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March/April 2019

T H E

V O I C E

O F

7 - E L E V E N

F R A N C H I S E E S

A Question Of Functionality

Presidents’

Reports

Of Lab Stores And Beer Vaults

1st QUARTER 2019 Page 60

You Are Not Alone

What’s Next For Our Brand?

Labor Crunch In The USA An Independent National Coalition, Part 1: The National Coalition Is Important Costs After An Employee Injury 7-Eleven FOAs Fight Cancer

Summary Of The Ninth Circuit Decision On The Franchisee Lawsuit Appeal February 27, 2019 Page 24

NCASEF 44TH ANNUAL CONVENTION

Long Beach, California August 5-8, 2019 Page 21

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


THE VOIC E OF 7-ELEVEN FRANC H ISEES

March/April 2019

Contents 31 A Question Of Functionality By Jay Singh, Chairman, NCASEF

35 Of Lab Stores And Beer Vaults

FEATURES 16

MWFOA Board Member Honored By Clubhouse Michigan

18

Remembering Karam Dhaliwal

82

Central Florida FOA Holds Successful Charity Golf Tournament And Trade Show

By Michael Jorgensen, Executive Vice Chairman, NCASEF

43 You Are Not Alone Australian Parliamentary Joint Committee Issues Blockbuster Report On Fairness In Franchising By Eric H Karp, NCASEF General Counsel

NCASEF 44TH ANNUAL CONVENTION

Long Beach, California August 5-8, 2019

NCASEF

49 Labor Crunch In The USA

Page 21

By Ajinder Handa, NCASEF Vice Chairman, President, Greater Northwest FOA

51 Why We Need An Independent National Coalition, Part 1:

HIGHLIGHTS Summary Of The Ninth Circuit Decision On The Franchisee Lawsuit Appeal

The National Coalition Is Important By John R Irvine Jr., Franchisee, Detroit, Michigan

55 Three Steps To Manage Costs After An Employee Injury

Presidents’

February 27, 2019

Reports

By Eric H. Karp, General Counsel, NCASEF

1st QUARTER 2019

Page 24

Page 60

By John Harp, CSP, ARM, Risk Engineering Consultant, MSIG

EN

TS

59 7-Eleven FOAs Fight Cancer PA R DE

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.

TM

By Rob Butcher, CEO, Swim Across America

Member News...............................14 Bits & Pieces..........................................16

Legislative Update....26 SEI News............................85 Vendor Focus....................89 Franchisee Calendars....94 AVANTI M A R C H | A P R I L 2 0 1 9

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NATIONAL COALITION OF ASSOCIATIONS OF 7-ELEVEN FRANCHISEES

NCASEF Requests Open Accounting Of Vendor Payments In the wake of its corporate convention, which reportedly drew thousands of vendors and their associates, the NCASEF is requesting that SEI open its books and show how much money it collected from the vendors who pay big money to show their products and services to franchisees and corporate executives. “We strongly believe that the money 7-Eleven collects from vendors at trade shows should be used to help lower the cost of goods for all fran-

chisees,” said NCASEF Vice Chair Rehan Hashmi, in a released statement. “The company collects millions of dollars for its Japanese parent even as U.S. franchisees are struggling to earn solid profits.” The press release claims that franchisees sometimes pay more for items that they could purchase from warehouse clubs like Costco. The new SEI franchise agreement makes no guarantees that franchisees receive the best pricing or most advantageous terms from the supply chain run by the corporation, even as it collects millions from the vendors who help supply stores coast to coast. The NCASEF said it has repeatedly asked SEI to apply vendor payments to the cost of goods, but the company has yet to show any accounting. “Franchisees should have a voice on how to best use that money. SEI should not be using the millions it collects to defray expenses they should bear,” said Michael Jorgensen, the National Coalition’s Executive Vice Chairman.

NATIONAL OFFICERS

Jatinder Singh NATIONAL CHAIRMAN

702-249-3301 • jays@ncasef.com

Michael Jorgensen EXECUTIVE VICE CHAIRMAN

347-251-1828 • mcjorg@yahoo.com

Paul Lobana VICE CHAIRMAN

818-203-2527 • paullobana@aol.com

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

New 7-Eleven Lab Store “e NCASEF has repeatedly asked SEI to apply SEE vendor payments to the cost of goods, but the company has yet to show any accounting.”

The newest 7-Eleven location is a lab store and an experiential testing ground where customers can try and buy the retailer’s latest innovations in a revolutionary new store format, SEI recently announced. The test store features madeto-order smoothies and agua frescas, street tacos on handmade tortillas, a continued on page 16

262-275-3086 • jrpinc@charter.net

Sheldon Smith AVANTI PUBLISHER ADVERTISING MANAGER

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

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. 14

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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 March/April 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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growler refill station pouring local craft beers, baked-in-store cookies and croissants, and a patio and inside dining areas. 7-Eleven, Inc. celebrated the grand opening of its new lab store in Dallas—and the only one in the U.S.—on March 22. “This new lab store will serve as a place to test, learn and iterate new platforms and products to see what really resonates with customers and how we can use those learnings to influence future store designs,” said Chris Tanco, 7-Eleven executive vice president and chief operating officer. The lab store is also the first 7-Eleven location to incorporate the Laredo Taco Company taqueria, and the first Laredo Taco Company location in Dallas. SEI acquired

the taqueria along with Stripes convenience stores in South Texas as part of the 1,000store acquisition from Sunoco in 2018.

7-Eleven Opens In India SEI announced it recently signed a master franchise agreement with a subsidiary of Future Retail Ltd to develop and operate 7-Eleven stores within India. The expansion marks the company's first entry into India. The first 7-Eleven convenience store in India is expected to open in 2019. The new master franchisee plans to build 7Eleven stores as well as convert some of its existing locations to the 7-Eleven brand. continued on page 18

MWFOA BOARD MEMBER HONORED BY CLUBHOUSE MICHIGAN Midwest FOA Board member Adnan Siddiqui was honored at the 4th Annual Michigan “Statewide Employment Celebration” on March 13, 2019 by the Clubhouse Michigan. Adnan was presented an award as an employer who is helping people with mental illness obtain jobs and become productive, taxpaying citizens and successful community residents through Visions Clubhouse, which is an employment and recovery center that provides services to people with psychiatric disabilities. Adnan employs his sales associate, Paul Kapolnek (pictured), who has been working at Adnan's Waterford store for over eight months. Adnan has been committed to the Visions Clubhouse for over four years and also employs one more member of the Clubhouse at his Waterford store. Members of the Midwest FOA are very proud of Adnan's commitment, dedication and leadership in helping people who have disabilities obtain employment, thus helping to dispel the stigma of mental illness, which is so often an obstacle to recovery. Congratulations Adnan and keep up your efforts in the community, as you are truly appreciated! 16

From left to right: Senator Ruth Johnson of Michigan Senate; Midwest FOA Board member Adnan Siddiqui of 7-Eleven Waterford, MI; Amy Wells, Employment Specialist of Visions Clubhouse of Michigan; and Paul Kapolnek, 7-Eleven Sales Associate.

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Amazon will soon begin selling fresh dairy products including milk, half-and-half, whipping cream and lactose-free milk, through its online grocery delivery service AmazonFresh, reported DairyHerd.com. • Wawa recently launched its spring hiring campaign with the goal of hiring more than 4,000 new associates by June, with all of Wawa’s 840+ stores across its six-state operating area looking to add new talent. • As more cities and states adopt Tobacco 21 laws, Juul Labs and British Tobacco have announced that they support raising the age to buy tobacco and vaping products to 21 as a way to reduce tobacco sales to minors. • C-store retailer Sheetz plans to hire 2,500 employees companywide, reported news station WJAC. The company held open interviews for full-time and part-time positions on March 27 at all of its 589 locations in Pennsylvania, Maryland, Virginia, Ohio, West Virginia and North Carolina. • CSP recently announced the winners of its fourth annual Category Manager of the Year awards, and SEI’s Andrew Lee was named for the candy category. The magazine said these category crusaders were recognized for tackling issues as varied as new product placement and retail disruption to keep their c-store chains on track to grow sales. • In order to free up its store employees to help customers, Walmart is deploying a small army of robots to clean floors, scan shelves and unload delivery trucks, reported Engadget. • Lidl recently opened a 1,000-square-foot "Express" store at its Arlington, Virginia headquarters, reported Grocery Dive. Lidl Express features a range of perishable and non-perishable goods, including produce, beer and wine, a coffee station, breakfast pastries and some prepared foods. The store is self-checkout only, with three dedicated stands. • C-store chain RaceTrac recently announced the launch of its new franchise program. continued on page 20


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7-Eleven's entry into the country will modernize the small-retail environment and bring greater convenience to shoppers, SEI said in a released statement. Internationally popular products, beverages, snacks and immediately consumable fresh foods with recipes developed for local tastes will be part of the initial convenience offering. SEI said it will support Future Retail Ltd to implement and localize the unique 7-Eleven business model.

GasBuddy Reports On Gas Customers A recent survey by GasBuddy reveals that several factors influence whether convenience store gasoline customers enter the store after filling up. These factors include store design and upkeep (82.54 percent), cleanliness of the fueling area (79.70 per-

“e GasBuddy report states that restrooms are the litmus test for overall store quality.” cent), quality of lighting (79.65 percent), brand reputation (58.60 percent), and opinions of friends and family (55.12 percent). The report states that the forecourt is the first handshake that welcomes customers to the store. If consumers perceive a store as dirty, boring, or unexceptional, then they’re unlikely to go inside. GasBuddy recommends that c-store retailers prioritize “the basics” of safety, cleanliness, and hospitality before addressing higher-level needs. The GasBuddy report further states that restrooms are a litmus test for overall

store quality. Gas customers surveyed indicted that they will occasionally (56.08 percent) or frequently (22.60 percent) make a purchase after using the restroom at a gas station’s convenience store. When retailers fail to meet the need for restroom safety and cleanliness, however, it casts doubt upon every aspect of their operations—especially foodservice. As c-store retailers continue to place increased emphasis on hot dispensed beverages and proprietary foodservice, quality restrooms are non-negotiable because today’s consumers expect it.

Record C-Store Sales In 2018 U.S. convenience stores experienced a 16th straight year of record in-store sales in 2018, according to newly released NACS State of the Industry data. U.S. c-stores sales continued on page 20

Remembering Karam Dhaliwal

The National Coalition mourns the loss of one of its strongest franchisee advocates and good friend, Karam Dhaliwal, who passed away on March 23. Karam served as vice president of the Southern California FOA for many years, and eventually became president of the association. He was an active member of the National Coalition Board, helping both his local 7-Eleven colleagues and franchisees nationwide. Karam first joined the 7-Eleven family in 1974 with the purchase of his first store in Chatsworth, California. Although he sold that store two years later to become a residential real estate broker, Karam came back to 7Eleven in 1981 and remained a franchisee ever since. Born on April 4, 1930 in Darbhanga, Bihar, India, Karam’s first passion was photography. With the help of his older brothers, who were studying in the United States at the time, Karam enrolled in the University of Southern California in 1948 to study cinema. Upon graduating from USC in 1952, Karam worked in Hollywood before returning to India, working as a director and serving as a technical advisor on many films, including “Bengal Brigade” (1954) and “Thunder in the East” (1953). The National Coalition, its officers and Board members send their sincerest condolences to Karam’s wife of 56 years, Matti, his daughters Sabrina and Sonia, son Guri, and the rest of the Dhaliwal family. Karam will be dearly missed by all who knew him. 18

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overall surged 8.9 percent to $654.3 billion, led by a 13.2 percent increase in fuel sales, which account for 69.6 percent of total sales. In-store sales increased 2.2 percent to a record $242.2 billion. Foodservice sales accounted for 22.6 percent of in-store sales, a category that continues to be a key focus area for the convenience store channel. Overall, convenience stores sales are 3.1 percent of the U.S. gross domestic product of $20.5 trillion, the report states. Higher gas prices, up 13.7 percent from $2.37 per gallon in 2017 to $2.69 per gallon in 2018, contributed to the increase in overall industry sales.

“Foodservice sales in 2018 accounted for 22.6 percent of in-store sales, a category that continues to be a key focus for c-stores.”

Fuel margins, which have increased over the last five years, were also higher in 2018, up 7.5 percent to 23.35 cents per gallon, while gallons sold decreased by 0.4 percent. Here are overall merchandise sales groups as a percentage of overall merchandise sales: • Cigarettes: 31 percent of in-store sales • Foodservice (prepared and commissary food; hot, cold and dispensed beverages): 22.6 percent • Packaged beverages (carbonated soft drinks, energy drinks, water, sports drinks, juices and teas): 15.3 percent • Center of the store (salty, candy, packaged sweet snacks and alternative snacks): 10.4 percent • Other tobacco products: 6.7 percent • Beer: 6.3 percent (12.4 percent for stores selling beer)

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RT Franchising, Inc. is currently seeking experienced, qualified candidates for franchise opportunities in Clermont, Mt. Dora, and DeLand, Florida. • Drugstore chains CVS and Walgreens have started selling CBD products in their stores. More than 800 CVS stores in eight states now offer CBD products as part of a distribution deal with Canadian marijuana company Curaleaf Holdings Inc. Walgreens is selling CBD creams, patches and sprays in nearly 1,500 of its stores in nine states. • The launch of the first Aldi Local store in southwest London recently has sparked speculation about the supermarket giant’s desire to conquer the convenience store market, reported Yahoo Finance UK. The store measures 6,000 sq ft and has 300 fewer products available than Aldi’s larger stores. • Microsoft is teaming up with Albertsons, America’s second-largest grocery chain, to implement a “frictionless” shopping experience continued on page 25

• Other: 7.7 percent continued on page 22

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7-Eleven On CSNews Top 20 Growth Chains 7-Eleven has ranked no. 2 on the Convenience Store News Top 20 Growth Chains list. According to the report, 7Eleven added 933 stores in the last year— going from 8,338 locations in 2018 to 9,271 in 2019, an increase of 10.1 percent. Marathon Petroleum Corp. took the no. 1 spot with a store count increase of 25.3 percent (4,401 in 2018 to 5,893 in 2019). The Top 20 Growth Chains list is based on store count figures provided by TDLinx, a service of Nielsen, according to Convenience Store News. This is the eighth year that CSNews has partnered with TDLinx to identify the c-store retailers that added the most convenience stores in the past year.

McLane Opens Florida Distribution Center McLane Company, Inc. announced it has opened a new grocery distribution center—McLane Ocala—in the Ocala International Commerce Center in Ocala, Florida. The 400,000 square foot facility will house 165,000 square feet of dry grocery, nearly 200,000 square feet of perishables and 35,000 square feet of office and support space. The new distribution center will also create over 400 new jobs in Marion County, the company said. By the end of the year, McLane Ocala plans to onboard 316 warehouse and support teammates and 120 drivers and transportation support team-

mates. This location is McLane’s sixth distribution center in Florida—joining the grocery center in Kissimmee and four foodservice centers in Lakeland, Haines City and two in Orlando—and will service the quickly expanding customer base in the North Florida region.

“A NACS survey revealed two of three c-store operators expect a sales increase in the second quarter of 2019.”

FDA To Tighten E-Cig Rules The FDA recently released its muchanticipated policy restricting e-cigarette sales, designed to tighten sales and eventually remove from the market many of the fruity flavors believed to be fueling teen use, reported CNBC. The proposal outlines new restrictions for most flavored e-cigarettes, speeds the agency’s deadline to review flavored nicotine products and allows it to pull e-cigarettes from the market. Outgoing Commissioner Scott Gottlieb said the FDA would likely consider removing all pod and cartridge e-cigarettes from the market. The new policy would also limit sales of flavored nicotine pods to websites, vape shops and other retailers that impose age restrictions. The FDA, which previously decided not to take enforcement actions while reviewing e-cigarettes, is now reversing that stance—but just for the fruity flavors many believe attract underage users, such as bubble gum, mango and creme. The agency could further tweak its guidelines, and could even specify that popular pod-based products be sold only if they receive FDA clearance.

C-Stores Expect Strong Food & Beverage Sales Convenience retailers suggest that strong sales in 2018 will continue into the summer drive season, with two in three (67 percent) expecting sales increases during

the second quarter of 2019 over the same period last year, reveals a survey of c-store operators conducted by NACS. Convenience retailers also expect fuel sales to remain strong. Nearly four in five (79 percent) say that they expect fuel sales from April through June to at least match sales from the same period last year. Retailers express confidence that sales of prepared foods, which account for one in six sales dollars in a convenience store, will grow this quarter. More than half (52 percent) say that their sandwich and meal sales will help drive sales growth this quarter. On-the-go beverage sales also are expected to heat up at convenience stores this quarter. Fully half of all retailers (50 percent) say they expect energy drink sales to increase, and 38 percent expect an increase in bottled water sales. Meanwhile, 16 percent of retailers expect coffee sales to increase, despite intense competition from quick-service restaurants for the morning coffee customer.

Multibillion-Dollar Visa, Mastercard Settlement The U.S. District Court for the Eastern District of New York announced that an agreement had been reached to settle a class action lawsuit brought by merchants who claimed Visa and Mastercard had charged them excessive fees on debit and credit transactions. Under the settlement, Visa, Mastercard, and the bank defendants have agreed to provide approximately $6.24 billion in class settlement funds, the largest in continued on page 73

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NCASEF

HIGHLIGHTS

Your National Coalition is Committed to Franchisee Interests

Summary Of The Ninth Circuit Decision On The Franchisee Lawsuit Appeal By Eric H. Karp, General Counsel, National Coalition February 27, 2019 On February 27, the “The Ninth Circuit vacated United States Court of Apboth of the previous peals for the Ninth Circuit vacated both of the previ- District Court decisions ous District Court deci- in favor of SEI in this sions in favor of SEI in this consolidated appeal, consolidated appeal, and and sent the entire matter sent the entire matter back to the District Court. back to the District Court.” Shannon Liss-Riordan of Lichten & Liss-Riordan, P.C., Boston, Massachusetts represented the Plaintiffs on the appeal and will be representing the Plaintiffs going forward.

the request for an injunction against such releases. The Plaintiffs then promptly appealed this case as well to the Ninth Circuit, asking that it be considered on an expedited basis.

The first case (the Misclassification Case) was filed in October 2017. The central allegation in the Misclassification Case is that the pervasive controls that SEI exercises over nearly every single aspect of the day-to-day operations of franchised locations makes them employees in the eyes of the law, as well as other legal factors. On March 14, 2018, Judge Walters of the United States District Court for the Central District of California issued a Judgment on the Pleadings, dismissing all of the Plaintiffs’ claims. The Plaintiffs promptly appealed to the Ninth Circuit.

• Judge Walters’ decision in favor of SEI and against the Plaintiffs was vacated in its entirety, and thus has no longer any legal effect-as if it was never issued in first place.

The Ninth Circuit consolidated and, at the Plaintiffs’ request, expedited the appeals. Oral argument was held on the consolidated appeals on February 13, 2019, and just two weeks later, the Ninth Circuit issued its Memorandum of Decision. Here is a summary of the Ninth Circuit decision:

MISCLASSIFICATION CASE

• The Ninth Circuit said that Judge Walters made two very important errors of law. First, he made his own determination of the persuasiveness of plaintiff’s factual allegations rather than the plausibility of their legal claims. This he is not permitted to do at such an early stage of the case. Second, the court focused only on the control exercised by reason of the franchise agreement and ignored Plaintiffs’ extensive allegations regarding ac“The central allegation in the Misclassification Case tual control is that the pervasive controls that SEI exercises over exercised on a daynearly every single aspect of the day-to-day operations to-day basis.

of franchised locations makes them employees in the eyes of the law, as well as other legal factors.” The second case (the Injunction Case) was filed in June 2018 and sought an injunction against SEI from forcing franchisees to sign releases of claims as a condition of renewing their franchise agreements. The central allegation of the Injunction Case is that such releases of claims are invalid under California law. A different District Court judge, Judge Fischer, heard the application and in October 2018 denied

• The Ninth Circuit impliedly criticized Judge Walters for not awaiting the outcome of the Dynamex case, which was decided just six weeks later. Dynamex is a decision of the California Supreme Court that adopted the Massachusetts ABC Test to determine whether a person is an employee or independent contractor. This decision presumes that all workers are employees and shifts the burden to the employer to prove, among other things, that the worker is free continued next page

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for customers, reported The Verge. • Retailers announced a whopping 4,309 store closures just in the first two months of this year, reported CNBC, citing a study by Coresight Research. Victoria’s Secret, Gap, J.C. Penney, Gymboree, Payless ShoeSource, Charlotte Russe and Ann Taylor parent company Ascena Retail, to name a few, have announced plans to shut down stores in 2019. • With nonalcoholic brews now the fastest-growing segment in the beer industry, Anheuser-Busch InBev is planning to produce more no- and low-alcohol beers, reported Insider. Presently, 8 percent of the company's global beer sales by volume are from beers with lower or no alcohol, and A-B InBev said it plans to grow that figure to 20 percent by 2025. • Costco Wholesale has raised its minimum wage from $14 to $15 for hourly workers at stores in the U.S. and Canada, marking its second increase in less than a year as the company works to attract and retain talent in a tight labor market, reported the Wall Street Journal. • Spurred by the success of companies like Target, which has seen its store sales rise as it increases its assortment of private-label products, more big-box retailers are accelerating their private-label push, launching brands in multiple, wide-ranging categories, reported Digiday. • Dollar General plans to open 975 new stores in the United States this year, and remodel 1,000 older stores with new queue lines to drive last-minute impulse buys, reported CNN Business. Dollar General opened 900 stores in 2018 and 1,315 the year prior. It has more than 15,300 stores across the country and sales have increased for 29 straight years. • Swisher International recently announced the retirement of Bill Dunn, Vice President, Industry Relations. Bill has been in the CPG industry for more than 45 years and has held several positions of increasing re-

“The central allegation of the Injunction Case is that releases of claims are invalid under California law.” from control and direction in connection with the performance of the work. • The Ninth Circuit left to the District Court the determination of whether or not Dynamex applies to franchisees and whether it should be applied retroactively. The Ninth Circuit strongly suggested that the District Court should await the outcome of the appeal pending in the Ninth Circuit in Vasquez v. Jan-Pro Franchising, which may decide whether Dynamex applies to franchisees. Oral argument on that case was held on December 18, 2018. Attorney Liss-Riordan also represents the plaintiffs in that case and argued the appeal. • The case was sent back to the District Court for further proceedings.

INJUNCTION CASE • Judge Fischer’s denial of preliminary injunctive relief was also vacated by the Ninth Circuit—as if that ruling had also not occurred. • The Ninth Circuit provided something of a roadmap to the District Court, which has been directed to reconsider the Plaintiffs’ request for injunctive relief “on an expedited basis.” • In particular, the Ninth Circuit rejected all three of the separate arguments made by SEI regarding the releases it has already secured or is seeking from California franchisees. More specifically, the Ninth Circuit pointed out to the District Court that: 1) case law involving typical releases of claims at renewal of franchise agreements do not apply to wage and hour claims. 2) such wage and hour claims can only be settled by release and payment— which did not happen here. 3) the contractual obligation to furnish a release upon renewal may not override California’s prohibition on contractual waiver of wage and hour claims. In addition, the Ninth Circuit awarded the cost of the appeal to the Plaintiffs. This aspect of the Memorandum is limited and permits Plaintiffs to recover only filing fees and printing/copying costs of the appeal. Where does the case go from here? Three steps are likely to take place in the near future: • The Misclassification Case and the Injunction Case are likely to be consolidated in front of a single judge in the District Court. • The District Court will now decide the release issue, based on the Ninth Circuit’s guidance. • The District Court will likely await the outcome of the Jan-Pro Franchising case, which may provide guidance on the disposition of the Plaintiffs’ cases. In the meantime, we encourage franchisees not to sign a new franchise agreement any earlier than they have to, so as to await the District Court’s new ruling on the release issue.

“We encourage franchisees not to sign a new franchise agreement any earlier than they have to, so as to await the District Court’s new ruling on the release issue.”

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Legislative Update House Committee Advances $15 Federal Minimum Wage e U.S. House Education and Labor Committee recently approved the Raise the Wage Act, H.R. 582 (116), which would phase in a nationwide $15 hourly minimum wage over five years and index future increases to inflation, reported Politico. e bill would also eliminate lower minimums for tipped workers, workers with disabilities, and workers younger than 20. U.S. Chamber of “RAISE THE WAGE ACT Commerce officials last year signaled WOULD PHASE IN A that they would negotiate with DemocNATIONWIDE $15 rats on raising the federal minimum, HOURLY MINIMUM but only if it were “paired with relief WAGE OVER FIVE for small businesses.” YEARS AND INDEX Most U.S. economists (74 FUTURE INCREASES percent) don’t support raisTO INFLATION.” ing the hourly federal minimum wage to $15, according to a new online survey of 197 economists conducted by the right-leaning Employment Policies Institute. Some 77 percent said raising the minimum that high would eliminate jobs. But nearly half (46 percent) favored raising the minimum above its present level of $7.25.

Maryland Approves $15 Minimum Wage Maryland recently became the sixth state in the nation to approve a gradual minimum wage increase to $15 an hour, reported the Associated Press. On March 28, the Maryland General Assembly—which has a supermajority of Democrats—overrode Republican Governor Larry Hogan’s veto of a bill to raise the state’s minimum wage from $10.10 to $15 an hour by 2025. e first increase will be to $11 in January 2020. e state’s minimum wage will increase by 75 cents a year to $14 in 2024, and then reach $15 in 2025. Businesses with fewer than 14 employees will have until July of 2026 to reach $15. Democrats, who control the legislature, say the increase is needed, because the cost of living has become high for basic needs. Republicans, including Hogan, say it will hurt the state’s economy and drive jobs away.

Washington State Raises Smoking Age Washington recently became the ninth state to raise its smoking age to 21, reported the Associated Press. Along with restricting traditional cigarettes, the new law raises the legal age for

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buying e-cigarettes and other vaping products, whether they include nicotine or not, and sets a penalty for selling to underage buyers. e law will take effect in January 2020. Altogether, California, Hawaii, Maine, Massachusetts, New Jersey, Utah, Virginia and Oregon raised their smoking age ahead of Washington, along with Guam and the District of Columbia. Similar bills have also passed in Illinois, Maryland, and New York, but have not yet been signed into law.

Texas Bill Seeks To Raise Smoking Age To 21 Texas would ban smoking for anyone under 21 if lawmakers approve a bill favored by Republican Lt. Gov. Dan Patrick, who runs the state Senate, reported the Houston Chronicle. Senate Bill 21, filed by state Sen. Joan Huffman, R-Houston, would raise the purchasing age from 18 to 21 for all tobacco products, including cigarettes and e-cigarettes. State Rep. John Zerwas, R-Richmond, filed identical legislation—House Bill 749—in the lower chamber. If the legislation passes, Texas will become the eighth state to adopt so-called Tobacco 21 legislation. In January 2018, San Antonio became the first and only city in Texas to raise its smoking age from 18 to 21. Proponents say the measure will save lives and dollars, but critics argue the policy is a textbook example of government overreach.

Labor Department Unveils Updated Overtime Rule e U.S. Department of Labor (DOL) recently released its proposed update to “The Department the overtime rule, reported NACS Online. of Labor’s e new proposal seeks to move the salary proposed threshold from $455 per week ($23,660 update to the annualized) to $679 per week ($35,308 anovertime rule nualized). is amount is slightly above raises the adjusting the current salary threshold for salary threshold inflation, which is about $33,000 annualto $35,308 ized, the article states. annualized.” In 2016, the Obama Administration proposed and finalized changes to the overtime rule, which doubled the salary threshold under which all salaried employees must be paid overtime. at rule was ultimately invalidated by a federal court in Texas prior to implemencontinued next page


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Legislative Update tation, necessitating this move by the current DOL. e new proposal is lower than the Obama Administration’s 2016 final rule, which was $913 per week ($47,476 annualized). e salary threshold is also in line with the average salary of store managers in the convenience retailing industry, per NACS State of the Industry data. e DOL expects the new rule to take effect in January 2020. Overall, the new DOL proposal is similar to comments NACS filed on behalf of the industry in 2016, and in 2017 in response to the department’s request for information, according to the report.

NY Bill Raising Tobacco Purchase Age e New York state Assembly recently voted overwhelmingly to ban the purchase of tobacco products and electronic cig-

arettes to peo“NINE STATES HAVE RAISED THEIR SMOKING ple under the AGE TO 21, AND SIMILAR BILLS IN THREE age of 21, a move expected STATES WILL SOON BE SIGNED INTO LAW.” to be followed by the state Senate, reported e Buffalo News. e measure was approved 105-23 in the Assembly; it advanced in the committee process the week prior in the Senate, where a number of anti-tobacco measures also are moving toward likely passage this session. e bill takes effect 120 days aer Governor Andrew M. Cuomo, already on record supporting the higher tobacco purchase age, signs it into law. Nearly two dozen localities, from Chautauqua and Cattaraugus counties to New York City, already have 21 on the books as the minimum tobacco purchase age. continued on page 69


A Question Of Functionality BY JAY SINGH, CHAIRMAN, NCASEF

The National Coalition was established as an organization in 1973. Six franchisee owners held a basement meeting in Seattle, so the story goes, and two years later sixty franchisees incorporated as the Convenience Stores Franchise Association. The first convention was held in Las Vegas in 1977, and we have represented franchisee interests ever since. Today, the National Coalition has grown to encompass some 4,200 of approximately 4,700 unique franchisees. All of these owners are members of one of 43 Franchise Owner’s Associations operating in 31 states. As a collective group we’ve sponsored 43 conventions total, and we’ve seen a lot of chairmen and national officers sitting at the head table during our Coalition Board meetings four times per year. When I travel the country and speak to franchisees, sometimes I hear the perception that the National Coalition is run by the six people who currently sit at the head table. This is a perception that I would like to correct, because in fact, it is quite the opposite. The National Coalition Board consists of 86 Board members, a president and vice president from every regional association in the country, who get to vote and voice their opinions (or their FOA’s stance) on the full range of issues put before the Board. We follow a specific set of bylaws, and we set an agenda for every quarterly meeting. Proper discussion is held on every issue on the

agenda, and we look at new business items, submitted by Board members, in every meeting. Members of the Board are quite diverse. We range from single store owners to super-multiples, from low volume to the top percentage of volume, and from smaller city stores to the largest stores in the suburbs. We often engage in spirited discussion of the issues, and we frequently take a long time deciding what to do. Usually, after careful consideration, a motion is made, and opportunity for proper discussion is of-

fered. We hear every Board member who wants to speak, and a vote is taken, either a ballot vote or a show of hands depending on the issue at hand. In many instances we delay decisions on issues so FOA member presidents and vice presidents can get the opinion of their local Board and members. Since I became chairman of the National Coalition on November 2, 2017, we have attempted total transparency. We have offered discussion on every

“I like to think that we have been operating under a true democratic process. We democratically elect officers, and we vote on every issue.”

“National Coalition Board members work at the behest of their FOA members, and the National Coalition officers work at the direction of the Board.” topic that our Board members raise, and there is not a single motion that has not been voted upon. The most important decision we have had to make—whether or not to support the filing of the Misclassification Case, and the subsequent Injunction Case—was decided unanimously by the National Coalition Board. A legal committee was formed, and funding was secured. Every motion raised was discussed. As elected officers, the six members of the head table had a lot of ups and downs, and we absorbed much of the shock from our franchisor. We are still absorbing shock. All of the presidents and vice presidents of our member FOAs are elected by their own groups, which have their own bylaws and election procedures. Some have two-year terms. Some have elections annually. Some have large Boards and lots of participation from their members. Some do not. In all cases, once an FOA is admitted into the membership of the National Coalition, the president and vice president are automatically Board members. continued on page 32 AVANTI M A R C H | A P R I L 2 0 1 9

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A Question Of Functionality continued from page 31

It is wrong also to think that only a few FOAs are driving all decisions, because the smaller FOAs and larger FOAs have an equal voice in Board meetings. When we discussed fundraising for the lawsuit, every FOA committed after a long and very frank discussion. The amount to raise was decided by majority vote. The decision to skip the 7-Eleven Experience was decided by majority vote. When we decided to go public (to the press) with our grievances, it was a majority vote, and we had much discussion about how to do this without harming our brand, which provides our income. In the end, we decided that our voice and our feedback would strengthen the brand, because corporate seemed to have forgotten their first customers—the franchisees.

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“All decisions are made collectively by a majority vote of the Board members.” At our last Board meeting in Dallas, when the majority of the Board members told us to soften our tone in speaking with 7-Eleven, we did. We have a legal committee in place, a finance committee, and a merchandising committee. It is not just the executive officers of the Coalition who are making decisions. We have a lot of back and forth discussion. All decisions are made collectively by a majority vote of the Board members.

The finances of the National Coalition also are transparent. Any paying member is free to call the National Office to look at our books with an appointment. All along I like to think that we have been operating under a true democratic process. We democratically elect officers, and we vote on every issue. The Board members work at the behest of their FOA members, and the National Coalition officers work at the direction of the Board. I guess the proof is in the pudding. Every Board meeting we hold is very well attended, and we had the largest turnout ever at last year’s National Coalition convention.

JAY SINGH CAN BE REACHED AT 702-249-3301 OR JAYS@NCASEF.COM


Of Lab Stores And Beer Vaults BY MICHAEL JORGENSEN, EXECUTIVE VICE CHAIRMAN, NCASEF

Many of you have seen the photos or read the press releases and coverage on 7Eleven’s new “lab store” in Oak Cliff, Texas. The idea behind the “lab store” is to test new and different ideas and to identify what resonates with our customers. This is not the first time that 7-Eleven has experimented like this. Back in 2013, the Next Gen store opened up in New York City. At the time there was a lot of media coverage regarding this store as well. You may even remember a rumor about 7Eleven was changing the logo, replacing the first “e” in Eleven to a lower case “e.” These innovative stores and concepts garner a lot of attention and build excitement, but we have been conditioned over time to view these programs as a long way off. Until these programs are realized in your average everyday store, to franchisees the lab store will be just a marketing campaign. Although there are many really cool concepts we would like to have and which we believe would drive traffic, we should have a much more practical approach. Some of these programs being tested may be effective to drive sales and gross profits for a majority of stores, but what about our bottom lines? We are experiencing significant labor issues. A major labor shortage in the U.S. is creating competition for talent, resulting in retention issues and driving up wages. While 7-Eleven is working on store simplification, with input from the NBLC, we have heard the “lab store” employs 40 employees, more than twice the number of employees as the average 7-Eleven. What is the realistic expectation of adoption and rollout to existing stores of many of these programs being tested? Franchisees have very real concerns about

products tested in a corporate environment. The critical feedback and input necessary to make the proper decisions as to how to scale and implement these initiatives in a “real world” environment may very well be missed. With the labor shortage, all new programs must not only deliver on sales and gross profit, but should also be as simple as possible to execute and must increase bottom line profits for franchisees.

“Although there are many really cool concepts we would like to have and which we believe would drive traffic, we should have a much more practical approach.”

7-Eleven has a recent history of responding quickly to opportunity. At the end of 2017, 7-Eleven spent a significant amount of money and resources to expand the assortment (ETA) in the center of the store (COS). SEI acknowledged that their strategy was responsible for the reduced SKU count in our stores as the previous initiative had been to narrow

the assortment to focus on top sellers. During this period, many items were narrowed by merchandising, made nonrecommended in the item master, and became difficult to source through the available 7-Eleven channels. The ETA rollout followed a test that had been conducted in select areas of the country over a period of a few months. The investment into the shelving, logistics and labor for installation was significant, and the ETA roll out had the speed and scale the likes of which franchisees had not seen in quite some time. We have been told that the ETA results were a resounding success. NACS 2017 State of the Industry (SOI) data indicated that across the c-store industry, center of the store accounted for approximately 15.8 percent of merchandise sales, and I found this to be consistent with my store results. An opportunity that exists today and which I believe requires a mobilization similar to ETA surrounds our vaults. continued on page 38

“The ETA roll out had the speed and scale the likes of which franchisees had not seen in quite some time.” AVANTI M A R C H | A P R I L 2 0 1 9

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Of Lab Stores And Beer Vaults continued from page 35

NACS 2017 SOI data indicate that approximately 30 percent of in-store sales across the convenience store industry come from the vault. Again this aligns almost identically with the data of the vault categories in my stores. SOI data also shows that packaged beverages and beer are responsible for 20.1 percent and 5.5 percent of total store GP dollars. Our vaults are clearly a focus for SEI. We are provided plan-o-grams to execute in our stores tailored to the regional level with the best intentions to maximize opportunity. The Customer Evaluation Visit (CEV) shops include anchors for out-ofstocks and fronting and facing. Starting in June, the CEV will be included in the metrics to obtain Emerald status. 7-Eleven franchisees are experts at adapting and doing the best we can with what we have, but we need a much more significant response to the current challenges to protect and grow our beer and packaged beverage business. Changes for many stores will require capital investments that franchisees cannot trigger. Although vaults are periodically being upgraded across the enterprise, a large number of stores are still in need of upgrades. We also need to consider the scope of the upgrades. While there was a major in-

“7-Eleven franchisees are experts at adapting and doing the best we can with what we have, but we need a much more significant response to the current challenges to protect and grow our beer and packaged beverage business.” facing far easier. Having done an impromptu poll, it appears many stores still do not have this roller glide shelving. The data suggests that the vaults are a significant source of revenue and gross profit, but they are also a big reason that customers decide to shop in 7Eleven stores. Convenience stores have traditionally had the best assortment of cold, ready to consume, packaged beverages available anywhere. As the leader in the industry, 7-Eleven became THE destination to get a cold drink to consume on the spot and other c-stores followed. Other channels, namely drug and dollar, have caught onto the c-store success

“The data suggests that the vaults are a significant source of revenue and gross profit, but they are also a big reason that customers decide to shop in 7-Eleven stores.” vestment in COS with ETA, items like the ADCO adjustable roller glide shelving has been overlooked. This shelving serves two purposes, making the vault appearance much sleeker and at the same time simplifying store operation, making fronting and 38

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and are expanding their assortment of cold packaged beverages and cold beer. Innovation and brand extensions within the non-alc categories continue to drive growth. For 7-Eleven franchisees we must also add our own private brand growth into the mix. With competition increasing and options coming from all directions there is little room for error. Attention to this extremely valuable space is crucial. Convenience stores sell nearly one third of packaged beer in the U.S. and 98 percent of it is sold cold. After looking at three sources—the NACS SOI data, MillerCoors Building with Beer Industry Insights (2018 https://csnews.com/millercoors-building-beer-industry-insights2018) and Anheuser-Busch Insight’s C-Store Explore (https://csnews.com/cstore-explore-grow-alcohol-your-stores)— it is clear that we are experiencing even more difficult decisions regarding our alcoholic beverage assortment in our vaults. To understand why space is such an issue we need to understand what’s going on within the sub-categories and pack sizes. Although Premium Beer has been losing share it still accounts for more than 45 precent of all beer sales. Imports and Super Premiums have had double-digit growth for three consecutive years. Micro Brews, especially from local breweries, have proven successful and contribute to credibility in assortment, growing 22 percent in 2015 but slowing since, only growing 3.8 percent in 2017. Flavored Malt Beverages grew by 8.5 percent in 2015, but have also slowed, even though Hard Seltzers are on fire right now and are expected to drive performance in this sub category in 2019. Although the Budget Beer subcategory has been declining roughly 3 percent each year, it still represents 8.2 percent of the total beer category and budget customers are frequent and extremely loyal customers. continued on page 40


Of Lab Stores And Beer Vaults continued from page 38

Singles continue to grow, accounting for 64 percent of c-store beer unit sales, and are high profit. AB Insights attributes 24 percent of beer sales to 12 packs and larger and the remaining 12 percent to 2 to 6 packs. Shoppers are very loyal to their preferred pack size, as having the right pack size is critical. MillerCoors Building with Beer notes that, “As the beer category expands space, revenue increases, more than any other beverage category in the cooler.” We need solutions for our cold space to ensure we can continue to maintain the proper assortment, allowing us to remain extremely competitive in both Non-Alcoholic Beverages and Alcoholic Beverages. Many of our competitors are responding to this pressure by building larger vaults or in many cases “beer caves.” In Florida, beer caves are standard in RaceTracs and Wawas and more often than not are found in Circle Ks and Speedways. They are standard in new builds for all major competitors. Even outside of Florida other c-store retailers are expanding as well. A November 2017 Convenience Store Decisions article highlighted Rutter’s continuing to expand their beer business with addition of more beer caves. An article in the Beaver Falls Times in Pennsylvania from March 6, 2019 mentions that Sheetz is in the process of opening 30 beer caves in stores across the state. Some benefits of beer caves: • Allow stores to carry or expand the assortment of larger packages such as 18pack bottles and 24 packs. • Vendors handle the stocking and rotation of the large packages, eliminating the need to move beer from storage room or warm display to the vault. All products are delivered to the vault and displayed for sale, ensuring the beer is available cold at all times. • Current shelving lacks pack out for larger packages causing opportunity for out of stocks 40

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“We need solutions for our cold space to ensure we can continue to maintain the proper assortment, allowing us to remain extremely competitive in both Non-Alcoholic Beverages and Alcoholic Beverages.” during peak selling times and peak days • Reduces pressure from staff to constantly run back to top off the cooler during peak times allowing for more focus on customers. Provides a potential solution for many of the quantity discount (QD) or post-off buying issues franchisees experience in many states. These QDs or Post offs make managing inventory inside the vault difficult. Beer Caves should facilitate stores in maximizing participation in QDs, increasing gross profit. An alternate option already in use in some stores is the open-air beverage

“It would be interesting to see what the calculation of ROI in an ETA project for the vaults under various scenarios would look like.”

cooler. It would be interesting to see what the calculation of ROI in an ETA project for the vaults under various scenarios would look like. Along with finding solutions for customer facing issues we also need to put some resources behind simplification of maintaining the back of house functions in the vault, as this is extremely labor intense. I am confident that our vendor partners would willingly provide valuable industry insights and input as they do with the reports above. A question remains as to why new 7-Eleven stores are not being designed by SEI with the current merchandising opportunities and challenges in mind. As always I learn as I write these Avanti articles. For this article I read both of the c-store industry beer reports available by Anheuser-Busch and MillerCoors, as well as the NACS SOI report and a handful of additional articles. If you want to find out about the beer category, read the two reports linked above. They have me thinking a bit differently about my assortment and the significance of so many different factors. At a minimum you can maximize the opportunity that exists with the space you currently have by paying very close attention to store data and what customers are telling you. Even executing at a very high level I fear we are leaving a lot on the table.

MICHAEL JORGENSEN CAN BE REACHED AT

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


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You Are Not Alone

Australian Parliamentary Joint Committee Issues Blockbuster Report On Fairness In Franchising ERIC H. KARP, ESQ., GENERAL COUNSEL TO NCASEF

On March 14, 2019 the Australian Joint Committee on Corporations and Financial Services issued a report entitled “Fairness in Franchising.” The 326 page report is an exhaustive study of the state of franchising in Australia, a $170 billion sector of its economy. You can read the entire report for yourself here: https://www.aph.gov.au/ Parliamentary_Business/Committees/Joint/ Corporations_and_Financial_Services/ Franchising/Report The Joint Committee conducted at least nine public hearings, and received 406 submissions of which 190 were treated as confidential, apparently from franchisees and others who did not want their identity disclosed. Among the presenters were representatives from the Australian 7-Eleven Franchisee Association. The Association itself submitted the 40-page report entitled “7-Eleven Franchisees Grievance Submission.” The National Coalition will post this report on its website, so that you can see how their complaints so closely resemble the problems that U.S. 7Eleven franchisees experience on a day-to-day basis. Among their complaints is that the disclosure of store profitability understates the cost of payroll, that franchise fees are too high, giving a false impression of the profitability of the business, and only the franchisor benefits from the business model. In addition, submissions were received in response to written questions, including two submissions from 7-Eleven Stores Pty. Ltd., the Australian affiliate of 7-Eleven. The complaints specific to the 7-Eleven Australian system that were submitted to the Joint Committee included the difficulty of obtaining financing because the franchisor controls the premises through its lease, the challenges associated with attempting to

“The complaints specific to the 7-Eleven Australian system that were submitted to the Joint Committee included the difficulty of obtaining financing because the franchisor controls the premises through its lease, the challenges associated with attempting to harvest goodwill in the event of a transfer, disclaimers regarding the reliability or accuracy of financial information in the disclosure document, and the exploitation of the franchise relationship by 7-Eleven.” harvest goodwill in the event of a transfer, disclaimers regarding the reliability or accuracy of financial information in the disclosure document, and the exploitation of the franchise relationship by 7-Eleven. However, there were many other systemic issues and problems cited by a wide range of presenters that validated the concerns of 7-Eleven franchisees and others. The Joint Committee identified “systemic exploitation of some franchisees by a subset of franchisors and a regulatory framework that does not provide adequate protection against such practices.” The Joint Committee further concluded that presale disclosure and transparency are important but are not adequate to protect franchisees from “abuse of contractual power by some franchisors” and that, “The current regulatory environment has manifestly failed to deter systemic poor conduct and exploitive behavior and has entrenched to the power imbalance.” Does this sound familiar to you as a 7Eleven franchisee? On behalf of the National Coalition, I have written to the Chair and Deputy Chair of the Joint Committee in order to establish what we hope will become a working relationship and to help them identify many of the close parallels between experiences of 7Eleven franchisees in Australia and in the

United States. It is also my longer-range hope that the exhaustive record of franchise abuses created by this parliamentary committee in Australia will make the environment for franchisee protection legislation in the United States more hospitable. The Joint Committee has recommended the creation of a task force to explore changes in the regulatory environment for franchising in Australia which will involve developing greater transparency and accountability, fairness and protection, as well as education and awareness. Here is a summary of some of the dozens of conclusions and recommendations for change made by the Joint Committee: 1. Development of a strong national association of franchisees to provide effective representation of franchisee views on how to deal with an unbalanced regulatory framework. 2. That wage theft committed by franchisees be recognized as sometimes encouraged or acquiesced in by franchisors and often a function of the structural breakdown of the business model and the imposition of cost controls. 3. That disclosure alone is insufficient as a response to power imbalances and exploitive behavior by powerful corporations. 4. Franchisor control of the supply chain constitutes an inherent conflict of interest continued on page 44

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You Are Not Alone

Australian Parliamentary Joint Committee Issues Blockbuster Report On Fairness In Franchising continued from page 43

when franchisors receive hidden financial incentives from suppliers, forcing franchisees to pay above market prices for goods and services. 5. Franchisees should be protected from franchisors who require them to order products they don’t want or need in excess of what they need to operate the business. 6. All rebates, commissions or other payments received by the franchisor on account of supply chain should be disclosed as a percentage of the full purchase price of each transaction, and that the franchisor also be required to disclose how they use those payments. 7. Whistleblower protection should be granted to franchisees and their employees, and regulatory authority should investigate all such claims. 8. It is unacceptable that franchisors are able to retain unfair contract terms without penalty and therefore have little incentive to remove such terms. 9. Franchisees should be entitled to a sevenday cooling off period after signing the franchise agreement. 10. There should be greater transparency around the allocation of goodwill in the franchise agreement. 11. Franchisees should be empowered to undertake collective action such as joint negotiation, mediation and arbitration to resolve disputes and problems, in order to provide a mechanism to address the power imbalance between franchisees and franchisors, and intimidating behavior by franchisors.

12. A mediator or arbitrator should be allowed to undertake multi-franchisee resolutions when disputes relating to similar issues arise. 13. Regulatory intervention should be permitted in the event of churning of outlets, meaning the repeated sale at a single site of the same franchise business to successive new franchisees.

“The Joint Committee identified ‘systemic exploitation of some franchisees by a subset of franchisors and a regulatory framework that does not provide adequate protection against such practices.’”

14. The Joint Committee was concerned with the detrimental consequences of irresponsible lending and borrowing in the franchise sector and suggested that the franchisor assisted lending risks, artificially inflating the value of a franchise business. 15. Franchisees should receive detailed financial statements of any advertising and marketing fund within 30 days following the end of each calendar quarter. 16. Disclosure should be made of any instance where a franchisee is required to sell a product below its cost, after considering all fees and fixed and variable costs in relation to the purchase and sale of the product. 17. Unfair contract terms should not be enforceable. 18. The franchisor should not be able to unilaterally “It is extremely gratifying that a government agency amend the franchise agreement through the manual or has taken a detailed and dispassionate look at any of the means, except franchising and identified deep, ingrained and long- with the agreement of a maof franchisees within standing unfair, exploitive and opportunistic behav- jority the system. iors by many franchisors, including your own.” 19. If a franchisee lodges a 44

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complaint with a mediator or arbitrator, any attempted termination by the franchisor should be suspended until the dispute is resolved. 20. It should be lawful for franchisees to collectively bargain with their franchisor, regardless of their size or other characteristics. 21. Where franchisees occupy the premises which are leased by the franchisor, they are entitled to see the head lease between the landlord and the franchisor or a written statement of the terms and conditions tenancy. 22. Franchisees should be protected from having to make significant capital expenditures near the end of the term of the franchise agreement. 23. Appropriate constraints should be imposed on the building franchisor who mandates capital expenditures on franchisees, and that the franchisee would only have to make a pro rata portion of the capital expenditure that would allow for appropriate return on investment within the franchise term. 24. Investigate whether the franchise agreement involves sufficient co-investment and risk sharing. As all of you know from our detailed written and Town Hall examinations of the 2019 franchise agreement, there could not be a greater contrast between the findings, goals and objectives of the Australian Joint Parliamentary Committee and both the letter and spirit of the take-it-or-leave-it 2019 franchise agreement. It is extremely gratifying that a government agency has taken a detailed and dispassionate look at franchising and identified deep, ingrained and longstanding unfair, exploitive and opportunistic behaviors by many franchisors, including your own. That validation alone should be deeply satisfying to every 7-Eleven franchisee. ERIC H. KARP CAN BE REACHED AT

617-423-7250 or ekarp@wkwrlaw.com


Vice Chairs’ Forum

LABOR CRUNCH IN THE USA BY AJINDER HANDA, NCASEF VICE CHAIRMAN, PRESIDENT, GREATER NORTHWEST FOA

We are facing a dilemma: the labor pool is market expectations of 3.9 percent. The number shrinking rapidly. This has been happening in Japan of unemployed persons decreased by 300,000 to for many years, but now labor problems in Japan 6.2 million. The point is: Does anyone want to work in reare peaking. The same phenomenon is occurring here, and it could be decades before we ever come tail these days? It is a big question for us as 7out of it. Across the nation in industries as varied as Eleven franchisees. And, the biggest question is what has our trucking, construcfranchisor done tion, retailing, fast to mitigate this food, oil drilling, “THE U.S. UNEMPLOYMENT RATE FELL situation? I have technology, and TO 3.8 PERCENT IN FEBRUARY 2019 approached my manufacturing, it FROM 4 PERCENT THE PREVIOUS local SEI team is becoming inMONTH, AND IS BELOW MARKET and asked the creasingly difEXPECTATIONS OF 3.9 PERCENT.” very same quesficult to find tion. They resufficient help. With the booming economy growth and sponded by saying that we can alleviate this retiring baby boomers, the labor crunch is situation by increasing sales and using traffic drivers. None of these solutions have helped franabout to get worse. The labor shortage is a unique sort of chisees so far. SEI is bringing more labor-intensive problem—easily predictable years ago, programs that really cost franchisees more and but still a surprise. That is largely because more rather than making money. My local SEI of the 2007-09 recession, which sparked team’s second response is that they cannot help us a longer-than-usual with labor issues because of the joint employer reemployment slump. lationship situation. “SEI SAYS WE Some big companies like CVS, Walgreens, The jobless rate was CAN ALLEVIATE above 5 percent for and Target have found the answer. They have anTHE LABOR SHORTAGE SITUATION BY more than several nounced pay hikes and bonuses. They are using INCREASING SALES years, during which the benefits of tax reforms, etc. I know SEI cannot AND USING TRAFFIC labor was cheap and help franchisees because of the joint employer reDRIVERS. THESE abundant. Employers lationship situation, but SEI can reimage and upSOLUTIONS HAVE had little incentive to grade our ancient stores. Also, they can help us NOT HELPED FRANprepare for tighter by observing write-offs. There are many other CHISEES SO FAR.” labor markets by up- ways to help franchisees so they can pay their grading their machin- employees handsomely and be able to retain ery or processes, which might have boosted good workers, who eventually help elevate the 7productivity. The U.S. unemployment rate fell to Eleven image. The bottom-line is SEI management must 3.8 percent in FebAJ HANDA ruary 2019 from 4 open their eyes and take care of this situation as CAN BE REACHED AT percent the previous soon as possible. Otherwise, this system, which AJINDERHANDA@HOTMAIL.COM OR 425-438-8381 month, and is below depends upon strong franchisees, will fall. AVANTI M A R C H | A P R I L 2 0 1 9

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Franchisee Guest Column

WHY WE NEED AN INDEPENDENT NATIONAL COALITION, PART 1: THE NATIONAL COALITION IS IMPORTANT First in a three-part series. Part 2 will appear in Avanti’s May/June issue. By John R Irvine Jr., Franchisee, Detroit, Michigan chisees face is the first step “A 7-ELEVEN in solving the problem. In FRANCHISEE IS A order to solve the problem we face today, we must CONTRACT EMPLOYEE WITH NONE OF THE understand it from a historical, legal, and ecoBENEFITS OR LEGAL nomic standpoint. PROTECTION Throughout the ‘70s, AFFORDED NORMAL ‘80s, ‘90s and 2000s the EMPLOYEES.” minimum wage did not keep up with inflation. I made a video called “The Minimum Wage Isn’t Fair” in 2013. You can see it on YouTube—just go to YouTube and type in the title. We can see in the video that the buying power of minimum wage dropped by at least 75 percent during this 40-year period. The real rate of inflation during those years was somewhere between 7 and 9 percent. With customer counts falling, sales because of inflation was rising 1 to 4 percent. Expenses were rising 7 to 9 percent, but payroll in terms of inflation-adjusted dollars was falling. Because of the combination of all the factors described, 7-Eleven franchisee income was rising. The problem was that minimum wage had dropped far below a livable wage, and it became almost impossible for a 7-Eleven franchisee to maintain a viable crew of employees. Enter the “New Americans!” So called “New Americans” (immigrants) came to 7-Eleven not only with money, but more importantly, with their own workforce willing to man 7-Eleven stores 24 hours a day. The speed with which the “New Americans” took over the 7-Eleven franchise sys“AN INDIVIDUAL FRANCHISEE HAS ZERO tem was amazing. BARGAINING POWER WITH A MULTINATIONAL A 7-Eleven franchisee in the ‘80s could net CORPORATION LIKE 7-ELEVEN, INC.” up to 8 percent of sales, but today that number is somewhere between 2 and 4 percent. The National Coalition during this time started a class action lawsuit An individual franchisee has zero bargaining power with a against 7-Eleven, Inc. and something interesting happened during multinational corporation like 7-Eleven, Inc. 7-Eleven began franchising as a way around the problem of employee unionization. the “discovery” phase of the case. 7-Eleven, Inc. did a massive docUnionization tends to level the playing field between employees ument dump on the National, hoping to overwhelm them with and employers. A 7-Eleven franchisee is a contract employee with useless information. Found among the documents were communone of the benefits or legal protection of a traditional employee, nications from the Japanese owners and 7-Eleven management including the right to unionize. Understanding the problem fran- indicating corporate’s belief that American 7-Eleven franchisees I was asked to write an article about why we need an independent National Coalition. The simple answer is, “Joe DePinto is an evil guy, so we need the National Coalition!” Except that is not true. Joe DePinto is doing his job. Joe’s job is to maximize the bottom line for the owners of 7-Eleven, Inc. I often hear franchisees say that franchisees and 7-Eleven, Inc. are partners. Nothing could be further from the truth. A 7-Eleven franchisee is a contract employee with none of the benefits or legal protection afforded normal employees. It is no secret that the profitability of a 7-Eleven franchise is on the decline. We all know that if you throw a frog into a pan of boiling water it will quickly jump out. But, if you put that frog in a pan of cold water and turn on the heat, the process is so slow that by the time the frog realizes there is a problem, the frog is dead. 7-Eleven franchisees are much like that frog—the process of declining income is so slow that by the time we realize there is a problem, we are out of business. Many franchisees face the problem of minimum wage rising at a rate far outstripping the rate of inflation. For a normal business the solution is to raise the profit margin (retail prices) to meet the new expense. Since all your competition faces the same increased cost, they will also be raising their prices. However, a 7Eleven franchisee is in a unique situation, as 7-Eleven, Inc. would be receiving over 50 percent of any increase in profit, and therefore the only fix is to raise prices and change the split. The fix is a simple one, yet we see no movement on our “partner’s” part to fix the problem.

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Next came the efforts to lower cost of goods by converting vendor labor to franchisee labor. In addition, labor-intensive programs such as hot foods were added. Labor is the number one line item on every profit and loss statement. Increasing franchisees’ labor costs, in the hopes of adding profit dollars for 7-Eleven, Inc., has taken its toll on franchisees’ bottom lines. If one looks at the current graduated split agreement in the new contract, over time with inflation all stores will eventually be at a split level below 45 percent. With franchisees netting between “IF ONE LOOKS AT THE CURRENT GRADUATED SPLIT 2 and 4 percent at current split levels, how can a franchisee survive? With expenses and sales rising AGREEMENT IN THE NEW CONTRACT, OVER TIME WITH INFLATION ALL STORES WILL EVENTUALLY BE because of inflation, split levels will decline for franchisees. The relationship between a franchisee’s AT A SPLIT LEVEL BELOW 45 PERCENT.” share of the profit and expenses will eliminate the possibility of a positive outcome. Next came gasoline. 7-Eleven in the ‘70s agreed to pay franIs there any question that we need an independent National chisees 25 percent of the profit on the sale of gasoline, even though Coalition? the contract mandated 1¢ per gallon would go to franchisees. The average profit margin was about 12¢ per gallon, giving franchisees 3¢ ______ End Part 1. The next installment of John Irvine’s three-part series on an indeper gallon. Unfortunately, the agreement to give franchisees 25 perpendent National Coalition, “The National cent of the profit on gasoline was a policy and was never put in an Coalition Is The Only Hope For Franchisees,” JOHN IRVINE addendum to the contract. 7-Eleven, Inc. eliminated the policy and will appear in Avanti’s May/June issue. Part 3 CAN BE REACHED AT offered franchisees 1.5¢ per gallon in a contract addendum, or the will appear in Avanti’s July/August issue. Avanti JOHNIRVINE1776@GMAIL.COM OR 248-535-6805 issues are available online at www.issuu.com. franchisee would revert to the original contract commission of 1¢. were earning too much, and this needed to be corrected. The process of moving corporate expenses to franchisees had begun. First it was credit cards. In the ‘90s, franchisees were resisting efforts to have stores take credit cards. 7-Eleven had assured franchisees that if they began accepting credit cards, 7-Eleven, Inc. would assume all associated costs of doing so. Of course, this was never put in writing in a contract addendum, so it was obviously subject to change.


Vendor Guest Column

Three Steps To Manage Costs After An Employee Injury John Harp, CSP, ARM Mitsui Sumitomo Insurance Group

When an injury is reported to have happened to one of your employees, the actions taken by you as the employer can greatly assist your workers compensation carrier to reduce the workers compensation claim costs. The initial information that you provide your insurance carrier can aid them in determining whether the injury was in fact caused by work. Information about how the injury occurred can assist you and the insurance carrier in evaluating and developing possible safety measures to prevent claims in the future. Your early actions also ensure the employee receives prompt and

costs, prevent lawsuits and minimize disruption to the store’s operations. Cost control and effective injury management occurs by: prompt reporting of claims, using network medical providers or occupational clinics, and having a plan for the employee to return to work. Prompt Reporting

Did you know the amount of time between the date of an injury and the date it is reported to the insurance company has a direct impact on the cost of a claim? There can be different reasons for a delay on the

“The initial information you provide your insurance carrier can aid them in determining whether the injury was in fact caused by work.” proper medical care and reduces the likelihood of the employee retaining an attorney, resulting in overall lower claim costs. Injuries to employees can be a significant cost to your business. Preventing injuries to employees or customers is the first objective, but if an employee injury occurs, there are three key steps that can help reduce claims

Change in Average Reporting Days

Over 14 8–14 4–7 0-3

part of the owner or employee. Have you ever heard or thought “I didn’t think it was a big deal” or “I thought the injury was minor and would get better on its own?” Why prompt reporting matters:

• Research shows that claims reported within three days have a reduced total claim cost (see graph). • Quicker access to medical care for Incurred per Claim the injured employee. • Easier for the insurance adjuster to 38.22% determine if the claim is compensa33.03% ble. • Employee lost time or restricted 28.75% activity can be reduced.

0.0%

% of Increased in Incurred Days Until Reporting ($0 - $250,000 Incurred: Excluding Death Claims, 2015-2018) CLOSE THE GAP: The faster you report a loss, the greater the benefits.

• There is an increased risk of legal action from the injured employee. • Medical outcomes may be hindered through a delay in treatment.

The consequences of late reporting:

• Timely and thorough investigation of the claim is jeopardized. • The employee may feel the owner does not care.

How to achieve the best results:

“Your early actions also ensure the employee receives prompt and proper medical care and reduces the likelihood of the employee retaining an attorney, resulting in overall lower claim costs.”

• Remind employees that all injuries must be reported no matter how minor. The information should be documented to retain the facts and help in the claims handling process. If medical treatment is not needed, that’s okay. It’s important to document the facts in case a claim is filed later. (In the event of an assault, contact MSIG or your insurance company regardless of injury and call OSHA if there is hospitalization or a fatality.) • Know who to call before a claim occurs and remind your managers about the accident reporting procedures. • Stay involved in the claims process—keep in contact with your employee and claims adjuster. Utilize Network Medical Providers Or Occupational Clinics

Medical costs represent almost 60 percent of workers compensation claims costs. Savings can be realized when negotiated medical costs (including prescriptions) are obtained through preferred or managed providers, or occupational clinics. These providers can provide quality care, understand workplace injuries and support early return to work efforts. continued on page 56

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Plan For Early Return To Work

An important element to controlling costs is through working with the employee’s doctor and your claims adjuster. Following the Employer Directs doctor’s advice on work restrictions, make Employee to their every attempt to accommodate those restricPreferred Medical Clinic tions. The benefits of returning your employee to work: • Reduces the chances of the employee seekEmployer Receives Employer Completes Accident Investigation Form ing an attorney. (if applicable, take photosof the accident scene) Notice of Employee Injury • Minimizes the overtime for other employees or disruption to work schedules. • Employee retains fitness and improves their chance of a full recovery. MSIG provides the workers compensation insurance for over 2,000 7-Eleven franchised stores throughout the U.S. through Aon, your insurance broker. If you have workers compensation insurEmployer Identifies Employer Reports ance provided by a different company, the any Witness(es) Accident/Incident to same principles apply, but check with your MSIG within 1-3 Days agent for claims contact information and proce“Did you know Employer Provides Employee with Claim Form dures. the amount of (as may be required by State Jurisdiction) The SEI Hotline is not time between the date of an the method to report ininjury and the juries or claims to your date it is insurance company. SEI should receive incident details, but your MITSUI SUMITOMO INSURANCE GROUP reported to insurer needs the information to manage the claim and it’s a good John Harp, CSP, ARM Greg Rice the insurance practice to keep the contact information posted in the office. company has Risk Engineering Consultant Claims Account Executive By providing the three steps of prompt reporting of injuries, a direct jIharp@msigusa.com grice@msigusa.com using preferred or occupational medical providers and supportimpact on the 908-604-2951 513-719-8405 ing early return to work, you can have an impact on your workers cost of a compensation cost, thereby improving your bottom line. Learn claim?” more about these steps by contacting your agent/broker or:

Workers Compensation Claims Flowchart

National Bill To Raise Tobacco Purchase Age Senate Majority Leader Mitch McConnell recently announced he will introduce legislation to raise the federal minimum age to buy tobacco to 21 from 18, reported CNBC. McConnell will introduce the legislation— called the McConnell bill—in May, he said. It will cover all tobacco products, including e-cigarettes. McConnell’s backing marks the strongest support yet in Congress for what’s been dubbed “T21.” A dozen states have already raised the minimum buying age and 56

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New York and Maryland are expected to join them soon. Even more states are considering legislation. At least 450 cities and counties have enacted T21 laws, according to the Campaign for Tobacco-Free Kids. Tobacco giants Altria, British American Tobacco and e-cigarette maker Juul have all thrown their weight behind raising the minimum buying age. Altria CEO Howard Willard and Juul CEO Kevin Burns have both urged legislation in recent op-eds. Altria started running “T21” ads earlier this month in The Washington Post, The Wall Street Journal and other newspapers.

New Store Built Between Sports Stadiums SEI has opened a 700-square-foot store between between Texas Rangers' Globe Life Park and the Dallas Cowboys AT&T Stadium in Arlington, reported the Dallas Morning News. The store is located on the plaza of Texas Live, a $250 million entertainment district that opened last summer backed by the Texas Rangers, The Cordish Companies and the City of Arlington. The store is half the size of an average store, but will stock most c-store basics.


Charity Guest Column

7-Eleven FOAs Fight Cancer By Rob Butcher, CEO, Swim Across America

You may have heard of Swim Across America, but may be asking yourself, “What is it and why do the FOAs and our National Coalition support it?” For three decades, SAA has been providing grants that support and speed up new cures and treatments for cancer. Since its inception, SAA has granted $80 million into cancer research and is one of the largest charitable funders of cancer research in the U.S. today. SAA has had some major successes in the quest to develop new cures to treat cancer. Most recently, Merck gave credit to SAA for playing a significant funding role in the clinical trials that led to FDA approval of Keytruda. Johns Hopkins Cancer Center in Baltimore conducted the Keytruda clinical trials, but was rejected for grant funding by every organization until Swim Across America said yes, for a total

Dallas. Like Susan, Mark is passionate about giving back, so the two of them encouraged the Dallas FOA to support SAADallas, which they have done since 2013. That relationship seed planted in Dallas has spread to 12 FOAs and NCASEF partnering with SAA. Rather than simply writing a donation check that lacks partnership or engagement, the FOAs and NCASEF relationship with Swim Across America is unique in that both sides bring value. The FOAs and NCASEF benefit because Swim Across America sends Olympians to the FOA golf tournaments and the annual national convention. Olympians typically command $5,000 to $15,000 appearance fees, but donate their appearance fees by participating in FOA golf tournaments knowing the proceeds benefit Swim Across America. In total, over 30 Olympians have attended FOA and NCASEF events, “Since the 7-Eleven FOA/NCASEF meeting franchisees and vendors, sharing stories, signing Swim Across America relationship autographs and bringing exbegan, over $700,000 has been citement. raised to fund cancer research.” Since the 7-Eleven of $3 million. Now Keytruda is FDA-ap- FOA/NCASEF Swim Across America relaproved for colon, lung, pancreatic, stomach, tionship was formed, over $700,000 has ovarian, and other cancer types. been raised to fund cancer research. New The FOAs and NCASEF were intro- cures such as Keytruda have been develduced to Swim Across America through oped that otherwise might not have hapSusan Davis, National Account Manager pened. Families are being given hope and for Nestle Professional. Susan is a neighbor lives are being saved. with Andrea Hayes Dickson, a 1988 US Olympian swimmer. Andrea invited Susan to the SAA-Dallas charity swim, where proceeds fund cancer research at the Baylor Cancer Center in Dallas. Since Susan has become involved with SAA, her dad was diagnosed with cancer and been treated at Baylor, so the cause—to find a cure to cancer—is personal to her. Susan invited her Dallas colleague Mark Gramlich to become a volunteer with SAA-

BY THE NUMBERS

–30– Olympians that have played in FOA golf tournaments

–$700,000– Proceeds donated from FOA golf tournaments & NCASEF

–4– New FDA approved cancer treatments funded by SAA

–12– FOAs that have hosted golf outings with SAA as a beneficiary since 2013 To find out more about SAA, visit www.swimacrossamerica.org. To get your FOA involved, call Rob Butcher at 980-237-9127.

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1s tQ F UA ebr RT uar ER y 18 20 -19 19 , 20

Pr es id e R n ep o r ts ts ’

National Coaliton officers, FOA presidents and vice presidents, and vendor representatives met February 18-21 at the Sheraton Four Points Hotel at the Dallas Fort Worth Airport in Coppell, Texas. The Affiliate Meeting February 18 and 19 saw presentations and talks from CSP/Winsight Content Director Steve Holtz, Swim Across America’s Rob Butcher, former NFL player Roy Williams, and a vendor panel on retailing and innovation from Outlaw Energy’s Jesus Delgado Jenkins. The entire group also broke out for lunch workshops on a variety of topics. At the end or the meeting interested vendors were able to participate in a tabletop trade show to talk about and show off their latest products. After the Affiliate Meeting, February 20 and 21 National Coalition officers and FOA leaders met to talk about franchisee issues and concerns, as well as the future direction of the National Coalition.

Greater Oregon FOA BILL HUFFMAN—VP, SOUTH

After very soft sales and difficult weather conditions in January and February, sales in Oregon in March have made a huge turnaround, with sales up over 5 percent in the state. However, many franchisees report to us that audit results are challenging. 7-Eleven, Inc. is expanding in Oregon with the purchase of over a dozen Circle K stores in the Portland/Eugene I-5 corridor. 7Now is in some Portland stores. Initial results are encouraging. Franchisees report that the average transaction on 7-Now is much higher than in store transactions. Greater Oregon FOA had our trade show in March at the Monarch Hotel in Clackamas. We had 85 stores represented and 50 vendors in attendance. Our guest speaker was Multnomah County Commissioner Sushela Jaypal. The topic she spoke to was the homeless issue. Many thanks to the GOFOA Board for put-

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ting on this tremendous event. Special thanks to Trade Show Chairwoman Ravinder Warrish and Treasurer Tim Jewsbury for the many hours they spent planning and executing the trade show. Portland franchisee Suzie Ho’s store received a remodel this winter that included the new beverage wall and self-serve grill. After a 3-week shutdown for the remodel, her sales

increase since reopening has been very impressive, as has the customer reaction to the new offerings. Greater Oregon FOA was represented by four board members at the COO regional roundtable held in Portland in early March. The main topics discussed were employee hiring/training/retention issues and store conditions. In April, many members of our Board went to our State Capitol in Salem to lobby our legislators on the multitude of issues that will negatively impact our business. Our annual golf tournament is in August at the Reserve in Portland.

New England FOA DENNIS LANE, PRESIDENT

“Profitability in the New England markets is being challenged by tobacco legislation and increased minimum wage.” —Dennis Lane, New England FOA

Profitability in the New England Markets is being challenged. On December 31, Massachusetts voted to go to 21 to purchase cigarettes, tobacco and e-cigs. Also in Massachusetts many cities and towns with existing flavor bans are expanding the ban to include Mint, Menthol and Spearmint, flavors traditionally excluded from flavor bans. Somerville, Massachusetts was the first city to include Mint, Menthol and Spearmint in its flavor restrictions, taking effect later this year. Many cities and towns in New England


Presidents’ Reports 1st QUARTER 2019

are also restricting Vape products such as Juul and Vuse to “Vape Shops” open only to people 21 and older. Flavor restrictions continue to expand across New England at an alarming rate, changing the convenience store landscape and making stores less profitable. In addition to tobacco restrictions, most New England states will be expanding minimum wage to $15 per hour over the next few years and expanding mandatory benefits for employees. Everyone is in favor of a fair working wage, but eventually expenses may exceed profitability. Remaining in business will be a challenge for low volume stores.

7-Eleven FOAC JAIMIN PANDYA, PRESIDENT

I have three main priorities for the year ahead: continue to build a constructive relationship with SEI, help franchisees grow their business profitability, and keep moving the FOAC in a positive direction. My intentions are to continue to work with SEI management for the future of the franchisees. I hope SEI feels the same way, especially the local zone management. The FOAC is committed to working with Zone and SEI Executive Leadership, Market Managers and Field Consultants to improve the business for all franchisees. Hopefully, we can put our differences

aside and start new efforts to build sales and profits for franchisees. Every leadership role has different challenges. When I was selected Steve Holtz, CSP/Winsite. to lead the FOAC back in August of 2018, one of the biggest challenges was the communication gap with local and national SEI management. I like to believe that we are one step closer to repairing the relationship with SEI by working with zone management teams locally. Currently, the most pressing issues for franchisees are sales and foot traffic in stores, maintenance issues, relationship with SEI, shrinking profits and higher costs of goods, and doing business not only in cities like Chicago but across the nation. The FOAC will help franchisees on a case-by-case basis for any issues they face related to their business. As I’ve stated before, and I’ll say it again—we are here for you. Please contact us with any issues or concerns you may have and we will do everything possible to help resolve them. As President, I would like to put most of my time and energy into helping franchisees be more successful, by making more connections, giving feedback, and providing the resources franchisees need to make better decisions. At times, running a 7-Eleven store is very challenging and it demands your full attention. There are a lot of moving parts in this business.

Jay Singh, Chairman, National Coalition.

But, the best feeling is when it all comes together and you make a profit at the end of the month. Then it's all worthwhile. I would say currently one of the biggest challenges our franchisees are facing is to find qualified labor to run the 24-hour business. It is extremely difficult to find people, and on top of that higher minimum wage requirements are eating away store profits. It is very difficult for low volume store franchisees to survive in these business conditions. I know SEI is aware of these issues at hand and is working tirelessly to come up with solutions that make this brand better. Let's all work together and make this awesome brand great again.

Columbia Pacific FOA HARBHAJAN GHOTRA, PRESIDENT

The Columbia Pacific FOA recently held our annual trade show. It was very successful. We had over 50 vendors participate, as well as nearly 100 franchisees or their managers attend. We also had approximately 1,400 orders placed by franchisees. Franchisees are very concerned about their declining income and rising expenses. They are also worried about the declining GP. Oregon Governor Kate Brown is proposRob Butcher, CEO Swim Across America.

Roy Williams, NFL player, Dallas Cowboys, Cincinatti Bengals.

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ing a $2 tax on tobacco products. This will increase the tax on cigarettes in Oregon from $1.30 to $3.30. This will lead Oregon to be in the top 10 list of states that pay the most for cigarettes.

how much rain we got. Having lower sales due to weather is the main issue for us. We are at 150 percent for rain compared to last year. The weather seems to be changing and we’re hoping that it will bring in more customers and we can turn this around. We are also fighting the same issues that others are dealing with. The minimum wage is different in every city in California. In Sunnydale, it is over $15 already. Labor is an issue. During our last Board meeting, we were encouraged to look at private brands because the gross profit is higher. NCASEF officers and Swim Across America staff and volunteers (left to right) Jas Dhillon, AJ In Northern CaliforHanda, Jay Singh, Mark Gramlich, Rob Butcher, Michael Jorgensen, Susan Davis. nia, lawmakers are going city to city to do flavored tobacco and menthol bans. They are adding a Tobacco ReBIC SIDHU, PRESIDENT sellers License (TRL). In addition to the state Tobacco License, now the cities are adding a Franchisees started 2019 pessimistically TRL that you need to get once a year, anywith the new 7-Eleven agreement and the in- where from $500 to $1,000 per city. Expenses crease in the minimum wage. We had more rainy days in San Diego than ever before, which resulted in sluggish sales. We are right now working with franchisees to see how we can get new vendors at our meetings to try to get new products and create more gross profit items in our stores. The FOA is currently working on our golf tournament, which is scheduled for June 5, 2019 and we are working on giving an incentive to our franchisees to attend the NCASEF Convention and Trade Storck’s Tony Harper, right, at the post-meeting tabletop. show in Long Beach, California. are going up in California. In Philadelphia, they made it so that you can’t transfer your tobacco license, so you have to sell your store without a license. They are passing laws like ANN SEKHON, PRESIDENT that in California, too. They are trying to shut down the number of licenses issued. This lowNorthern California has had a very severe ers the value of our stores and makes it diffiwinter this year. It has been very wet, causing cult to find a buyer. We have a trade show coming up on customer counts to be down and sales to be April 24, 2019 in Freemont. Our golf tournadown. For the first time in six years, California is now out of the drought, so that shows you ment is going to be on September 16, 2019.

San Diego FOA

San FranciscoMonterey Bay FOA

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“The minimum wage is different for every city in California. —Ann Sekhon, San Francisco/Monterey Bay FOA

South Nevada/ Las Vegas FOA KEVIN LUCERO, PRESIDENT

Sales are fairly strong for the Las Vegas Valley. Market #1607 is up in first quarter sales by 4.08 percent, fresh food is up 6.63 percent and average GP was 35.56 percent. Market #1608 was up 3.66 percent in sales, fresh food up 4.73 percent and average GP was 34.87 percent. There continues to be a lot of construction, and the housing market has remained strong for the last couple of years. The Las Vegas Raiders Stadium is going up quickly, and the Raiders relocating here next year should continue to help contribute to a strong economy here in the Valley.

Linnea Solbrook, Tweaker Energy and Aloe Vera Fresh.

The Emerald program has been a nice incentive for our stores, but our concern moving forward is the CEV visit now being tied to it. That will make this program very subjective to the CEV scorer and perhaps put us on an unfair playing field for this evaluation. Time will tell as we move forward with this new requirement. One of our Board concerns is that a handful of franchisees have been experienccontinued on page 64


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ing very excessive audit shortages. We have formed an audit committee that will try to provide support. We are hoping to help these franchisees find the causes of these shortages. These large shortages have the potential to cause financial hardship on our franchisees. We hope by providing support we can find some answers. A minimum wage increase is on the table for our current legislative sessions and some new bills have been proposed. In the last several weeks we have met with the VP of the Retailers Association of Nevada, and a NFIB representative. We plan on becoming members of both groups. We believe these two organizations can be helpful in representing our interests in the minimum wage battle, and other legislation that can be harmful to our business. We have reached out to our local SEI executives and expressed our concern that SEI has not participated in any of our local meetings or events. We have put the message out to them that we would like a more collaborative relationship with them moving forward. We will see if it bears any fruit in the near future. There is a Tobacco Summit that is being Held at the Gold Coast by our cigarette vendors mid-April. Several of us are planning to attend. I’m sure it will be a very informative session, and a chance to learn more about the current challenges and what the future may hold for this category. We are excited about our trade show and charity golf tourney that are happenFranchisees and vendor representatives broke into four groups for lunch workshops on a variety of issues related to operating, selling to and managing 7-Eleven stores.

“We have reached out to our local SEI executives and expressed our convern that they have not participated in any of our local meetings and events.” —Kevin Lucero, President, South Nevada/Las Vegas FOA

ing on April 17 and 18. We have approximately 50 vendors committed to the show, and over 120 golfers signed up. Our two charities that we will be supporting are Swim Across America and St. Jude’s Children’s Ranch. Our Golden Knights are back in the Stanley Cup Playoffs, we are hopeful they can win it all this year. Go Knights Go!

Utah FOA WALLACE IMAMURA, PRESIDENT

First, let me pay my respects and condolences for the untimely loss of a very charismatic and lionhearted former FOA President Richard “Rich” Alan Learned. Also, thank you on behalf of his wife Leena to all of the National Executive Officers, FOA Presidents and Vice Presidents for your prayers of comfort and condolences. We here in Utah are no different than anywhere else with the mounting pressures and challenges internally or externally that are affecting our livelihoods as franchisees. We are fortunate to have some very awesome Servant Leaders in the franchise community, Zone and our local Operation teams here. On the other hand, we also have franchisees and store ops teams that are struggling with taking care of their responsibilities. Sales are trending in a very positive direction. Sales for April are +7.2 MTD and this is coming off of consecutive months where we were +2 to 4 percent, which is well above the trend of where we were this time last year. Guest counts were down about 20 to LY, but contributing to some of this was the absolutely poor weather we had for the first three months of 2019. Guest counts for April are only down 2 APSD. I would attribute this to much favorable weather, our BOGO Pizza offer, and the new sales plan with encouraging offers. This continues to be our greatest challenge and the market will shift to more of a traffic driving focus (in partnership with FZs) starting in May/June since the center of store and vault resets are predominantly finished. Average ticket has been the saving grace with the guest counts being down. The market is 0.53 over LY YTD! continued on page 66

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• ECIGS +$91 APSD over LY • Energy +$52 over LY—Mostly driven by promotions and new products such as REIGN and BANG (really not new anymore). • Fresh Food—Offerings such as the improved pizza and the roasted wings 10 for $6 are creating a buzz and the market is now up +$40 APSD in total food over LY, and this is coming off of two straight years where we were down in this category. The Brand Excellence incentives that began last month for fresh food we truly believe are generating some energy and push to sell. • 7NOW—Only in 15 stores in the market, but we are seeing anywhere from $1,000$2,000 additional sales a month without any additional expense to the franchisees. •Raised retails have obviously impacted average ticket positively, but we must be cognizant that some of our categories aren’t growing units, but we are growing dollars based on the increased prices. • 7 Rewards—For some reason (not smart in my opinion) our Utah Markets were chosen as control/test Markets to not run with all of the Pokemon advertising and the AR functioning. With that being said, the 7-Eleven phone app was active for a day and a half then it was pulled! That didn’t help us since we created some false excitement for our digital guests. Stores that are performing the best on registered scans continue to have the most financial success. The market is now close to 15 percent registered scans and with the text to join and the customer facing display, the organizational goal is to get to 20 percent by the end of the year. We need new guests and we are only acquiring slightly over 1 APSD as a market, even with the digital enhancements. We’ve successfully navigated through the 3.2 beer issue and starting on November 1st we should start to see a decent amount of new packages being introduced to the market.

We need to foster collaboration between SEI and our franchise owners. We welcomed to Utah Executive Vice President and COO Chris Tanco, who invited us to attend his COO Town Hall meeting. Along with Mr. Tanco, Greg Franks SVP of U.S. Operations, Dan Soper VP Franchising and Operations Services, Art Lazo VP Asset Protection, Enid Cangialosi VP South West Zone and former NCASEF Chairman Bruce Maples were in attendance, as well as local franchisees. The meeting was well taken by those who attended. I voiced that I did not like the business environment and politics that are dividing franchisor and franchisees. I said we need to somehow move forward from our differences

“We need to foster collaboration between SEI and our franchise owners. —Wallace Imamura, President, Utah FOA and start having an effective dialogue and transparency so we can build trust again. Chris Tanco echoed and agreed with what I had said about the politics. He said, “Politics does not belong in business!” Moving forward, I am cautiously optimistic that things are in the works that will help franchisees’ livelihoods to progress to better times. Maybe baby steps forward, but hopefully momentum will build to the positive.

“Alone we can do so little, together we can do so much.” —Helen Keller Our FOA here in Utah was organized when it was suggested by a SEI Operations Servant Leader whose name I will keep in confidence. That person suggested that we

“The FOAC is committed to working with Zone and SEI executive leadership, market managers and field consultants to improve the business for all franchisess. —Jaimin Pandya, President, 7-Eleven FOAC 66

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needed to unite the franchisees to have a voice in communicating to SEI our concerns and to share good practices. The FOA could also facilitate a movement to help strengthen the brand, as well as be a co-prosperity model to be successful. The more franchisees we have join our Association, together we can do so much! We as a FOA have sponsored contests that helped drive Zone and Market PSA 17 initiatives. We made it fun working together! We hope to sponsor more positive initiatives that will help both our franchisees and the brand to grow together.

“Talent wins games, but teamwork and intelligence win championships.” —Michael Jordan We need teamwork and intelligence (good business sense) to win in order to be profitable in our business! We are like many areas of the country that are faced with aggressive expansion by competitors who have great locations and new facilities, while our remodels or new store locations are a work in progress and badly needed. We have a lot of talented people at HQ. One thing SEI is great at doing is building platforms to help us move forward. The CEO Round Table and the NBLC are working as a team to help us be successful in our business and help us to be relevant. I applaud our NBLC representative Cherry Colton for sharing her time and talents. She was one of the 12 to 14 franchisees to put her own cash to get us registered as an entity and an association. We are having our trade show on Tuesday, June 11, 12 pm to 4 pm at the Airport Hilton Doubletree Hotel, 5151 Wiley Post Way Salt Lake City, Utah. Charity Golf is on the Wednesday, June 12 and the location is to be determined.

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Legislative Update is approved measure would set a new statewide floor of 21.

Maryland General Assembly Passes Bill To Raise Smoking Age Maryland’s General Assembly recently passed a measure to raise the age for buying tobacco and nicotine products from 18 to 21, aer carving out an exemption for members of the military, reported the Baltimore Sun. e bill, which proponents say is aimed at protecting teens from the harmful health effects of smoking, but which some Republicans decried as “nanny state” legislation, would make Maryland the ninth state in the nation to raise the age for buying cigarettes and other tobacco products. e legislation would apply to all types of tobacco products, including cigarettes, cigars, smokeless tobacco, e-cigarettes and vaping devices. Retailers would have to post signs warning that the products can be sold only to those age 21 or older. e bill wouldn’t change the penalty for selling tobacco to those under age, currently a fine that begins at $300 for a first offense.

Illinois Hikes Smoking Age To 21 Illinois Governor J.B. Pritzker recently signed legislation that raises the legal age for purchasing cigarettes, e-cigarettes and other tobacco products from 18 to 21, reported news station Fox 8 Cleveland. HB 345 takes effect July 1. It aims to reduce tobacco use among teens and young adults by preventing them from starting, said Pritzker and state lawmakers who attended the bill signing. Illinois joins a growing list of states and municipalities adopting “Tobacco 21” policies, as vaping among teens is on the rise. Some tobacco and e-cigarette companies have signaled support for Tobacco 21 policies.

“SAN FRANCISCO COULD BAN E-CIGS UNTIL THE FDA CONDUCTS A REVIEW TO EVALUATE ITS EFFECT ON PUBLIC HEALTH.”

San Francisco Considers Ban On E-Cig Sales

Two San Francisco officials recently proposed a new law that would ban the sale of e-cigarettes in the city until the FDA conducts a review to evaluate its effect on public health, reported Fox Business. Under the legislation, any sale—in-store or online—of an e-cig that has not undergone an FDA review would be prohibited. “By law, before a new tobacco product goes to market, the Food and Drug Administration is supposed to conduct a review to evaluate its impact on public

health,” San Francisco City Attorney Dennis Herrera, who co-authored the bill, said in a statement. “Inexplicably, the FDA has failed to do its job when it comes to e-cigarettes. Until the FDA does so, San Francisco has to step up.” So far, no e-cigarette has been approved by the FDA.

New Jersey Retailers Must Accept Cash Retailers in New Jersey must accept cash as a form of payment aer Governor Phil Murphy signed into law a ban on so-called cashless stores, reported the Philadelphia Inquirer. With the exception of a few businesses, the new law prohibits most brick-and-mortar retailers from refusing to accept cash. Businesses can be fined up to $2,500 for a first offense and $5,000 for a second violation. Subsequent offenses will be considered unlawful practices under the state’s consumer fraud act, which can levy penalties of up to $20,000. New Jersey lawmakers say the law—applauded by Cardtronics, the world’s largest ATM operator—is meant to protect lowincome consumers from discrimination. But businesses see the measure as going against a trend toward electronic forms of payment to improve efficiency, reduce the risk of robbery, and greater tax compliance as technology gives consumers more ways to pay, including with their smartphones.

Philadelphia Bans Cashless Stores Philadelphia has become the first major U.S. city to force shops to take cash aer Mayor Jim Kenney signed off on a law that would ban so-called cashless stores, reported the Philadelphia Inquirer. e ordinance will prohibit most retail locations from refusing to take cash or charging cash-paying customers a higher price. Violators of the law, which will take effect July 1, will face fines of as much as $2,000. Supporters of the new law said it was needed to protect low-income Philadelphians from discrimination. e law does exempt some businesses from the cash requirement, however. Parking lots and garages, wholesale clubs, retailers that accept mobile payments through membership programs, and rental companies can still stop taking cash. Sales made by phone, mail, and online will also be excluded, as well as goods and services sold exclusively to employees.

“The state of New Jersey and the city of Philadelphia have both banned so-called cashless stores like Amazon Go.” continued on page 70

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Legislative Update San Francisco Could Ban Cashier-Free Stores San Francisco is considering a ban on cashless Amazon stores as it weighs a bill that would make it one of a growing list of cities forbidding cashless retailers, reported CNBC. District Five Supervisor Vallie Brown introduced a bill in late February that aims to ban cashless retailers. At a recent Board of Supervisors meeting, Brown expanded the proposal to include Amazon Go stores, which were originally excluded because they are automated and do not have employees that would handle cash. Recently, New Jersey followed Philadelphia’s lead in signing into law a cashless store ban. Lawmakers argue that cashless stores can effectively discriminate against low-income consumers, who may not have a bank account or credit card. But businesses say going cashless is good for consumers and reduces the risk of robbery and the ability to evade taxes.

Connecticut Governor Proposes Soda Tax Connecticut Governor Ned Lamont recently asked legislators to impose a new 1.5 cents per ounce tax on sugar-sweetened beverages, reported e Hill. e tax, included in a budget proposal, would generate about $163 million in new revenue for the next fiscal year, Lamont's office estimated. e money is part of a package of new revenue-raisers aimed at closing Connecticut's $2 billion budget deficit. Lamont also proposed new taxes on electronic cigarette liquids, a 10-cent surcharge on plastic bags and new deposits on wine and liquor bottles.

California’s Proposed Soda Tax & Large Sugary Drinks Ban California restaurants and stores would be prohibited from selling “Big Gulp”-style sodas and consumers would face taxes on sugar-sweetened soft drinks under bills recently announced by five state lawmakers to address a “public health crisis” of obesity in the state, reported the Los Angeles “CALIFORNIA LAWMAKERS Times. The proposals inCOULD IMPOSE A 2-CENTSclude a ban on the sale of unsealed “sugarPER-FLUID-OUNCE TAX sweetened beverage” THAT WOULD MEAN AN portions larger than 16 ADDITIONAL 24 CENTS ON ounces at food-service THE COST OF A 12-OUNCE businesses, including CAN OF SODA.” restaurants with self70

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service soda fountains, stores such as 7-Eleven, and sports arenas. Assemblyman Richard Bloom of Santa Monica said the “beverage fee” he proposed does not yet state the size of the fee, but noted that past proposals he has supported would have set a 2-cents-per-fluid-ounce tax, which would raise $2 billion annually. at would mean an additional 24 cents on the cost of a 12ounce can. Other bills proposed include a reintroduction of a measure that failed last year to require health warnings on cans and bottles of sugar-sweetened drinks, and one that would bar the soda industry from offering subsidies including discount coupons that encourage soda consumption. Health groups have also proposed an initiative for the 2020 ballot that would tax sodas at 2 cents per fluid ounce.

Michigan Governor Proposes Fuel Tax Hike Michigan Governor Gretchen Whitmer recently proposed in her budget a 45-cent per gallon increase in the fuel tax—phased in over a one year period—to raise more than $2 bil“MICHIGAN’S GOVERNOR HAS PROPOSED A lion to fix the 45-CENT PER GALLON GAS TAX INCREASE TO state's crumRAISE $2 BILLION TO FIX THE STATE’S ROADS.” bling roads, reported the Detroit Free Press. e first 15-cent increase would take effect October 1, with another 15-cent hike on April 1, 2020, and the third increase on October 1, 2020. When fully implemented, the proposed tax hike would increase the cost of a 15-gallon fill-up by about $6.75. Michigan's fuel tax is currently 26.3 cents per gallon for both regular and diesel fuel. e Senate Fiscal Agency estimates each one cent increase in the fuel tax would raise about $46 million to fix roads, so a 45-cent hike would raise close to $2.1 billion for roads. Opponents of the tax hike have slammed the proposal as “a $2-billion tax increase that will break many Michiganders' budgets.”

Ohio Lawmakers Consider Gas Tax Hike ere is a House bill before Ohio legislators that seeks to raise the state’s gasoline tax from 28 cents per gallon to 46 cents per gallon, reported e Marietta Times. It’s been 14 years since continued on page 72


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Legislative Update continued from page 25

Ohio raised its gas tax rate, and during that time fuel efficiency, electric and hybrid cars, and rising costs of materials to maintain, repair and replace roads have widened the gap in funding for road infrastructure, supporters of the tax hike say. Each one-cent increase would generate $67 million, with the state keeping 60 percent and 40 percent going to local governments. If passed, the new gas tax rate would kick in on July 1.

Illinois Senate Bill Would Raise State Gas Tax A bill introduced recently in the State Senate would double the Illinois gas tax— from 19 cents to 38 cents per gallon—and hike vehicle registration fees to pay for repairs to roads, bridges and transit systems, reported the Chicago Tribune. Senate Bill 103, proposed by Sen. Martin Sandoval, D-Chicago, could create almost $2 billion in additional revenue annually. e new gas tax would begin July 2019 and increase each year based on inflation, but cap at 1 cent per year. e bill would also increase the passenger vehicle registration fee to $148 from $98, and the electric vehicle fee to $148 from $17.50. Most driver’s license fees would increase to $60 from $30, while truck registration fees would rise by $100.

New York Moves To Ban Plastic Bags New York State lawmakers have agreed to impose a statewide ban on most types of single-use plastic bags from retail sales, reported the New York Times. e plan would be the second statewide ban, aer California, which banned bags in 2016. New York’s ban, which would begin in March 2020, would forbid stores to provide customers with single-use plastic bags. e ban would have a number of carveouts, including food takeout bags used by restaurants, bags used to wrap deli or meat counter products and bags for bulk items. Newspaper bags would also be exempted, as would garment bags and bags sold in bulk, such as trash or recycling bags. e plan would have an additional element allowing counties to opt in to a 5-cent fee on paper bags, revenue that would go to the state’s Environmental Protection Fund as well as a separate fund to buy reusable bags for consumers.

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.

sponsibility spanning a 37year career at Swisher. The company said Bill will serve as a consultant to Swisher going forward. • An Amazon executive recently informed employees that the company’s cashierless Go stores will start accepting cash to address “discrimination” concerns, reported CNBC. The move comes as a growing number of cities and states are enacting laws that require stores to accept cash. • Maryland is well on its way to becoming the first state to ban foam food containers and cups, reported CNN. The State Legislature has recently approved bills to ban polystyrene—commonly known as plastic foam—which now have to be combined into a final measure for the governor to sign. • QuikTrip recently celebrated the opening of its 800th store location nationwide. The store opened the first week of April in San Antonio, Texas. • Alcohol that makes you feel drunk without the coinciding hangover nor liver damage may be available within five years, reported The Independent. The synthetic alcohol, named Alcarelle, was created by Professor David Nutt, the British government’s former chief drug adviser who believes it will change alcohol consumption once it is regulated. • Circle K recently opened the largest service center in its global network, reported PetroPlaza.com. The site is located in Gorey, Ireland, is set up to cater up to 20,000 motorists daily with premium fuels and fast-charge points for electric vehicles, as well as a wide range of fresh foods, frozen drinks, coffee, and more. • President Donald Trump has proposed adding a user fee to ecigarettes to fund FDA oversight of new tobacco and nicotine products as part of an effort to reduce use by teenagers, reported Reuters. It’s estimated that the fee could bring in as much as $100 million a year. • Whole Foods Market is testing a bodega-style store format in New York City's Chelsea neighborhood, reporter Eater New York. continued on page 76

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history. Those funds are subject to a deduction to account for certain merchants that exclude themselves. The net class settlement fund, after deducting court-awarded attorneys' fees and costs, will be used to pay valid claims of merchants that accepted Visa or Mastercard credit or debit cards at any time between January 1, 2004 and January 25, 2019. Visa and Mastercard said they have done nothing wrong and the Court has not decided who is right, but the parties have agreed to a settlement. On November 7, 2019, there will be a Court hearing to decide whether to approve the proposed settlement. If the Court grants approval of the settlement, and if that approval is affirmed on any appeals, every merchant that does not exclude itself from the class by July 23, 2019 and files a valid claim will get money from the class settlement fund.

Target Raises Minimum Wage Target Corp will raise its U.S. minimum wage to $13 an hour in June, from $12 currently, increasing its payroll costs

growth through waves of store openings in favor of enhancing its outlets, reported Nikkei Asian Review. The company plans a net increase of just 150 stores for the year through February 2020, an 80 percent drop in annual growth. SevenEleven last logged such a small increase back in fiscal 1977, with a gain of 176 and putting new pressure on rival Walstores. It intends to open 900 new locamart to attract retail workers in a tight tions in fiscal 2019, down 40 percent on labor market, reported Reuters. Target the year and the fewest in nine years, previously raised its minimum hourly pay while closing 750 outlets. to $12 in March 2018 from $11. Instead of In 2017, Target said it was comstore openings, “SEJ will see a net mitted to raising its minimum Seven-Eleven wage to $15 an hour by 2020. increase of only 150 will focus on Target employs over 300,000 making its exstores in 2019, the workers and runs 1,845 stores isting outlets fewest since 1977.” in the United States. The dismore competicount chain is investing billions tive. “Until of dollars to improve its supply chain, now, 60 percent of our investment had grow its online sales and improve delivery been used on new stores,” Seven & i Presiof merchandise to shoppers’ homes. dent Ryuichi Isaka told reporters. “Going forward, 60 percent will go to existing locations.” The company has earmarked 145 billion yen ($1.3 billion) in capital spendSeven-Eleven Japan will hit the ing for domestic store operations, up 30 brakes on expansion of its retail network, percent on the year. departing from a strategy of driving

“Target will raise its minimum wage to $13 per hour in June, with a commitment to $15 per hour by 2020.”

SEJ Slows Down Expansion

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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.

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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type items, as well as fresh food such as produce.

7-Eleven Rules In Taiwan 7-Eleven is the top convenience store retailer in Taiwan, and can literally be found everywhere—from up in the mountains to oceanside, in cities, suburbs and rural villages, reported Forbes. According to Euromonitor, Taiwan’s 7Eleven held a 60.5 percent share of Taiwan’s convenience store market in 2018. Its sales have grown about 20 percent in the five years through 2018, more than double Taiwan’s retail sales growth rate between 2013 and 2018. Its share of Taiwan’s retail market has increased by 0.4 percentage points to 3.8 percent in 2018 from 2013, ranking it the No. 1 retailer in the market. As of December, there were nearly 5,400 mostly franchised 7Elevens in Taiwan. It holds a perpetual license from 7-Eleven in the U.S. and is a unit of Taiwan's President Chain Store Corp. Top rival FamilyMart, introduced from Japan in 1988, has nearly 3,350 locations in Taiwan. Taiwan’s 7-Eleven is so popular it has made itself an integral part of many locals' daily life, thanks to the myriad of services it offers. Through in-store touchpad kiosks, customers can pay their utility bills, parking tickets and tuition, get cell phone services and sim cards, make hotel reservations, buy movie tickets, reload their metro cards, make donation to their favorite charities and take care of some of their insurance and banking needs, just to name a few.

Retailers Of All Sorts Entering The Convenience Market Retailers of all kinds are introducing new formats, offers and amenities in an

SEJ Replaces President

effort to compete in the convenience store channel, reported Convenience Store News. Big-box retailer Target is testing a new self-service, grab-and-go concept called Snack Bar at some of its locations countrywide. One Snack Bar, located in Northeast Minneapolis, features an ICEE machine, items from Pizza Hut, popcorn, salads, and other grab-and-go snacks like beef jerky. Customers pay for their items at a self-service kiosk. Amazon-owned supermarket chain Whole Foods recently opened Whole Foods Market Daily Shop in New York's Chelsea neighborhood. The 2,500-squarefoot store focuses on grab-and-go items— including prepared foods across all three dayparts, a fresh produce selection, and self-serve baked goods—and features selfcheckout kiosks as well as staffed checkouts, according to the article. Finally, discount grocery chain Lidl recently introduced Lidl Express, a smallformat grocery store, on the ground floor of its U.S. headquarters in Arlington, Va. Lidl Express measures a little more than 1,000 square feet, as opposed to the retailer's typical location size of about 20,000 square feet, and sells convenience-

Seven & I Holdings has replaced the head of its 7-Eleven convenience store business in Japan, amid pressure to abandon its 24-hour store policy due to a shortage of workers, reported Reuters. Seven-Eleven Japan Vice President Fumihiko Nagamatsu has been appointed leader of the company. Seven-Eleven has come under pressure to change after complaints by franchise owners, some of whom were forced to keep working amid massive snowstorms or in the wake of a family death, attracted nationwide attention. As a result, the company recently began testing shorter hours at 10 of its more than 20,700 stores.

RENEW Program Attracts Customer Traffic SEI is touting the success of its RENEW program with a video on the initiative's website, which features franchisee testimony that the program is helping drive customer traffic, reported Convenience Store News. The RENEW reduced emissions program is a collaboration between SEI and GreenPrint. For every gallon of gas purchased in the 7-Eleven RENEW program, an investment is made in reforestation, greenscape projects, wildlife protection and renewable energy projects designed to help reduce tailpipe emissions. 7-Eleven stores in California, Washington, Oregon, and Wisconsin offer the program. On the video, SEI North Pacific Zone Vice President Jason Murray states, “The impact of

“For every gallon of gas purchased in the 7-Eleven RENEW program, an investment is made in projects designed to help reduce tailpipe emissions.”

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the 7-Eleven RENEW program has been great. It's driving customers into our stores while it's making our brand shine. That makes it feel really good to know we are giving back to the community and also doing right by our brand.” Franchisee Aman Rai noted the program has resulted in the planting of more than 100,000 trees, and said, “This is a win-win situation for 7-Eleven and the customers.” Wanel Thomas, a 7Eleven customer, added, “When I see a company giving back to its community, I see value. I see credibility. I see integrity, and it makes me, as an individual, want to invest in the company even more.”

SEJ Testing Shorter Hours Seven-Eleven Japan is reassessing its signature 24-hour business model as franchise owners grapple with severe personnel shortages, testing shorter store hours at select locations to gauge the impact on earnings, reported Nikkei Asian Review. In mid-March, 10 directly run stores started operating from 7 a.m. to 11 p.m. in trials that will run at least a few

months to assess changes in sales and customer traffic. The convenience store operator under Seven & i Holdings will review the results to decide what to do with franchise locations, which account for 98 percent of all stores. Seven-Eleven has 20,000-plus Japanese locations, and 96 percent of them—excluding ones at such facilities as train stations and office buildings—are open around the clock. Franchise owners are hard-pressed to staff their stores, however. An Osaka Prefecture owner who cut daily hours to 19 in February has been accused by Seven-Eleven Japan of violating its contract. Franchise owners asked late that month for collective bargaining to negotiate shorter hours and other remedies.

Ferrero Acquires Kellogg’s Cookies & Fruit Snacks The Ferrero Group recently announced it will acquire the cookie, fruit and fruit-flavored snack, ice cream cone and pie crust businesses from Kellogg continued on page 78

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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The small-format store, called Whole Foods Market Daily Shop, features self-checkout kiosks and emphasizes grab-and-go shopping. • Walmart announced stellar earnings on recently, driven by its strong grocery business and 40 percent sales growth in e-commerce sales, reported Yahoo Finance. • A flood of CBD products have put the FDA in a bind, as companies rush to market products before regulators decide how to police them, reported Politico. • As baby boomers begin to retire en masse, companies are struggling to find replacements, reported the Washington Post. Of the companies surveyed by Willis Towers Watson, 75 percent said they expected major challenges directly related to late retirements, and are worried about the employees considering early retirement. • California consumers lost out on at least $308 million in nickel deposits on cans and bottles in 2018, largely because it’s increasingly difficult to find a place to recycle them, reported the Associated Press. In the last five years, about 40 percent of California’s recycling centers have closed, with more than 100 closing in Los Angeles County alone. • Wawa said Florida will soon become its largest state for convenience store locations, reported the Philadelphia Business Journal. The company said its new direction of growth will be southerly, with Florida set to open more stores and surpass both New Jersey and Pennsylvania by the end of 2021. Today, Wawa has 251 stores in New Jersey, 236 in Pennsylvania and 167 in Florida. • A team of University of California at Berkeley synthetic biologists have modified brewer’s yeast to produce a range of cannabinoids, reported The Atlantic.The technique opens up the possibility of circumventing the need for largescale plant cultivation, and could conceivably make high-quality, reasonably priced cannabinoids much more accessible for pharmaceutical development and recreational consumer products. • More than 169 million plastic shopping bags have remained unused over the past two months at 7-Eleven continued on page 80


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Company for $1.3 billion. These businesses generated sales of approximately $900 million in 2018. Ferrero said it will acquire a strong portfolio of brands in the cookie category, including the iconic cookie brand Keebler, top selling on-the-go Famous Amos cookies, the premium family cookie brand Mother’s, and Murray sugar free cookies, as well as Little Brownie Bakers, supplier of cookies to the Girl Scouts. Ferrero will also acquire the Kellogg fruit snacks business, including Stretch Island and Fruity Snacks along with Keebler’s ice cream cones and pie crust products. The transaction is expected to close in the second half of the year.

Burger King Offers $5 Monthly Coffee Subscription On March 15, participating Burger King restaurants across the U.S. started offering coffee subscriptions for a $5 monthly fee, reported Nation’s Restaurant News. The BK Café Coffee subscription, available only through the chain’s app, is valid for a small cup of coffee each day. The burger chain has also dropped the price of a small coffee to 50 cents. The Burger King subscription program comes on the heels of other chains like

“Participating Burger King restaurants across the U.S. have started offering monthly coffee subscriptions for a $5 fee.”

McDonald’s and Dunkin’ beefing up their morning beverage programs by offering upgraded espresso and cold-brew coffees.

McDonald's Stops Fighting Minimum Wage McDonald’s will no longer lobby against minimum-wage hikes at the federal, state, or local level, reported Fortune. In a letter to the National Restaurant Association, McDonald’s vice president of U.S. government relations Genna Gent said the fast food corporation wants to advance the minimum wage conversation, not impede it. “Ultimately, progress must come from all corners of our society,” Gent wrote. She added that wage “increases should be phased in and that all industries should be treated the same way.”

pers that are not interested in Whole Foods organic fare. It will also give the company more pickup and delivery points to meet customer demand, help it gain data about shoppers, and introduce its expanded lineup of food and personal care brands, according to analysts.

Unmanned Stores The Future For Japan Retailers

Japan’s Ministry of Economy, Trade, and Industry (METI) recently announced it will expand a successful pilot that involved three convenience stores adding RFID tags to products to improve itemlevel inventory monitoring, reported The Drum. The long-term ambition of the initiative is to enable “McDonald’s has issued a statestores to be entirely unstaffed, with RFID enabling customers ment that it will no longer lobby to pay for their basket of goods against minimum wage hikes.” automatically on leaving the store. In addition, shoppers who scan a product tag will be presented with McDonald’s is currently entangled in additional product information via digital a National Labor Relations Board lawsuit shelf signage. filed in 2014 by the Obama administraThe RFID solution will also allow retion, which alleges McDonald’s franchises tailers like Seven-Eleven Japan, Familypunished employees for participating in Mart, Lawson, and others to automatically Fight for $15 labor organizing. Unions scan the product tags, identify units that are backing the movement celebrated the fastapproaching their “best by” or “use by” food giant’s announcement. date, and credit the buyer with discounts on those items at the point of purchase. METI is targeting full roll out of the RFID tags across all stores in Japan by 2025. The project was launched in 2017 to address the Amazon is planning to open dozens of labor shortages and cost increases resulting its own grocery stores separate from Whole from Japan’s aging population and declinFoods in several major U.S. cities as it looks ing birthrate, as well as reducing the burden to broaden its reach in the food business, reon in-store staff created by supply chain isported CNN Business. The stores will offer sues from traceability and authenticity to different, cheaper products than Whole wastage and returns. Foods, and could help Amazon court shop-

Amazon Plans New Grocery Store Business

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retail sale of Canopy’s Tweed line of cannabis products in a store solely dedicated to the brand, reported ProactiveInvestors.com. The Atlanta-based convenience new recreational “RaceTrac chain RaceTrac recently launched marijuana outlet loits new franchise program, RT will franchise cated in London, Franchising Inc., reported Constores in cenOntario, will open in venience Store News. Its first move April. Currently, the tral Florida is to find experienced, qualified only place to buy that ring up candidates for franchise opportulegal recreational three times nities in central Florida. RaceTrac weed in Ontario is the NACS has been operating in central through a governFlorida for three decades and has average fuel ment-run online more than 170 locations in the reoutlet—the Ontario gallons.” gion. Cannabis Store—but The company is seeking franprivate brick-andchisees for three of those stores—one each mortar shops are set to open April 1. in Clermont, Mt. Dora and DeLand. RaceThe Alcohol and Gaming CommisTrac stated franchise owners will benefit sion of Ontario held a lottery in January from the brand's conveniently located to choose the entities that could apply for stores, comprehensive training program the initial 25 retail licenses, and Coucheand proven experience in marketing, opTard and Canopy said they have entered erations and merchandising. In addition, into a trademark license agreement with franchise owners will be able to take adone of the winners of that lottery to open vantage of the company's strong brand repthe store under Canopy's Tweed brand. utation and presence in the Central Florida The companies said the lottery winner will region. Each store currently rings up avercontinue to have “full ownership and conage fuel gallon sales nearly three times the trol over the London store.” NACS Industry Average.

RaceTrac To Franchise Stores

Couche-Tard Teams On Weed Store Canadian convenience store operator and Circle K parent company Alimentation Couche-Tard has signed a multi-year deal with Canopy Growth Corporation for the

Skip To Provide Frictionless Checkout To C-Store Group Mobile self-checkout service provider Skip recently announced that it has been selected by the SG900 share group to provide frictionless checkout for all their retail members. The SG900 includes convenience store chains Cruizers, Parker's, Kwik Chek, Coen, Fastrac, Loop, Sprint Foods, and Spinx Stores. Cruizers was the first of the group to go live with Skip in all 27 of their sites at the continued on page 82

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stores in Thailand, the result of a management initiative to phase out their use, reported Retail News Asia. The move encourages shoppers to refuse plastic bags or bring reusable bags to the store. • Burger King is testing out Impossible Whoppers, made with plant-based patties from Impossible Foods, in 59 locations in and around St. Louis, reported CNN Business. If all goes well, Burger King will roll out the Impossible Whopper nationally. • On April 11, Wawa celebrated its 55th anniversary in convenience retailing by offering customers any size free coffee, chain-wide, all day. The company said it gave away more than 2 million free cups of coffee to customers at its more than 840 stores across Pennsylvania, New Jersey, Delaware, Maryland, Virginia, Florida and Washington, DC. • Supermarket chain Kroger, which last year banned Visa credit cards in its Food Co. stores to save on processing fees paid to Visa, has expanded its ban to 250 Smith's Food & Drug Store locations in seven states, reported USA Today. Smith's has 142 supermarkets and 108 fuel centers in Utah, Nevada, New Mexico, Wyoming, Idaho, Montana and Arizona. • Target is experimenting with a new section at the front of the store to speed up shopping for grab-and-go snackers, reported Retail Wire. Target will pilot its new “Snack Bar” section in a few locations nationwide, which features Pizza Hut products, self-serve Icees, popcorn, beef jerky and the like. Customers pay at a self-service kiosk, circumventing the grocery line. • Starbucks plans to start trials for recyclable and compostable cup designs later this year in several markets, reported CNBC. Last year, the coffee giant pledged to phase out plastic straws from all of its stores by 2020. • Canopy Growth Corp. recently announced it would spend $150 million to set up a hemp facility in New York state, where hemp-derived CBD would be extracted and sold to consumers there. • Some U.S. grocery stores will soon roll out a new feature on their apps that will allow their shoppers to use their smartphones to scan a shelf and pinpoint continued on page 87


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beginning of April. Coen and Kwik Chek will follow shortly this Spring. For Skip, this is the first agreement of its kind for an entire share group to sign with all retail members at once. Skip said it has optimized its processes to enable faster implementations, from onboarding to training to marketing, with minimal time and effort for retailers.

Dollar Store Produce Quality Matches Traditional Chains A new University of Nevada, Las Vegas (UNLV) study has found that the quality of fruits and vegetables at dollar continued next page

“A new study has found that the quality of fruits and veggies at dollar stores is as good as grocery store produce.”

CENTRAL FLORIDA FOA HOLDS SUCCESSFUL CHARITY GOLF TOURNAMENT AND TRADE SHOW The Central Florida FOA is proud is announce that it’s recent Charity Golf Tournament and Trade Show were resounding successes. The group’s 7th Annual Charity Golf Tournament was held on April 9 at the Orange County National Golf Course in Winter Garden, Florida and benefitted Swim Across America. The event raised $20,711 for Swim Across America,

Pictures left to right: Jeff Davis—Central Florida FOA Board member; Leslie Dempse—Event Organizer/Administrative Assistant, Central Florida FOA; Harvi Thaper—Treasurer, Central Florida FOA; Art Farooqi—Central Florida FOA Board member; Fari Ishani—Vice President, Central Florida FOA; Anil Ratnani; Chintan Patel—Central Florida FOA Board member; Michael Jorgensen, President Central Florida FOA and Executive Vice Chairman NCASEF; Stephen Warris—Central Florida FOA Board member; Frankie Wight—Central Florida FOA Board member.

Pictured left to right: Stephen Warris—Central Florida FOA Board member; Harvi Thaper—Treasurer, Central Florida FOA; Rob Butcher—CEO and President Swim Across America; Michael Jorgenson—President Central Florida FOA and Executive Vice Chairman NCASEF; Fari Ishani—Vice President, Central Florida FOA; Leslie Dempsey—Event Organizer/Administrative Assistant, Central Florida FOA; Jim Sirignano— Swim Across America Tampa Bay; Roger Van Sluis—Central Florida FOA Board member.

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which is dedicated to raising money, awareness, prevention and treatment for cancer research through swimming-related events. All funds raised for Swim Across America benefit the regional hospitals where the funds are raised, so the funds raised by the Central Florida FOA will go directly to the Moffitt Cancer Center in Tampa. The 7th Annual Central Florida FOA Trade Show was held on April 10, 2019 at the DoubleTree by Hilton Orlando at SeaWorld. It was a huge success with 90 of vendors participating. The Central Florida FOA thanks its franchisees and especially its vendor community for making both events very memorable and successful.


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stores is just as good as regular grocery store produce. The findings are especially good news for the 17.3 million people nationwide who live in low-income areas more than one mile from grocery stores— areas referred to as food deserts by the U.S. Department of Agriculture, the UNLV researchers said. UNLV’s study compared the color, cleanliness, freshness, and firmness of fruits and vegetables in 14 dollar-discount stores to 40 traditional food outlets across the Las Vegas metro area. While there was slightly less variety of produce at dollar stores (for example, none of the dollar stores carried pears), there was no significant difference in quality, the study reveals. The study also found that 84 percent of produce and 89.5 percent of non-produce items were significantly less expensive at dollar stores.

Retailers Alerted About Contactless Skimmers The U.S. Secret Service’s Philadelphia Field Office has alerted retailers to be on the lookout for a new skimming technique to steal payment card information at gas pumps, reported NACS Online. Contactless enabled gasoline dispensers use near field communication (NFC) to allow the wireless exchange of payment data between some smartphone applications or contactless

credit cards and the payment terminal. Per the Secret Service, fraudsters are now using a sophisticated technique that involves a cellular relay skimmer located in the contactless NFC reader on the outside of a gas pump. When customers make a contactless payment, this skimming device picks up the contactless card primary account number over-the-air before it reaches the point of interaction (payment terminal), which means that it will even defeat point-to-point encryption. Since this skimmer contains a cellular relay, it can transmit stolen card data wirelessly via text message. Consequently, fraudsters can receive real-time transmissions of the stolen card data from anywhere in the world. The Secret Service notes that retailers should be aware that a small external cellular antenna may also be attached to this device. Any questions relating to this alert can be directed to the GIOC at gioc@usss.dhs.gov or 202-406-6009.

Delek U.S. Ends 7-Eleven Licensing Agreement Delek U.S. Holdings Inc. and SEI have terminated a licensing agreement that “will require the removal of 7-Eleven branding on a store-by-store basis by Dec. 31, 2021,” reported CSP Daily News. Delek U.S. reported contract termination and modification charges of $6.2 million in its fourth-quarter and full-year 2018 earnings report. The refiner-retailer is launching a new convenience-store brand, DK, to replace that branding and for new stores, according to the article. Delek’s c-store retail business is the largest 7-Eleven licensee in the U.S. and operates

“When customers make a contactless payment, this skimming device picks up the contactless card primary account number over-the-air before it reaches the point of interaction.”

approximately 280 locations in central and west Texas and New Mexico. Delek U.S. opened a new c-store in Midland, Texas, on February 26, the first under the DK brand.

Wawa To Open First Miami-Dade Stores This Spring Wawa plans to hire 150 workers as it prepares to open its first stores in MiamiDade this spring, reported the Miami New Times. The popular Pennsylvania-based chain of convenience stores aims to break into the Miami market with three area stores. Grand opening dates have not yet been set. Wawa hosted two job fairs on March 5 for customer service associates, supervisors, and other positions. Sessions were held at the Courtyard by Marriott Coral Gables and at the Candlewood Suites Miami Executive Airport. The company said it has already begun hiring for management positions and will continue in anticipation of future store openings during the year. Wawa employees get a host of benefits including employee stock ownership plans; medical, dental, and vision plans; a 401(k) plan; and more. This year, Wawa was listed as one of the Best Employers for Diversity by Forbes. Wawa was also designated as a 2018 Best Place to Work for LGBTQ Equality by the Human Rights Campaign Foundation. AVANTI M A R C H | A P R I L 2 0 1 9

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7REWARDS LOYALTY PROGRAM HONORED Retail analytics company CB4 re- EXCLUSIVE 7REWARDS cently announced the winners of its first OFFER FOR U.S. MILITARY annual C-Store Loyalty Awards, and SEI’s VETERANS 7Rewards received the “Most Enticing SEI recently announced that it is workPrizes to Reward Loyalists” honor. CB4 ing with Veterans Advantage to offer exclunoted that 7Rewards started as a buy six sive benefits to the organization's members hot beverages/get the 7th free program, on the 7-Eleven app through the 7Rewards but expanded it in 2018 to all bevcustomer loyalty program. Founded erages and incorporated a in 2000, Veterans Advantage is points program for pura public benefit corporation “7Rewards chases including select that creates exclusive benhas gone from 9 snacks, drinks, and efits and discounts for acmillion members to other items. tive duty, retired, veteran, over 12 million in In order to entice guard, reservists and famthe short time since more shoppers to sign ily members. Here's how its launch.” up, in March 2018 SEI Veterans Advantage memgave 7 lucky registrants one bers can access 7-Eleven savings million points each, and benefits: with entries being • They can visit vetermade each time ansadvantage.com to customers scanned link their account to their 7Rewards app 7-Eleven and take adduring a purchase. vantage of offers from Additionally, SEI awarded a treasure both programs. trove of unusual, buzz-worthy prizes • Receive a welcome offer of 800 points such as a media room, trips to sporting when registering for the 7Rewards cusevents and racing weekends, tickets to tomer loyalty program. live music events, and even a trip for two • VetRewards level members earn 1,000 to Paris. 7Rewards points for every $10 spent in Since enhancing their 7Rewards pro- any participating 7-Eleven store by scangram, SEI has also made the following ning the 7-Eleven app upon checkout. updates: 80 percent of purchases are now • On Memorial Day, July 4th, and Veteligible for points; customized app expe- eran's Day, they can claim a free coffee riences are now based on browsing and or Big Gulp drink by scanning the 7purchase history; and new digital in-app Eleven app upon checkout. coupons. Proving that enticing prizes, attention-grabbing go a long way with cus- STORES ‘TEA’ UP WITH tomers, 7Rewards has gone from 9 NEW CHAI LATTE million members to over 12 million in SEI is spicing up its hot beverage the short time since its launch. lineup with a rich, new tea-based Chai

Tea Latte. Subtly “Chai products flavored with a have grown sweet and spicy almost 40 blend of carpercent over damom, cinnathe past four mon, ginger and cloves, the new hot years.” beverage combines black tea, milk and sweetener to create the traditional warm beverage from India. 7-Eleven’s version of the creamy spiced tea was benchmarked against national brands and coffeehouses, and compared very favorably against those well-known brands. Chai and products flavored with similar spice blends have been growing in popularity and have experienced a dramatic uptick recently—almost 40 percent growth over the past four years. It is particularly popular among women, millennials, Gen Z and Hispanic consumers, and doubledigit increases are expected to continue over the next few years.

7-ELEVEN AUSTRALIA WINS NACS RETAIL TECHNOLOGY AWARD In spite of its employment troubles, 7-Eleven Australia is this year’s recipient of the inaugural NACS Asian Convenience Retail Technology Award. The continued on page 86

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award, sponsored by enterprise management software developer PDI, recognizes the retailer’s innovative 7-Eleven Fuel App. 7-Eleven Australia accepted the award on March 7 at the 2019 NACS Convenience Summit Asia in Shanghai, China. More than 1.6 million Australians have downloaded the 7Eleven Fuel App, which allows them to lock in the best local fuel price at one of the 520-plus 7-Eleven fuel stores throughout the country. App users also have access to exclusive and personalized deals on in-store merchandise at any of 7-Eleven’s 680 stores.

new spicy snacks was created from a partnership between 7-Eleven and Taco Bell: Taco Bell’s Tortilla Chips. The spicy chips mimic Taco Bell’s Diablo sauce, which contains hot peppers and lime. 7-Eleven debuted these chips in May 2018 and sold more than $2 million within seven months, Stegman told CSP Daily News.

‘MARCH MADNESS’ AR PROMO

SEI launched an augmented reality SPICY FLAVORS THE (AR) experience FOCUS FOR 2019 during the NCAA SEI has its sights on spicy flavor inBasketball Tournanovation for snacks this year, reported ment to remind basCSP Daily News. SEI category manager ketball fans where Emily Stegman told the trade publicathey can quench tion that spicy chips will especially retheir thirst throughmain a core focus for 7-Eleven in 2019. out March Madness, reported Next RealChips have consistently been the top ity News. Available until April 10 in the performer in the salty-snack sector, in- 7-Eleven app, the pair of augmented realcreasing 2.4 percent in the convenience ity experiences served to promote Bodchannel from last year, according to yArmor, the official sports drink of the Chicago-based IRI. NCAA Championships. Stegman said chips are The first AR experiher focus because when a “Taco Bell’s ence leveraged the frontTortilla Chips decategory is doing as well facing camera. First, the buted in May 2018 as chips, keeping it at effect placed a virtual botand have sold more that pace is crucial. One tle of BodyArmor within than $2 million of the most promising the camera view and, within seven when users open their months.” mouths, the bottle turns upwards to deliver some imaginary refreshment. Next, the experience turned users into basketball players, inserting the real-time camera feed into a basketball court scene, complete with a virtual bas86

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ketball player's body. The second experience took over the rear camera and anchored a miniature basketball game in the user's environment. Following the familiar three-point shooting contest format, players could compete with an AI opponent to see who can reach 10 hoops made first, with three rounds of escalating difficulty available per game. According to the article, SEI remains committed to augmented reality experiences—built with Zappar's Zapworks Studio platform—as a means to attract customers. Previously, 7-Eleven published a football-centric AR experience at the beginning of the 2018 football season.

PIZZA DEALS ON NATIONAL PI DAY 7-Eleven stores offered deep discounts on whole and sliced pizza to celebrate National Pi Day, the informal math holiday that falls on March 14, or 3/14 (the first three digits of the mathematical constant with infinite decimal points are 3.14). Customers who wanted pizza brought straight to their door were able to place an order through the 7NOW delivery app. All day long on the delivery app, whole pizzas were available for a discounted price of $3.14. Also, continued next page


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items that specifically meet your dietary needs—such as lactose free, low-calorie, or gluten-free, reported USA Today.The feature was developed by Swiss technology company Scandit and allows retailers to decide what types of product information they want to offer. • Walmart plans to reduce the amount of plastic it uses in its in-house brand's products and packaging, reported Packaging World. The company will target a minimum of 20 percent post-consumer recycled content and strive for 100 percent recyclable, reusable or industrially compostable packaging by 2025. • Package delivery firm UPS is preparing to test a U.S. service that dispatches nurses to vaccinate adults in their homes, as the company and its healthcare clients work to fend off cost pressures and competitive threats from Amazon.com, reported Fox Business. • Pennsylvania-based convenience store chain Sheetz recently completed the installation of eight Tesla Supercharger stations at one of its locations, reported the Altoona Mirror. Sheetz currently has 21 store locations that offer Tesla Superchargers. • Supermarket chain Kroger and robotics company Nuro recently announced the launch of their autonomous grocery delivery service in Houston. The service will be available through two Houston Kroger stores, reaching customers residing in four local zip codes. • Family Dollar will close 390 stores this year and make big changes to the stores it is keeping open as the discount chain seeks a turnaround, reported CNN Business. • GasBuddy has analyzed gas price data from the period of January to March 2019 and found that Monday offers the lowest average gas price in 30 states, making it the best day to fill-up. The study also found that Saturday is the worst day to buy gas in 16 states, and Friday has the most expensive average price of any other day of the week. • Pizza chain Domino's recently opened its 16,000th store and has grown by nearly 50 percent over the past five years, reported CNN Business. It still trails Pizza Hut, however, which has

customers who visited 7-Eleven stores won big on National Pi Day when they scanned their 7-Eleven app at checkout—7Rewards loyalty program members could purchase slices for just 50 cents in stores. On top of that, registered 7Rewards members who purchased a whole pizza pie in store received 314 7Rewards bonus points when they scanned the 7-Eleven app at checkout.

TEXAS STORES OFFER ‘DELI DOLLAR DAYS’ Participating Texas 7-Eleven stores offered dollar deals on select freshly-prepared deli sandwiches March 18-22. The limited-time offer gave customers an opportunity to try the new sandwich recipes, now made on artisan breads baked especially for 7-Eleven stores by the award-winning Village Baking Company in Dallas. The sandwiches are freshly made and delivered from a local USDA-inspected commercial kitchen. The special sandwich offer was only available to registered members of the 7Rewards loyalty program. Hungry customers were able to up their lunch game for just $1 with an Italian sub, a bistro-style three-meat deli sandwich, traditional favorites such as chicken, tuna or egg salad, a better-for-you 7-Select GO!Smart

turkey sandwich or kid-pleasing PB&J. Sandwich selection varied by store, and customers were limited to one discounted sandwich per day.

INCOMM NAMED 2018 VENDOR OF THE YEAR SEI has named payments technology company InComm its 2018 Vendor of the Year. This is the second time in the past three years that SEI has recognized InComm for its innovative products and services, which deliver a robust payment experience to 7-Eleven customers. InComm has supported 7-Eleven's prepaid program for more than 15 years. In 2018, the companies launched auto-replenishment, a process to help stores maintain their inventory by automatically shipping cards based on sales volume. In addition, the company implemented the host-to-host (H2H) payment solutions, an update and integration of the stores' POS system, enabling it to “InComm support InComm's bar- has supported code scan 7-Eleven’s activation, as well as PINprepaid card on-receipt program for products and more than real-time replenishment 15 years.” for wireless products. This continuing collaboration has helped 7-Eleven achieve significant cost savings and sales growth in 2018.

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Wine Cocktail-Inspired Ritas Spritz Ritas Spritz are wine cocktail-inspired FMB alcoholic beverages delivering fizzy fruit flavor and fun in every can. At 6 percent ABV, this liquid is more sessionable than traditional Ritas, and more premium with 16 ounce singles and 4-pack 12 ounce slim cans. Second, while still sweet, there is less sugar per serving than a Lime-aRita. Finally, inspired by the taste profile of sangrias and Rosè cocktails, this product welcomes new consumers Ritas Spritz, available in three on-trend flavors, brings new into the Ritas family who do not like the consumers to the Ritas family. taste of a margarita cocktail. Available in White Peach Rosè, Pear Orange Sangria, and Strawberry Blueberry Sangria, these on-trend flavors are ready to add growth to your bottom line. Sangria is the top 4 flavor in cocktails with a 15 percent increase in menu penetration. Rosé flavored beverages grew $69M incremental sales (+27 percent) vs last year. Peach flavored beverages grew $14M incremental sales (+5 percent) vs last year. Ritas Spritz will be supported with national and local media investments. Television, online video, social, and out of home support will be out in market all summer long, as well as in store assets to support the new Ritas Spritz.

pouch with the “Sealed Fresh” guarantee, Swisher Sweets Sticky Sweets is ready for shipment to stores nationwide. It is offered in “2 for 99¢,” “Save on 2,” and “2 for $1.49” options. This product is also available in a “2 for $1.29” option for selected markets. For more information or to place an order, contact your Swisher representative at 1-800-874-9720 or visit https://swisher.com/cigars-cigarillos/.

Enjoyable Tastes Added To Swisher Sweets Mini Cigarillos Swisher Sweets flavorsome Mini Cigarillo lineup now includes the tasty blends of Sticky Sweets and Green Sweets. The Mini Cigarillos offer the same great taste and freshness of Swisher Sweets Cigarillos, yet in smaller packages, perfect for a quick smoke. Sticky Sweets have a refreshing blend of caramel and peach, and Green Sweets are Sticky Sweets and Green Sweets are now created using naturally mild Candela leaf part of the Swisher that offers a distinctive green color, pleasant Mini Cigarillo lineup. aroma and burns slowly for an easy, sweet smoke. Both flavors join the Swisher Sweets Mini Cigarillos line that includes Original, Grape, Blueberry, Island Bash, Tropical Storm and continued on page 90

LOACKER MATCHA CRÈME WAFER IN 7-ELEVEN FIRST

Encore Edition Sticky Sweets Back By Popular Demand Swisher Sweets Sticky Sweets, a proven customer favorite, are now available as an Encore Edition Cigarillo. These cigarillos provide a delicious blend of caramel fused with juicy peach Customer favorite Swisher for an unbeatably satisfying Sticky Sweets are now taste and equally enticing aroma. available as an Encore Available in a resealable 2-count Edition Cigarillo.

Loacker has created a new crispy treat featuring cream of unsurpassable goodness— Matcha Green Tea Crème Wafer. Available exclusively in 7-Eleven stores from May To June 2019, Loacker Matcha Green Tea Crème Wafer contains a light layer of Matcha cream filling, a good 71 percent of the product, enclosed between two light and crispy wafer layers, delivering a refined and bold taste. Matcha is a high-quality ingredient that doesn't contain any additional aromas, colorings (it's naturally Loacker Matcha Green Tea Crème Wafer will be a 7-Eleven exclusive green), preservatives, or from May through June 2019. hydrogenated fats. And as if that weren't enough, the packaging alone is a titillating and alluring invitation to take a bite. Loacker Matcha Green Tea Crème Wafer is available in a 1.32 ounce single serve bar. AVANTI M A R C H | A P R I L 2 0 1 9

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Diamonds. All of the Mini Cigarillos are available in a resealable 3count foil pouch with the “Sealed Fresh” guarantee. For more information or to place an order, contact your Swisher representative at 1-800-874-9720 or visit https://swisher.com/ cigars-cigarillos.

Sour Patch Kids Heads—Two Flavors In Every Piece Sour Patch Kids Heads are here and shoppers are going to go totally head over heels for the latest innovation from everybody’s favorite sour then sweet candy. Featuring two fun flaNew Sour Patch Kids Heads offer vors in every big piece, they’re going to be doutwo fun flavors in ble trouble, and double exciting for shoppers. every piece. Sour Patch Kids Heads come in three taste combinations in every bag: Blue Raspberry-Pink Lemonade, Redberry-Pineapple, and Orange-Peach. One flavor then another, sour then sweet, these fun flipping flavors will leave candy connoisseurs’ heads spinning and have them heading back for more. Sour Patch Kids Heads will be available in a convenient 5 ounce peg bag.

Get your orders in now. With double the flavors for double the excitement, get ready for more shoppers.

Vita Coco Sales Soar In 7-Eleven Vita Coco Coconut Water sales in 7Eleven increased by 35 percent year over year after the 2018 launch of Vita Coco PET (Slim Bottle). Drinking on-thego (50 percent) or with a workout (34 percent) are the top occasions for drinking Vita Coco 500 ml. Both of these occasions favor a sleeker and more Vita Coco Coconut Water sales in durable pack format. While its Tetra Pak 7-Eleven increased by 35 percent last year after the PET bottle launch. is known by their loyal drinkers, Vita Coco’s PET (Slim Bottle) is a more familiar, cup-holder friendly pack that can bring in new consumers. New Pressed Coconut flavor is Vita Coco’s #1 velocity flavor in Convenience, less than one year from launch. In fact, the Pressed Coconut flavor is bringing in new consumers: 20 percent new to Coconut Water category; 78 percent of volume incremental to the Vita Coco brand.

MILLERCOORS UNVEILS THREE NEW BREWS MillerCoors recently introduced three new products to its lineup to help increase your alcoholic beverage sales: • Steel Reserve Alloy Series Flavored Malt Beverage—Spiked Tropic Storm: New malt beverage flavor featuring citrus flavors that are carried through by a contrasting sweetness and balanced by a low-moderate, fruit-appropriate sour taste. Spiked Tropic Storm is available in a 24 ounce can and is 8% ABV. SLIN 100454 • Sol Chelada Cerveza Mexican Import Beer—A flavorful and refreshing balance of Sol beer with tomato, lime and spice flavors for a crisp and savory finish. Discover the Sol Chelada and experience Mexico's favorite flavors. Single 24 ounce can, 3.5% ABV. SLIN 101503

Three new Miller brews: Spiked Tropic Storm, Sol Chelada Cerveza and Peroni Nastro Azzurro Lager. 90

• Peroni Nastro Azzurro Lager Beer—Crisp and refreshing lager with a light body and a balanced aroma, Peroni Nastro Azzurro is an international-style Pilsner that is still made in Italy using only the highest-quality ingredients and a meticulous brewing process. 6 Pack, 11.2 fl. oz. bottles, 5.1% ABV. SLIN 100908

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Introducing Teton, 7-Eleven Private Brand Cigarettes Teton, the first private brand tobacco offering for 7-Eleven, will launch nationwide on May 20, 2019. The brand will be sold exclusively in 7-Eleven stores. Teton will deliver an approximately 23 percent margin—double the average margin from industry leading brands. Teton No. 18 will compete with super premium brands and is available in King Size Yellow, Blue and Green Menthol. Teton No. 6 will compete with premium brands and is available in 100’s Red, Gold, Green Menthol and Black Menthol. Both Teton No. 18 and No. 6 are high quality cigarettes crafted by master blenders and manufactured by Wind River Tobacco Company in Wilson, North Carolina. continued on page 92


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Teton will be supported with onthat lasts for up to one hour, doesn’t pack and insert coupons, as well as require batteries and never needs to in-store intercepts to generate be charged. ZYN has been built to adult smoker awareness and trial. grow in a fast-changing, regulated The brand also will be supported landscape and is available in six adult 7-Eleven private label cigarettes Teton will deliver a 23 percent margin— with incentives to accept, promote, flavors and two satisfying strengths in a double the average margin from industry leading brands. sell and keep in stock. See their ad child-resistant can. in this issue of Avanti (page 54) and look for retail mailings for more The new nicotine pouch category—led by ZYN—continues to details on the incentives and benefits of stocking Teton. The Teton emerge and is rapidly becoming a valued source of growth. Swedish brand launch represents the first true partnership for 7-Eleven in the Match has a company vision of: “A World Without Cigarettes” and tobacco category. ZYN will continue to be a large contributor in bringing that vision to fruition. ZYN is now available nationwide. Contact your Swedish Match representative or call 800-367-3677 for additional details. For more information, visit www.ZYN.com.

BLK Wine Tip Cigarillos Offer Pleasing Wine Taste

BLK Wine Tip Cigarillos, a Swisher brand, provide a wine taste and aroma unlike any other cigar with its fusion of hand selected air-and-fire cured tobaccos that deliver a unique experience. BLK combines high quality and convenience in unforgettable blends, from the easy draw of the signature black tip to the intense aroma and smooth taste BLK Wine Tip Cigarillos that keeps customers coming back for keep customers coming more. back for more. BLK Wine Cigarillos join the line up of blends including Smooth, Grape, Cherry and Berry and come in a resealable 2-count pouch with the “Sealed Fresh” guarantee. Available for shipment to stores nationwide, it is offered in “2 for 99¢,” “Save on 2” and “2 for $1.49” options and single sale impulse displays. To place an order, contact your Swisher representative at 1800-874-9720. For more information, visit https://swisher.com/cigars-cigarillos/.

Swedish Match ZYN Tobacco-Free Nicotine Pouches ZYN Tobacco-Free Nicotine Pouches have revolutionized nicotine and created an entirely new category—the nicotine pouch category. ZYN introduces consumers to the idea of a convenient, tobacco-free nicotine pouch 92

ZYN Tobacco-Free Nicotine Pouches lead the rapidly growing nicotine pouch category.

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Smirnoff Ice Red, White & Berry is Back Smirnoff Red, White & Berry—the much loved summer seasonal flavor—is back. Now available in 6pk bottles, 16oz single cans, 24oz single bottles and 12pk cans. A delicious Popular summer seasonal flavor Smirnoff Red, White blend of cherry, citrus & blue & Berry is back. raspberry flavors, Smirnoff Red, White & Berry was the #1 FMB innovation. Vibrant packaging and liquid celebrates America’s summer occasions. Available now through August as an SSI.

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more than 18,000 locations. • Startup company Quadrobot will soon begin testing 30 of its U1 electrically powered, self-driving mail delivery trucks at a suburban Detroit industrial park, reported the Detroit Free Press. At least the first couple of the U1s will be driver-operated as Quadrobot gathers data about how they’re used. • Good Times Burgers & Frozen Custard restaurant in Denver, Colorado is now testing artificial intelligence to take drive-thru breakfast orders. Developed by Valyant AI, the voice-based assistants allow businesses to streamline the customer experience, improve employee efficiency and help address labor shortages, especially during peak times. • The ATM Industry Association recently confirmed its support for new efforts to ban cashless retail businesses in New York City, Washington, DC, and Philadelphia, PA. The motivation for all such efforts has focused on the potential disenfranchisement of poor and unbanked consumers. • Restaurant industry sales are forecast to reach $863 continued next page


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billion in 2019, according to National Restaurant Association’s “2019 State of the Restaurant Industry”report. The study projects that 1.6 million new restaurant jobs will be added by 2029. • Starbucks recently opened its biggest Roastery in the world in Tokyo, reported CNN Business. Roasteries are large, lavish Starbucks stores, and the 32,000-square-foot Tokyo Roastery overtakes the one in Shanghai as the biggest Starbucks on the planet. The company has just three others, in Seattle, Milan and New York City. • Two Pennsylvania senators recently unveiled a new bill that would legalize recreational marijuana, reported KDKA-TV. The bill would allow anyone 21 and older to use recreational marijuana in Pennsylvania, and each household could also grow up to six marijuana plants at a time for personal use. • As part of an ongoing effort to modernize and enhance the pizza delivery experience, Pizza Hut said it has teamed with FedEx to explore the use of the FedEx SameDay Bot, a new autonomous delivery device aimed to “revolutionize local delivery.

Advertiser’s Index

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

Anheuser Busch............................................10 Aon Risk Services .........................................27 Arizona.........................................................74 Blu Ecigs .................................................36-37 Blue Bunny...................................................19 Bug Juice......................................................33 Chobani........................................................71 Coca-Cola..............................................cover 2 Cookies United.............................................45 Dean Foods ..................................................34 Diageo Guinness..........................................17 Keurig Dr Pepper .........................................68 Foreign Candy..............................................67 Frankford Candy...........................................77 Fiji/Wonderful ...........................................8-9 Glanbia.........................................................52 Hormel...........................................................4 JUUL................................................cover 4, 57 Kellogg's.......................................................23 Kraft .............................................................91

Loacker.........................................................81 Logic.......................................................48-49 Mars ............................................................39 Maruchan.....................................................41 McLane ........................................................46 Mondelez.......................................................5 Nestle Professional.......................................53 Nestle Waters...............................................79 Pepsi Quaker................................6,7,32,58,63 Perfetti Van Mele .........................................50 Sapporo/Anchor Steam ...............................88 Seneca....................................................28-29 Simply Orange........................................12-13 Swedish Match.............................................15 Swisher ............................................cover 3, 3 Tell Industries...............................................65 Teton Cigarettes...........................................54 Vita Coco ......................................................84 Whitewave Foods ........................................30 Windsor........................................................42 AVANTI M A R C H | A P R I L 2 0 1 9

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foa events Midwest FOA Trade Show Detroit Marriott Troy Troy, Michigan May 14, 2019 Phone: 847-971-9457

Southern California FOA Annual Trade Show Pasadena Convention Center Pasadena, California May 15, 2019 Phone: 818-203-2527

South Texas FOA Trade Show Hyatt Regency Hill Country Resort & Spa San Antonio, Texas May 23, 2019 Phone: 702-249-3301

South Texas FOA Golf Tournament Hyatt Regency Hill Country Resort & Spa San Antonio, Texas May 24, 2019 Phone: 702-249-3301

San Diego FOA Golf Tournament Riverwalk Golf Club San Diego, California June 5, 2019 Phone: 619-733-5917

Utah FOA Trade Show Airport Hilton Doubletree Hotel Salt Lake City, Utah June 11, 2019 Phone: 801-403-1118

Utah FOA Golf Outing River Oaks Golf Course Sandy, Utah June 12, 2019 Phone: 801-403-1118

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Southern California FOA Annual Charity Golf Tournament

NCASEF

National Coalition Affiliate Meeting Ceasar's Atlantic City Atlantic City, New Jersey October 21-22, 2019

Industry Hills Golf Club at Pacific Palms Resort City of Industry, California June 12, 2019 Phone: 818-203-2527

Board meetings

7-Eleven FOAC Charity Golf Outing

National Coalition Board of Directors Meeting

Ceasars Atlantic City Atlantic City, New Jersey October 23-24, 2019

The Westin Alexandria Alexandria, Virginia May 17-18, 2019

NCASEF 44th Annual Convention & Trade Show

National Coalition Board of Directors Meeting

Long Beach Convention Center Renaissance Long Beach Hotel The Westin Long Beach Long Beach, California August 5-8, 2019

Makray Memorial Golf Club Barrington, Illinois June 17, 2019 Phone: 847-343-7777

7-Eleven FOAC Annual Trade Show Schaumburg Convention Center Schaumburg, Illinois June 18, 2019 Phone: 847-343-7777

FOA Of Greater LA Golf Invitational Black Gold Golf Club Yorba Linda, California June 19, 2019 Phone: 909-822-4122

Midwest FOA & Alliance FOA Trade Show

Renaissance Long Beach Hotel Long Beach, California August 4-5, 2019

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

San Diego FOA Day At The Races

National Coalition Board of Directors Meeting

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

Midwest FOA Holiday Show

Rosemont Convention Center Rosemont, Illinois June 26, 2019 Phone: 847-971-9457

Del Mar Thoroughbred Club Del Mar, California August 23, 2019 Phone: 619-733-5917

7-Eleven FOAC Annual Picnic Cook County Forest Preserve, Grove 29 Cook County, Illinois July 27, 2019 Phone: 847-343-7777

San Diego FOA Vendor Appreciation Day

San Diego FOA Christmas Party

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

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

Midwest FOA & Alliance FOA Golf Outing

7-Eleven FOAC Trade Show & Holiday Party

St. Andrews Golf & Country Club West Chicago, Illinois August 21, 2019 Phone: 847-971-9457

Holiday Inn Skokie Skokie, Illinois November 14, 2019 Phone: 847-343-7777

AVA N T I M A R C H | A P R I L 2 0 1 9

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


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