’s online grocery service can now pay for their orders at pickup with a SNAP EBT benefit card at more than 2,500 of the retailer’s locations, reported Fox Business. • By 2021 nearly 50 million U.S. consumers will use a food delivery app, and by 2023 it will grow to 60 million people, making up 23 percent of smartphone continued on page 66

ing the federal minimum wage to $15 per hour would boost wages for some 17 million people, but cost the United States 1.3 million jobs, UPI reported.

The CBO analysis found that in addition to boosting the wages of millions of minimum wage earners, another 10 million who are “otherwise earning slightly” more than $15 per hour also could get a pay

dicators like freshness, taste and menu appeal, reported Smart Brief. Citing Datassential’s Brand Fingerprints report—which captures consumer ratings for hundreds of restaurant, grocery, and c-store brands—the article states that 56 percent of consumers are likely to recommend Wawa to family and friends, which is just 8 percent behind restaurant brand In-NOut Burger.

The report further reveals that foodservice at major convenience chains are “e Congressional Budget office taking a cue from said a $15 minimum wage would restaurants with craveworthy limited time ofraise 1.3 million Americans above fers (LTOs) that not only the poverty level.” appeal to the changing taste of consumers, but raise. Some 1.3 million Americans also draw them into the store. would rise above the poverty level, but Whether it’s a made to order Fiery at the cost of 1.3 million U.S. jobs.

Mac & Cheese Brisket Bowl from The CBO said a $12 per hour minWawa or a Huevos Rancheros Pizza imum wage would have “smaller effrom Kum & Go, highly unique LTOs fects” on the U.S. economy and job drive traffic and further blur the lines market. By 2025, it would result in between convenience stores and quick wage increases for 5 million workers service restaurants. earning less than $12. Another 6 million who make slightly more than $12 could also see an increase. The increase would result in the loss of about 300,000 jobs. A $10 per hour miniThe percentage of U.S. consumers, mum wage would see wage increases ages 18 and above, who shopped onfor 1.5 million workers, with another 2 line for groceries within a 30-day pemillion possibly seeing a raise. There riod—whether for delivery or pick-up would be “little effect” on employment, in store—increased from 17 percent in the CBO said. the quarter ending November 2018 to 20 percent, or about 51 million consumers, in the quarter ending February 2019, according to a new study from The NPD Group. Of those who shop Wawa and Sheetz are best-in-class online for groceries from brick and for key food and beverage quality incontinued on page 66

More Consumers Ordering Groceries Online

C-Stores Score Big On Fresh Food

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authorities for its series on the fu“About 51 million U.S. consumers have ture of convenordered groceries online within a 30-day ience retailing. period, according to the NPD Group.”

DePinto said he believes that “U.S. mortar or pure-play online grocers, 16 convenience retailing is positioned percent order their food and beverages well within the overall retail sector for for delivery. The option to order online the next 50 years” as customers will and pick-up in store is favored by 11 continue to seek out simplicity, ease of percent of online grocery shoppers. use, and seamless and frictionless Seven percent of these shoppers mix it shopping experiences at a greater pace. up and do both, the study reveals.

He also believes that as retail channels overlap and merge, all retail will become increasingly competitive, and for c-stores “that means we will continue to see significant consolidation as size and scale will matter.”

When asked where he sees 7SEI President and Eleven being 50 years from now, DeCEO Joe DePinto rePinto responded, “7-Eleven will evolve cently shared his with the customer. We have the organviews on what the ization, scale and capacity to make the next 50 years will changes required to keep pace with a bring for c-stores in rapidly evolving customer. In this an interview with Convenience Store sense, we will remain top of mind with News. The trade publication recently the customer regardless of how they interviewed leading c-store industry define convenience in the future.”

DePinto Says 7-Eleven Will Evolve With The Customer

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Questions For The CEO? Got a question you want to ask the CEO of 7-Eleven? Submit it via email to nationalcoalition@NCASEF.com. Include the phrase, “Question for the CEO.” We’ll print your question here next issue. All questions are anonymous. The changing environment franchisees face over the next year is bound to raise many issues we have not faced before. We have all signed a new contract that we have yet to test in practice.

So, got a question? Let us know: nationalcoaltion2@ncasef.com

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users, according to reseach firm eMarketer. As of February 2019, DoorDash (27.6 percent), Grubhub (26.7 percent) and Uber Eats (25.2 percent) claimed the most food delivery market share. • Illinois recently became the 11th state to approve marijuana for recreational use, reported the Associated Press. Legalization in Illinois also gives cannabis-vendor preference to minority owners and promises 25 percent of tax revenue from marijuana sales to redevelop impoverished communities. • The U.S. trucker shortage is expected to more than double over the next decade as the industry struggles to replace aging drivers and recruit more women, reported Bloomberg. The driver deficit increased by more than 10,000 to 60,800 in 2018 from a year earlier, according to a study by the American Trucking Associations. • With plans to bring Jones Soda into the CBD beverage market, international hemp and CBD company HeavenlyRx recently acquired 15 million shares from the Seattle soda company, representing about 25 percent ownership.

• The San Francisco International Airport has banned the sale of single-use plastic water bottles and will only allow reusable water bottles, recyclable aluminum, glass and certified compostable water bottles, reported The Hill. • Kretek International has agreed to acquire media assets from Tobacco Merchants Association, including Tobacconist Magazine, Pipes & Tobacco Magazine, Cigars & Leisure and TobaccoReviews.com, reported CStore Decisions.

These media entities will be housed under Tobacco Media Group, a subsidiary business of Kretek International. • Walmart will begin a pilot program in Bentonville, Arkansas using a self-driving vehicle to bring customer orders between two stores in the area on a two-mile route, reported Progressive Grocer. The move comes in the wake of legislation passed in Arkansas last March permitting autonomous vehicles to operate in the state. • Dunkin' recently continued on page 68

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Couche-Tard Invests In Cannabis

Seven-Eleven Japan Monthly Sales Drop

Circle K parent company Alimentation Couche-Tard Inc. recently announced that it has made a strategic investment in Fire & Flower Holdings Corp., a leading independent cannabis retailer based in Alberta, Canada. Fire & Flower currently operates or licenses 23 cannabis retail stores in Alberta, Saskatchewan and Ontario, a wholesale distribution division in Saskatchewan, and the leading HiFyre digital retail platform designed to connect consumers to the world of cannabis.

Couche-Tard said this investment will provide Fire & Flower with additional capital to further accelerate their expansion strategy.

This is not Couche-Tard's first foray into the cannabis sector, reported The Canadian Press. In February, the Quebec retail giant and Canopy Growth Corp. of Smiths Falls, Ontario, announced they were teaming up to support a privately run cannabis shop in Ontario under the cannabis company's Tweed banner. The companies also entered into a multi-year partnership, with the location in London, Ontario serving as its entry into a market that could lead to “future international opportunities.”

Seven-Eleven Japan recently reported its first year-on-year decline in monthly chain wide sales in more than nine years, with bad weather and the hacking of the short-lived 7Pay mobile payment platform seemingly driving customers elsewhere, reported Nikkei Asian Review. Sales across all SevenEleven convenience stores fell 1.2 percent in July, the article states.

Same-store sales slid 3.4 percent following a smaller dip in June.

“Seven-Eleven Japan reported its first year-onyear decline in monthly chain wide sales in more than nine years.”

The company also experienced a 5.6 percent drop in same-store customer traffic, which it attributed partly to a long stretch of rainy weather through mid-July. Sales of beverages and ice cream were also slower than a year earlier, when the heat was especially intense. However, franchisees also put blame on the 7Pay hack, saying that customers went to rival stores that had introduced other payment services first.

According to the report, the woes of Japan's convenience store sector extend beyond Seven-Eleven. FamilyMart and Lawson reported declines of 1.7 percent and 2.3 percent in July same-store sales. FamilyMart's total store sales sank 1.9 percent, while Lawson's grew 1.1 percent. continued on page 70

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announced a new partnership with Beyond Meat to introduce the Beyond Sausage Breakfast Sandwich, available now at participating Dunkin' restaurants in Manhattan and plans a future national rollout. • As Coca-Cola and PepsiCo work to increase the amount of recycled plastic they use in bottles to address environmental concerns, both companies have decided to step away from the Plastics Industry Association, a plastics lobbying group, reported CNN Business. • New York City recently implemented a citywide ban on food and drinks containing CBD, reported the Hemp Industry Daily. Businesses selling CBD-infused food and drinks will have to remove the products or face fines ranging from $250 to $600 starting October 1. • Convenience store chain Sheetz has teamed up with Coinsource to install Bitcoin ATMs in five of its Pennsylvania stores, plus one location in Winston-Salem, North Carolina. The ATMs will allow customers to buy and sell the cryptocurrency with U.S. dollars. • Kwik Trip recently launched delivery services with EatStreet for over 400 items currently available in its stores. Kwik Trip said the delivery partnership will roll out in phases. The initial pilot period launches took place in Madison and La Crosse, Wisconsin. • Manufacturers are allocating more money for digital coupons in food categories as print coupon activity declines, according to a new analysis by Kantar Consulting.

While print coupon activity fell 12.4 percent during the first half of 2019, digital coupons and promotions grew 8.5 percent driven by dry groceries like candy, snacks, coffee and other center store items. • More than 10,500 U.S. Subway restaurants will be remodeled with a new design and décor by the end of 2020, the sandwich company announced. Subway said it is covering about 25 percent of the redesign costs, with franchise owners covering the rest. • Wawa, Inc. and The Baltimore Ravens recently announced a multi-year agreement with Wawa to become the “Official Hoagie” and “proud partner of the Baltimore continued on page 70

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Amazon Plans For A New Grocery Store Chain Amazon is planning a new type of grocery store that would combine traditional shopping with online pickup, reported Business Insider. Citing several sources, the article states Amazon is looking into building new grocery stores from the ground up rather than significantly expanding Whole Foods.

These new stores would be centered on pickup and delivery, and would include a separate section where shoppers could pick out fresh groceries. The store concept would also allow shoppers to order nonperishable items through an app as they roam aisles to pick out fresh groceries. These nonperishable items, which could include staples like paper towels and canned foods, would be brought down to the checkout area as the customer shops.

More Retailers Using Robots To Cut Costs The grocery industry is stepping up its investment in shopper-facing robot technology as it strives to offset the costs of online delivery and pressure from non-supermarket competition, reported Forbes. Retailers overall are investing an estimated $3.6 billion in artificial technology globally, and are expected to invest $12 billion by 2023.

While a lot of this spending is dedicated toward warehouse and fulfillment tasks, supermarkets are increasingly earmarking some of their robot investments for in-store services like scanning and sorting inventory, identifying shelf items that are out of 70

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stock, scoping the aisles for hazards such as spills, and running price checks. The evident goal, in addition to cutting costs, is to improve the in-store and online shopper experience.

Nestle Develops Recyclable Paper Packaging Global food giant Nestle SA has developed new paper packaging for its YES! snack bars, a technology it hopes to scale up and extend to other confectionery products as it tries to make all its packaging recyclable or reusable by 2025, reported Reuters.

The company said the new snack bar wrapper, composed of paper and a water-based coating to guarantee the same shelf life as plastic, could be used on its existing high-speed lines that can seal up to 500 snack bars per minute. Once scaled up, the paper packaging could be extended to other products such as its KitKat bars, but at this stage Nestle’s partners cannot supply enough paper, the company said.

Nestle rolled out paper packaging for its flavored milk powder Nesquik in the first quarter of 2019 and will introduce paper-based pouches for its Milo health drink in 2020.

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Ravens.” As part of the partnership, Wawa and the Ravens will team up on a number of promotions throughout the season both in Wawa stores and at the stadium. • Domino’s plans to launch an e-bike delivery program nationwide this year, reported CNBC. The company said electric bikes improved delivery and increased the pizza chain’s hiring pool in market tests. • Supermarket chain Hy-Vee has admitted that a possible data breach may have exposed customer credit card information, reported The Daily Swig.

Concerns about transactions at some Hy-Vee fuel pumps, drive-thru coffee shops, and restaurants has prompted an ongoing investigation into its payment processing systems, the company said • U.S. retail sales rose 0.7 percent in July from the previous month, beating economists' forecasts and booking the biggest increase in four months, reported the Associated Press. Spending grew in 10 of 13 categories, with a 2.8 percent increase in online and other non-store spending leading the way, and department stores booked a 1.2 percent rise. • Amazon recently opened its newest brick-andmortar 4-star store on the ground floor of its new Seattle office tower, reported the Seattle Times. The store stocks about 2,000 products that are new, trending or whose Amazon reviews average at least four stars. • The Global Cereal Bar Market size is expected to reach $16.9 billion by 2025, rising at a market growth of 6.17 percent CAGR during the forecast period, according to a new report by research firm ReportLinker.

Share Your Experience and Expertise Do you have a store experience, some operational expertise, or thoughts about the 7-Eleven system you would like to share with your fellow storeowners? Avanti Magazine welcomes articles from franchisees interested in communicating their ideas, knowledge, suggestions, opinions, etc. to the franchisee community at large.

Please contact Sheldon Smith at sheldon.smith5@verizon.net or 215-750-0178 if you would like to contribute an article to Avanti.

SEI SETS UP COLLEGE FUND FOR 7/11 BABY A baby girl in St. Louis, Missouri was born on 7-Eleven Day (July 7) at 7:11 p.m., weighing 7 pounds and 11 ounces reported USA Today. Lovingly referred to as the “7Eleven Baby,” officials at SEI are ensuring that J'Aime Brown is taken care of well into her teenage years by kick starting her college fund with a donation of $7,111 and supplying childcare goods to her family like diapers and 7-Eleven onesies. J'Aime's mom said she saw the numbers 7 and 11 repeatedly over the course of her pregnancy.

SEI REDUCING ITS CARBON FOOTPRINT

ergy management systems and a high-efficiency HVAC unit—to reduce its CO2 emissions.

JONES SODA SUMMER PROGRAMS SEI and Jones Soda Co. kicked off summer 2019 by announcing plans to distribute several new products into locations across North America. In the U.S., 7-Eleven continues to offer its most popular 7-Select flavors, Berry Lemonade and Mango Lemonade, along with the new Airheads Cherry Pineapple Blast, which was introduced on June 10th. 7-Select premium sodas are available at participating 7-Eleven locations and will now be sold in an additional 1,000 locations under the APlus and Stripes banners, which SEI acquired last year. This expansion was kicked off with the rollout of Kiwi Strawberry, a new flavor developed for 7-Eleven that will be sold exclusively in its stores.

SEI recently announced the adoption of Honeywell Solstice N40 (R-448A) refrigerant for its refrigeration cases installed across the U.S. and Canada. Based on hydrofluoroolefin technology, Solstice N40 offers global warming potential that is approximately 60 percent lower than legacy HFC refrigerants like R-404A, and consumes less energy.

SEI set measurable corporate social responsibility goals in 2016 to reduce its environmental “Solstice footprint. The company, FREE AIRPODS N40 offers global which aims to reduce WITH $50 warming potential that is its energy footprint in 7NOW ORDERS approximately 60 percent stores by 20 percent SEI gave away free Airlower than legacy HFC by 2027, has already Pods to some customers refrigerants like R-404A, invested in several enwho spent $50 or more and consumes less ergy and sustainability through the 7NOW app on energy.” programs to increase effiJuly 25, reported Fox Business. ciency, and reduce waste and The company sent a notification resource consumption. In the past through the app when it was ready to start few years, SEI has implemented several ingiving out the AirPods on that day. The novative measures—like LED lighting, enorder total had to be at least $50 before tax 72

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and SEI had 500 pairs to give out, which shipped out within six weeks. The article states that SEI has recently been making a big push behind the 7NOW app, which offers delivery service through DoorDash and Postmates. Customers can even get orders delivered to public places like parks.

7NOW BEER DELIVERY 7-Eleven stores in select markets offered free delivery on all orders of beer—and $3 off any 18 pack of beer— on the 7NOW app to celebrate International Beer Day on August 2, reported Convenience Store Decisions. “7-Eleven stores in select markets 7-Eleven’s vast offered free delivbeer selection inery on all orders cludes everything of beer—and $3 from traditional off any 18 pack of beers to craft beer—on the beers and even 7NOW app to celciders. Beers inebrate Internaclude Corona, tional Beer Day Coors Light, on August 2.”

Modelo, Bud Light, Heineken, Budweiser, Angry Orchard, Stella Artois, Dogfish Head, New Belgium Fat Tire Amber Ale, Dos Equis, Brooklyn Defender, Miler Light, Michelob Ultra, Kona Big Wave Golden Ale, Blue Moon New Belgium Voodoo Ranger, and more.

7-ELEVEN DAY CELEBRATION WITH FREE SLURPEE & GREAT DEALS 7-Eleven stores across the country celebrated 7-Eleven Day, July 11 (7/11), by giving away an estimated 9 million free small Slurpee drinks from 11am to 7pm continued on page 74

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local time. The featured Slurpee flavor was Blueberry Lemonade, and the Slurpee Lite flavor was sugar-free Cherry Limeade. Novelty Slurpee drinking accessories included a Twist & Slurp Bottle ($3.99) and Super Flexy Straws ($1.99). 7Rewards members had even more reason to celebrate. All members who scanned their app, card or entered their phone number with their free small Slurpee drink on 7-Eleven Day received another free any-size Slurpee drink, redeemable in the next 30 days.

Other 7-Eleven Day deals included $1 Big Bite hot “7-Eleven stores dogs, hot pizza slices across the country structive activities and acts and cherry Slurpee gave away an estiof kindness. Appropriate drink-flavored cookmated 9 million free “offenses” might include ies. An additional $1 small Slurpee drinks helping another person, Nashville hot chicken from 11am to 7pm following safety and traffic tender offer was availon 7-Eleven Day.” laws, or taking part in a comable in the 7-Eleven app to munity- or police-sponsored event.

7Rewards members.

Each coupon could be redeemed for a small Slurpee drink at participating 7POLICE REWARD Eleven stores.

KIDS DURING

‘OPERATION CHILL’ This summer, thousands of local law enforcement officers in the U.S. gave free Slurpee drink coupons to kids caught doing good deeds thanks to SEI’s annual Operation Chill program. During 2019, 7-Eleven will issue 1.475 million Slurpee drink coupons to more than 1,100 law enforcement agencies, most of which were distributed during the summer months and back-to-school season. Big city police departments and small-town forces alike use the Slurpee drink coupons to enhance relationships with young people by rewarding them for good deeds, con-

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PUMPKIN SPICE LATTE IS BACK AT 7-ELEVEN Participating 7-Eleven stores have recently started offering a couple of favorites among coffee lovers—Pumpkin Spice Latte and fresh-brewed pumpkinflavored coffee. Since Pumpkin Spice is its most successful limited-time offering in the hot beverage category, 7-Eleven released the flavored drinks in mid-August,

more than a month before its “officially” fall. Additionally, any size Pumpkin Spice Latte or Pumpkin Coffee were just $1 a cup for a limited time.

The 7-Eleven pumpkin spice latte blends warm, autumn spices including cinnamon, ginger, anise and clove with creamy pumpkin. To make the seasonal launch even more of a celebration, coffee customers can create a pumpkin spice mocha by adding a pump or two of the new chocolate sauce to their latte and topping with festive, fall-colored leafshaped sprinkles. International Delight pumpkin spice creamer is also available to make any hot beverage more pumpkin-y and spicy.

7-ELEVEN STORES INTRODUCE NEW SPORTS DRINK In the midst of record-breaking high temperatures this summer, participating 7-Eleven stores have introduced a new way to stay cool, refreshed and rehydrated: 7-Select Replenish. A new sports drink (isotonic) that contains no artificial sweeteners or high-fructose corn syrup, 7-Select Replenish is available in four flavors: lemonade, orange mango, cucumber mint, and guava splash. While the everyday suggested retail price is $1.99, customers were able to take advantage of a limited-time buy one-get one free offer.

7-Eleven has been building its private brand beverage lineup. Just recently, stores added Quake performance energy drinks to their vaults, and the private brand beverage has already acquired a loyal following. Available in four flavors, Quake energy drinks combine the best of energy, sports and performance drinks into one.

Enjoy Clean Pure Hemp Rolling Paper With Hempire

orders. Order your free fill today and start offering your customers BlastZ fruit pouches on the go to fuel their healthy snacking needs!

Hempire, a Swisher brand, is the first all-natural, highest qualHempire all-natural ity 100 percent hemp rolling paper hemp rolling papers offer a clean smoking experience. available in the U.S. that delivers what customers are looking for in a clean smoking experience. Hempire offers 11 different quality papers, rolls, tips and packs that can satisfy any customer. Its paper and rolling paper accessories are manufactured with European expertise using vegan, pesticide-free and lead-free hemp to deliver the ultimate, pure smoking experience.

Hempire uses innovative packaging with visible brand elements and unique cello wrappers to combat paper staleness and ensure maximum freshness. Delivering a perfect smoke every time, Hempire is a plant-based solution for adult consumers seeking to live a sustainable lifestyle. To place an order, contact your Swisher representative at 1-800-874-9720.

BlastZ Fruit Squeezers Free Fill

Rancho La Gloria Margaritas Ready To Explode In 7-Eleven Rancho La Gloria Margaritas is the #1 wine-based margarita sold in the U.S. in 2018, and is strategically positioned to explode into the c-store category as customers are conditioned to seeing it at their local grocery store or big box retailer. In fact, Rancho Margaritas RTD has surpassed wine industry leader Kendall Jackson in regional sales, consumer popularity, and store sellthru profitability at Walmart, Costco, Whole Foods, World Market, Trader Joe’s, and Krogers, to name a few.

MPL Brands has empowered DSTiger & Company to champion an aggressive marketing campaign to fully support the NCASEF and franchisees across the nation. Currently sold in over 500 7-Eleven stores, Rancho La Gloria Margaritas is expanding their selection from lime and strawberry flavors to include Mango and Peach. The suggested retail is $9.99 for both the 750ml bottles and 250ml 4-pack cans.

New and improved pricing allows for increasing the Gross Profit for all 7-Eleven franchisees from 28 percent to 35 percent.

Through DSTiger’s long-term loyal relationships with franchise owners, there will be support for national FOA trade shows and invaluable in-store promotions/wine tastings, all to promote maximum Rancho La Gloria Margaritas will generate 35 percent gross profit for sales. Rancho Margaritas

BlastZ by GoGo squeeZ is the newest addition to the fruit squeezer category with bolder fruit flavors and bigger pouches for active kids of all ages. Just like GoGo squeeZ Original Applesauce, BlastZ is made from 100 percent fruit, has no added sugar, and at least 3 grams of fiber per pouch.

BlastZ Raspberry Rush and Tropical Burst have been authorized by 7-Eleven to compliment the current 7-Eleven private brands applesauce and strawberry applesauce pouches, as well as take ad7-Eleven franchisees. continued on page 77 vantage of the growing consumer demand for squeezable fruit.

The fruit squeezer Thanks to all the support from 7-Eleven franchisees and SEI, the three cables in the category is one of the Long Ass Cable floor display are currently ranked or have been the #1, #3, and #4 top BlastZ is offering a free fill fastest growing snackselling items in the entire electronics category in 7-Eleven stores. If you don’t have a per SKU on initial orders. ing categories in retail fresh shipper in your store right now, you are missing out on some serious sales. Order (IRI Data, 52 Weeks Ending December 30, one today and be blown away by the results. Stores sell an average of 4.2 cables per 2018). GoGo squeeZ pioneered the fruit day, or an additional $300 in sales per week. squeezer category by launching GoGo squeeZ The new eye-catching Christmas themed shipper will get the customer’s attenOriginal Applesauce pouches in 2008. Since tion, and the colorful cables are perfect stocking stuffers. Lightning (Apple), Micro then, the category has grown to almost $400 (Android) and Type-C (Android) cables cover all the smartphones and tablets on the Million in annual revenue. The consumer trends market right now. They are a must-have for all customers. that are driving the growth of fruit squeezers This shipper is approved by 7-Eleven corporate and the cables are of the high- Three Long Ass Cables in the are healthy snacking, portable on the go est quality. The Apple Lightning cables are Apple MFi Certified. The cable quality Pre-book Long Ass Cable lifestyles, and clean label foods without chemiHoliday Shipper are among cal preservatives. the customer gets for $9.99 is second to none. Pre-book this Holiday Shipper the top four electronics items in all of 7-Eleven.

BlastZ is offering a free fill per SKU on initial today: (316) 260-3297, orders@tellindustries.com, or McLane UIN 194047.

LONG ASS CABLES HOLIDAY SHIPPER

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currently has National Shipment Authorization in place through Republic, Young’s, and Southern Wine and Spirits. Rancho La Gloria Margaritas is ready to deliver to your store today.

Keep a lookout for the soon-to-be-released Ranch Water—an extraordinary tasting new Sparkling Margarita Wine at 6.9 percent alcohol. Consumers across America are patiently awaiting this exciting new release from MPL Brands, and 7-Eleven stores will be the first U.S. cstore category leader to sell this coveted new item.

chemicals or pesticides. True elegance that lasts up to two years or more.

Roses have long symbolized love, romance, passion, and friendship. They are the perfect way to say, “I love you,” “Happy anniversary,” “I’m sorry,” or simply, “Thinking of you.” Nothing can be more delightful or charming than receiving a beautiful rose, popping with bright colors and smelling like it was picked that morning. Order yours today on the company’s scan-based program and Valentines Pre-book as a National Recommended Item.

Swisher Sweets Cherry Dynamite

Flavorful & Healthy No Cow Energy Bars

Swisher Sweets Cherry Dynamite is now available as a Limited Edition cigarillo, providing an explosive blend of cherry and black cherry sweetness that will blow customers away and entice them to keep Swisher Sweets Cherry Dynamite coming back for more. Swisher Sweets is available for a limited time.

Cherry Dynamite is available in a resealable 2-count pouch with the “Sealed Fresh” guarantee, and is ready for shipment to stores nationwide in “2 for 99¢,” “Save on 2,” “2 for $1.29” and “2 for $1.49” options. To place an order, contact your Swisher representative at 1-800-874-9720.

Long-Lasting 4Keeps Roses 4Keeps Roses were created to elevate a rose from a flower to a beautiful luxury long lasting gift.

4Keeps Roses come in over 30 4Keeps Roses are preserved and colors and themed displays and color last up to two years. combos for every holiday for year round gifting and celebrating. 4Keeps preserved roses are handpicked at peak freshness from the farmlands of Colombia where the world’s best roses are grown. Each and every rose is 100 percent natural and free of toxic

New No Cow Energy Bars are not just another candy bar in disguise—they’ve got big flavor, No Cow whole grain oats, 12g of plant proEnergy Bars are tein, and only 1g of sugar. They’re dairy free, high protein, and low sugar also dairy-free and great for people fuel with big taste. who have issues with dairy. Made with 45mg caffeine from a patented, all-natural coffee bean flour, No Cow Energy Bars are the future of clean fuel.

Sour Punch Standup Bags Pack A Sales Punch

Sour Punch Standup Bags were introduced to the market in 2014, and continue to exSour Punch Standup Bags continue to experience perience double-digit double-digit growth in convenience stores. growth and positive distribution gains in convenience. IRI reports Sour Punch Assorted Bites is the #3 selling standup in BUD LIGHT PLATINUM IS EXCITED TO Total U.S. convenience during the last 52 weeks ANNOUNCE ITS RE-LAUNCH JUST IN TIME (period ending June 16, 2019). Sour Punch FOR FALL. WITH A WIDE VARIETY OF Standup Bags are outpacing overall pack type perSKUS, PREMIUM TASTE WITH 6 PERCENT formance by 2.6 times! Sour Punch Standup Bags are available in three great flavors: Assorted, ABV, AND BOLD COBALT BLUE PACKAGRagin’ Red, and Tropical. In November, American ING, BUD LIGHT PLATINUM IS BREWED Licorice will add two new flavors—Assorted Spicy FOR THE NIGHT AND YOUR SALES. and Cherry Lime Cola.

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foa events Delaware Valley FOA Trade Show Caesars Atlantic City Atlantic City, New Jersey September 19, 2019 Phone: 215-771-6178

FOA Of Greater LA Holiday Party Royal Vista Golf Club Diamond Bar, CA December 7, 2019 Phone: 619-726-9016

Midwest FOA Holiday Show

San Diego FOA Vendor Appreciation Day Alesmith Brewing Company San Diego, California October 3, 2019 Phone: 619-733-5917

NCASEF

Board meetings

7-Eleven FOAC Trade Show & Holiday Party Holiday Inn Skokie Skokie, Illinois November 14, 2019 Phone: 847-343-7777

December 11, 2019 Phone: 613-486-6266

San Diego FOA Christmas Party Hilton San Diego Del Mar San Diego, California December 14, 2019 Phone: 619-733-5917

Ceasar's Atlantic City Atlantic City, New Jersey October 21-22, 2019

National Coalition Board of Directors Meeting Ceasars Atlantic City Atlantic City, New Jersey October 23-24, 2019

Detroit Marriott Troy Troy, Michigan December 10, 2019 Phone: 847-971-9457

UFOLINY FOA Holdiay Party

National Coalition Affiliate Meeting

FOA Of Greater LA/ San Diego FOA 10th Annual Trade Show 10th Annual Trade Show Pechanga Resort and Casino Temecula, California January 22, 2020 Phone: 619-726-9016

Midwest FOA & Alliance FOA Holiday Show Chicago O'Hare Marriott Chicago, Illinois December 4, 2019 Phone: 847-971-9457

Advertiser’s Index

Yowie Surprise Rescue Series includes one of 26 collectible endangered species animals.

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American Licorice ............54

Cookies United ...........10-11

JUUL......................8, cover 4

McLane ............................34

Seneca........................16-17

Anheuser Busch...............14

Danone ............................23

Kellogg's ..........................19

Mondelez.........................21

Simply Orange...................9

Aon Risk Services.............29

Dean Foods......................30

Keurig Dr Pepper..............37

No Cow.............................69

Swisher.................5, cover 3

Arizona.............................58

Diageo Guinness................7

King Palm ........................63

Old World Industries........57

Tell Industries...................41

Blue Bunny/Wells............33

Foreign Candy..................75

Loacker.............................44

Organic Valley..................60

Teton Cigarettes...............46

Bug Juice..........................38

Fiji/Wonderful ...........12-13

Logic Ecig....................42-43

Pepsi Quaker.........3,4,32,48

Twang..............................50

Chobani............................52

GoGo Squeez....................67

Mars Ice Cream ................25

Premier Nutrition.............64

Windsor ...........................73

Coca-Cola..................cover 2

Hormel.............................27

Maruchan...........................6

Sapporo/Anchor Steam...71

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