THE VOIC E OF 7-ELEVEN FRANC H ISEES
November/December 2020
Contents
NCASEF Holds Highly Successful
VIRTUAL TRADE SHOW!
25 The Light At The End Of The Tunnel By Jay Singh, NCASEF Chairman
By Ajinder Handa, NCASEF Vice Chairman, President, Greater Northwest FOA
41 LONs And Notices Of Material Breaches: What You Should Do If One Is Served By Arnold J. Hauptman, Esq., General Counsel, United Franchise Owners of Long Island and New York
45 Slip, Trip, And Fall Prevention 2020—Customers And Employees By John Harp, CSP, ARM— Risk Engineering Consultant, Mitsui Sumitomo Insurance Group
52 A 30-Year Franchisee Is Being Driven Out Of Business
Join Us For The NCASEF’s 2nd Virtual Trade Show February 9-10 | Noon to 8 pm CST Watch for details at www.NCASEF.com
FEATURES 16 San Diego’s Annual Charity Golf Tournament 49 Finding Joy In 2020 By Bob Elkins, Franchise, Former President, San Diego FOA
67 Can U.S. Employers Require Employees To Receive COVID-19 Vaccinations? By Peter Gillespie and Elizabeth Rice, Laner Muchin, Ltd.
Talk With Other Franchisees On Free Telegram App Page 10
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39 Lessons, Contingency Plans, And Adjustments
Page 19
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By Eric H. Karp, Esq., NCASEF General Counsel
TM
33 Sign This, Or Do This—Or Else!
10 Franchise Agreement Puts Store Owners In Peril As Minimum Wages Increase
PA R
By Michael Jorgensen, NCASEF Executive Vice Chairman
Dispatch at NCASEF.com
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29 Paper Shrink: What It Is And How It Burns Franchisees
Member News...............8
Bits & Pieces..............12
Join Your Local FOA............51 Legislative Update..................22 SEI News.....70 Vendor Focus........75 FOA Meetings Calendar...............78 Franchisee Calendar.........................78
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; on-line, 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.
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NATIONAL COALITION OF ASSOCIATIONS OF 7-ELEVEN FRANCHISEES NATIONAL OFFICERS & STAFF
7-Eleven Named Hot Beverages Innovator Of The Year 7-Eleven Inc. has scored its second win as Hot Beverages Innovator of the Year in Convenience Store News’ Foodservice Innovators Awards, having first won this category in 2018, reported CSNews Online. SEI has also previously taken home honors as Cold & Frozen Beverages Innovator of the Year in 2014 and 2019, and for Best Limited-Time Offer in 2016. is spring, 7-Eleven launched a new dispensed beverage platform in its Long Island stores that allows customers to be their own barista. Touchscreen machines pour both custom hot and cold beverages to order. e platform includes espresso machines that can make lattes, espressos, cappuccinos, Americanos and more hot beverages that are customizable by size, by dark or medium espresso roasts, and with either whole or skim milk. At the same time, bean-to-cup brewers allow coffee fans to select the size, temperature and intensity of their coffee, with beans ground fresh for each cup. Judges also cited 7-Eleven’s beverage innovation in
the areas of new so-heat urn systems and nitro-infused, dra cold-brew coffee and tea.
Jatinder Singh NATIONAL CHAIRMAN
702-249-3301 • jays@ncasef.com
Michael Jorgensen
Seven & i To Sell U.S. Gas Stations SEI parent company Seven & i Holdings is planning to sell as many as 300 gas stations following its deal to acquire Marathon Petroleum Corp’s nearly 3,900 Speedway stores for $21 billion, reported Reuters, citing people familiar with the matter. Seven & i is working with investment bank Nomura Holdings Inc to solicit buyers. Seven & i said in August it expected net proceeds of $1 billion, without disclosing how many stations it would sell. TDR Capital, the private equity firm that owns British petrol station operator EG Group and lost out to Seven & i in the race for Speedway, plans to make an offer for the gas stations, according to one of the sources. Seven & i inked a deal in Au-
“Seven & i plans to sell as many as 300 gas stations following its deal to acquire Marathon Petroleum Corp’s nearly 3,900 Speedway stores.” continued on page 12
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
Shawn Howard OFFICE MANAGER
210-971-9211 • shawnh@ncasef.com
Eric H. Karp, Esq. GENERAL COUNSEL
617-423-7250 • ekarp@wkwrlaw.com
John Riggio MEETING/TRADE SHOW COORDINATOR
262-394-5518 • johnr@jrplanners.com
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. 8
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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 November/December 2020 © 2020 National Coalition of Associations of 7-Eleven Franchisees Avanti Magazine is the registered trademark of The National Coalition of Associations of 7-Eleven Franchisees.
NCASEF
HIGHLIGHTS
Your National Coalition is Committed to Franchisee Interests
Franchise Agreement Puts Store Owners In Peril As Minimum Wages Increase While small businesses in 25 states and the District of Columbia are bracing for increases to the minimum wage in the new year, 7-Eleven franchise owners face unique danger. Because of the terms of their Franchise Agreement, 7Eleven operators cannot simply raise retail prices to make up this difference. Many franchisees will be forced out of business as a result of crushing labor costs. “Payroll is every franchisee’s greatest expense and can range from 45 to 50 percent of their share of the gross profit. Increasing the minimum wage will hit them directly on the bottom line,” said Eric H. Karp, NCASEF General Counsel. “The 7-Eleven Franchise Agreement has a provision in it which unfairly favors the franchisor. For each gross-profit dollar a franchisee earns, as much as 59 cents must be paid back to the franchisor. This Gross Profit Split provision makes it virtually impossible for 7Eleven owners to make up the difference.”
“Payroll is every franchisee’s greatest expense and can range from 45 to 50 percent of their share of the gross profit. Increasing the minimum wage will hit them directly on the bottom line.”
The National Coalition is deeply sympathetic to the plight of their customers, many of whom struggle to support their families on minimum wage jobs, but Karp notes, “It is the responsibility of 7-Eleven to address the combined impact higher wages and its unique economic model has on franchisees, who themselves work hard and play by the rules.” According to the U.S. Department of Labor, five states have no minimum wage, and another 16 states have a minimum wage pegged to the federal minimum wage, currently $7.25 Those states represent approximately one quarter of the franchised locations in the country. That leaves franchisees in three-quarters of the U.S. paying labor costs that are—in some cases—increasing to twice the federal wage. 7-Eleven store owners say the company’s “one-size-fits-all” financial model just can’t work. “Here in Florida, our minimum wage will increase steadily over the next five years until it reaches $15 an hour. That 75 percent increase will be difficult for franchisees to offset,” said Michael Jorgensen, a Tampa-area franchisee and executive vice-chairman of NCASEF, who pointed to a recent study which found raising the minimum wage to $15 an hour could result in a loss of 158,000 jobs in the state of Florida. “There are few options available to 7-Eleven franchisees who will be burdened by rising labor costs. Either they will have to work more hours themcontinued on page 52
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Talk With Other Franchisees On Free Telegram App National Coalition members are using a new app to discuss issues, make announcements, post information and send files. It's called Telegram and will accommodate many more than the 250 group member limit of WhatsApp. We already have more than 400 members on Telegram, and we encourage you to download the free app onto your phone or desktop and sign on using the following link: https://t.me/joinchat/QR1k9Efl4QmXqtIFtpaCkQ. There are just a few basic rules: 1. Must be a franchisee and paying member of an FOA affiliated with the National Coalition. 2. Not a member of an FOA? Join one ASAP or become a National Coalition Member at Large. 3. Display your full name and area on your profile so issues can be related to that area. 4. If your full name is not displayed, you will be removed. 5. Posts should be strictly business related. 6. Pro SEI? No problem—we all are, that is why we are franchisees. FOA/National Coalition haters, please stay away. 7. Encourage your fellow franchisees to join. 8. STAY UNITED. LOVE YOU ALL.
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gust to purchase Speedway’s stores in 35 U.S. states. e deal would leave Seven & i with some overlap between 7-Eleven and Speedway stores, which it is seeking to address by divesting up to 300 gas stations.
Federal Court Rules In Favor Of SEI A recent decision from a federal court in Massachusetts on a case brought by 7Eleven franchisees is a significant victory for franchisors who continue to face lawsuits alleging they have misclassified their franchisees as independent contractors rather than employees, reported e National Law Review. In Patel v. 7-Eleven, Inc., franchisees brought a putative class action alleging that SEI’s misclassification of its franchisees violated Massachusetts wage and hour laws. e franchisees argued the level of control that 7-Eleven exerted over them transformed them into employees, entitling them to the benefits and protections of Massachusetts labor laws, specifically Massachusetts’ Independent Contractor Law (“ICL”). In order to demonstrate SEI’s level of control, the franchisees pointed to the company’s daily communications with the franchisees, inspections of their stores, and “exacting” standards regarding cleanliness, inventory, and hours of operation. e franchisees also pointed
to requirements that they wear uniforms and utilize 7-Eleven payroll systems. SEI countered that the franchisees were responsible for hiring, training, compensating, and managing all store employees, and for the payment of taxes. However, SEI conceded that it did exert some control over its franchisees but only in order to comply with federal regulation. e article states that the court took note of this “inherent conflict” and held that the specific requirements of the Franchise Rule trumped the general precepts of the ICL’s ABC test. is meant the FTC’s “franchise-specific regulatory regime…governs over the general independent contractor test in Massachusetts.” As a result, Massachusetts’ ICL did “not apply to 7-Eleven.” e court accordingly denied the franchisees’ summary judgment motion and, more importantly, their request for class certification.
How Consumers Want To Shop & Pay Nearly one year into the pandemic, 63.9 percent of consumers today use digital channels to buy at least some of their groceries online, according to a new report by PYMNTS and ACI, titled “e Omnichannel Grocery Report: Leveraging Digital Purchasing Channels To Boost Conversion.” e study shows that even more consumers have shied to ordering their groceries online over time, as 15.7 percent of all grocery shoppers now say they are buying fewer groceries in stores and more online than they had prior to the pandemic— roughly four times more than the 3.9 percent who had shied back on March 6, 2020.
“e court took note of this ‘inherent conflict’ and held that the specific requirements of the Franchise Rule trumped the general precepts of the ICL’s ABC test.” 12
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Albertsons, Kroger, Publix, Walmart and Wegmans are among the grocers that will administer the free COVID-19 vaccine as soon as it is approved, reported Progressive Grocer. Through the Federal Pharmacy Partnership Strategy for COVID-19 Vaccination, the grocers will receive a direct allocation of COVID-19 vaccine once it’s authorized or approved and recommended for use. • Iowa-based convenience chain Casey’s General Stores recently announced an agreement to acquire Buchanan Energy, owner of Bucky’s Convenience Stores, in an all-cash transaction for $580 million. The acquisition includes 94 retail stores and 79 dealer locations in Illinois and Nebraska, as well as multiple parcels of real estate for future new store construction, which will increase Casey’s footprint to over 2,300 stores. • Swisher recently announced that it has joined with the University of North Florida’s Center for Entrepreneurship & Innovation (CEI) to develop a new program that supports underrepresented entrepreneurs in pursuing their business goals. Swisher said the program, named The Swisher Startup for Underrepresented Entrepreneurs, reinforces its commitment to inclusion and diversity. • Cheese prices are plunging as the COVID-19 pandemic drives diners from restaurants, reported Bloomberg. Some wholesale cheddar prices have fallen more than 40 percent in November alone. Prices for cheese blocks, the type that graces party platters, have declined 13 percent this year to about $1.66 a pound. Barrel cheese, typically used to make processed cheeses, is down 18 percent. • As sales of Vizzy, Coors Seltzer and Blue Moon LightSky continue to continued on page 26
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PYMNTS research also reveals that 38.6 percent of all consumers prefer grocery shopping with large national chains like Walmart, which was found to be the most preferred merchant at 27.8 of consumers. However, 25.4 percent buy their groceries from online grocers of all sizes, which means small grocers can acquire new customers if they offer digital payment options. For customers who are
still going into brick-and-mortar stores, more than one-third would be willing to switch to grocers that offer touchless instore payment technologies such as digital wallets, QR codes, cards on file and POS credit options.
Consumers Shopping Less During Pandemic More than half of consumers (52 percent) say they are shopping at convenience stores less during the pandemic than previously, while only 14 percent are shopping more, reported Convenience Store News. According to the publication’s new shopper study, changes in daily routines due to the coronavirus
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“Some 52 percent of consumers say they are shopping less at convenience stores during the pandemic, while only 14 percent are shopping more.” pandemic and related COVID-19 business shutdowns and restrictions is the main reason why consumers are shopping less at c-stores these days. Consumers also say they’re shopping less at convenience stores because they are: trying to consolidate or make fewer continued next page
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shopping trips overall (40 percent); not buying gasoline/fuel as oen (38 percent); not traveling as much for leisure (34 percent); not eating out as oen (33 percent); don’t feel safe shopping at convenience stores (29 percent); and choosing to shop at online stores/sites (24 percent). Of the 14 percent of consumers who are shopping at convenience stores more during the pandemic, more than onethird (38 percent) attribute their increased trips to changes in their daily routine due to COVID-19 and/or their choice to shop for groceries at a smaller store. Also, among those who have increased their shopping at c-stores during the pandemic, curbside/pumpside pickup and contactless payment options are a big draw, with 18 percent stating they increased their c-
store shopping because their preferred store offers curbside/pumpside pickup, and the same percentage increased visits because their store offers contactless payment options.
“NACS has joined with other industry trade groups to seek second priority for employees of essential businesses, including convenience and fuel retailers, for a COVID-19 vaccine when it becomes available.”
NACS & Trade Groups Seek COVID-19 Vaccine Access NACS recently announced that it has joined with three other industry trade groups to seek second priority for employ-
ees of essential businesses, including convenience and fuel retailers, for a COVID19 vaccine when it becomes available—once healthcare workers are vaccinated for the disease. In a letter sent on November 23 to Alex Azar, secretary of the U.S. Department of Health and Human Services, NACS, the Energy Marketers of America, NATSO and SIGMA continued on page 21
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San Diego FOA’s Annual Charity Golf Tournament Raises Funds For Warrior Foundation & SAA Abiding by California’ pandemic social distancing rules, franchisees and supporting vendors gathered at the Carlton Oaks Golf Club in Santee on September 9, 2020 to have fun at the San Diego FOA’s 27th Annual Charity Golf Tournament. The outdoor event benefited two worthy organizations—the Warrior Foundation Freedom Station and Swim Across America. Attendees, which also included members of the Southern California FOA, started the day with breakfast burritos from Rita's Mexican Food, as well as orange juice donated by Coca-Cola and bagels from Brooklyn Bagel. Lunch was sponsored by John Barbot Insurance, and featured burger and fries provided by the Habit Burger Grill Truck. Participating vendors held contests at their sponsored holes, with great prize giveaways. The San Diego FOA held a contest for the Best Booth on the Green, with first place going to Monster Energy and second place to Bang Energy. Both were awarded $250. Among the other vendor activities, the JVD Golf Hot Shots was sponsored by Red Bull with Cannon Game, and TCD TransCold Distribution donated an ice cream cart and Ruby Jewel Ice Cream. Overall, the event was a huge success in support of two wonderful organizations, thanks to all the franchisee participation and the generous support of the vendor community.
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NCASEF Holds Highly Successful
VIRTUAL TRADE SHOW! The NCASEF held its first-ever Virtual Trade Show on November 17-18, and it was a grand success for franchisees and exhibiting vendors, alike. Franchisees were able to view thousands of products online during the two-day virtual event, as well as download product information provided by over 50 exhibiting vendors, live chat with vendors via text, voice The home page of the NCASEF’s Virtual Trade Show featured an exhibit hall with booths for each vendor. or video, and most importantly, some of the imporplace orders. All this from the tant legal issues safety of their homes and offices! franchisees are facTo get franchisees revved up to ing today. This forum place orders, there was a raffle conwas presented live test with a grand prize of $10,000. on the second day of Every order placed garnered more the Trade Show, simpoints to be entered into the conilar to a Zoom meettest, which had a second prize of ing, with a Q&A $5,000 and third prize of $2,500. session at the end. Plus, The FOA with the most orders Shortly after placed was awarded $2,500! Please The VTS also featured a Legal Forum with NCASEF General Counsel Eric Karp. the event closed, the see the next page for the list of trade show website was reopened until December 10 contest winners. in “static form” with the live vendor chat feature disAnother highlight of the Virtual Trade Show was a abled, to allow franchisees a Legal Semisecond chance to browse our vendors’ virtual booths nar conand place orders. It was a great way to show our ducted by vendors our appreciation NCASEF for their support! General Since this event proved to be a big hit, plans are Counsel Eric currently underway for another Virtual Trade Show Karp, who on February 9-10, 2021! Visit NCASEF.com for the provided an latest information! overview of continued on page 20
A video message to franchisees from Coke SVP Jack Stout. AVANTI N O V E M B E R | D E C E M B E R 2 0 2 0
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Congratulations to the Virtual Trade Show Raffle Contest Winners! The NCASEF Executive Committee is very pleased to announce the winners the 2020 Virtual Trade Show Raffle: 1. Grand Prize of $10,000: Mangesh Patel, Store #25715, Central Florida FOA 2. Second Prize of $5,000: Hung (Henry) Nguy, Store #14253, San Francisco/Monterrey Bay FOA
Raffle Grand Prize winner Mangesh Patel with NCASEF Executive Vice President and Central Florida FOA President Michael Jorgensen.
3. Third Prize of $2,500: Linda Brown, Store #33294, South Florida FOA
The winners of the FOA category (highest participation and largest orders made by its franchisee members): 1. $2,500 Prize: Central Florida FOA (with more than 1,675 orders) 2. Chairman's Appreciation Special Prize of $1,000: Chesapeake Bay FOA, a 19-member FOA that placed 235 orders total and had the highest percentage of participation! A big Thank You to all the franchisees who participated in the trade show and supported not only the NCASEF, but our valued vendors!
Raffle second prize winner Henry Nguy accepting check from SF/MB FOA President Ann Sekhon.
(Please note: To select the winners, points were taken from the leaderboard and more points were added from actual orders as 50 points per order, then the total compiled points were entered per franchisee into an online program to pick the winners randomly. To make the process more transparent, a special ID was given to each franchisee.)
2020 NCASEF Virtual Trade Show Sponsors Let ’s give a big round of applause to the generous vendors who sponsored and participated in our first-ever Virtual Trade Show! Anheuser-Busch, Inc. Coca-Cola North America PepsiCo, Inc.
Nestle Waters North America Swedish Match North America Swisher International VPX / Redline / Bang
LEVEL 2
LEVEL 1
Aon Risk Services Barbot Insurance Services Constellation Brands Fiji Water Heineken USA Mars Wrigley—Ice Cream MONSTER Energy Company
5-Hour Energy ADP Payroll Advantage Solutions American Licorice Company Big Ideas Marketing Calypso Lemonade Clean Cause
LEVEL 3
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Chobani Crossmark/Johnson & Johnson Danone North America Don Chelada FitVine Health-Ade Hostess Brands KanPak Kellogg's Keurig Dr Pepper McLane Company Inc. MegaMex Foods/Hormel-Don Miguel
Mondelez International More Labs Morinaga America NJOY Perfetti Van Melle USA Promotion in Motion, Inc. Raindrops Enterprises Ripple Foods RJ Reynolds Tobacco Co./RAI TMS The Pickle Juice Company Uptime Energy Vita Coco
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Franchisees visiting the NCASEF Virtual Trade Show were able to easily navigate the website to view exhibitor booths, live chat or video chat with vendors, and place orders. The trade show exhibitor list was easily searchable.
Join Us For The NCASEF’s 2nd Virtual Trade Show February 9-10 | Noon to 8 pm CST Watch for details at www.NCASEF.com
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stated, “e Department of Homeland Security’s Cybersecurity and Infrastructure Security Agency recognized early on the importance of our industry to ensure Americans had food in markets, fuel at gas stations, and safe places for truck drivers to stop as they haul essential items across the country. In the deployment of a vaccine to protect Americans from COVID19, that recognition should be applied to these critical workers. Our employees have put themselves at risk since the beginning of the pandemic, working despite health concerns, and we believe they should be prioritized in vaccine deployment.” NACS reminded Secretary Azar of the important roles convenience stores and gas stations play not only in the U.S. economy, but also to first responders and the nation’s transportation network. “When vaccine distribution begins, trucks delivering the vaccine will depend on our retailers to be open to refuel. e food and
convenience items our industry provides are also critical as our “Public health experts see emindustry oen has the most ployers as playing an important convenient locations and allows role in vaccinating enough peofor quick shopping trips for American consumers. is is ple to reach herd immunity.” also helpful for first responders, especially because stores in our people to reach herd immunity and get a industry are typically the only ones open handle on a pandemic that has killed more extended hours (or 24 hours per day) to serve their needs,” the NACS letter states. than 300,000 Americans. Widespread coronavirus vaccinations would keep people from dying, restart the economy and usher a return to some form of normalcy, experts say. Employers had been waiting for guidEmployers can require workers to get a ance from the U.S. Equal Employment COVID-19 vaccine and bar them from Opportunity Commission, the agency that the workplace if they refuse, the federal enforces laws against workplace discrimigovernment said in guidelines issued renation, because requiring employees be cently, reported the New York Times. Pubtested for the coronavirus touches on lic health experts see employers as playing thorny medical and privacy issues covered an important role in vaccinating enough
Employers Can Require Workers To Get Vaccinated
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Legislative Update Federal Bill Would Ban Gas-Powered Cars By 2035 West coast democrats recently introduced federal legislation that would ban U.S. sales of new vehicles with internal combustion engines by 2035, despite electric vehicles accounting for less than 5 percent of sales last year, reported e Detroit News. e federal standard proposed by the legislation would require that in five years, 50 percent of new sales would be zero-emission vehicles—with that figure increasing by five “LEGISLATION percentage points each year until 2035. FROM WEST COAST e proposal is hailed as a measure to reDEMOCRATS WOULD duce pollution and protect U.S. manuBAN U.S. SALES OF facturing. ALL NEW VEHICLES e proposal comes on the heels of California Governor Gavin Newsom reWITH INTERNAL cently signing an order seeking to ban COMBUSTION new gas-powered vehicles in the state by ENGINES BY 2035.” 2035. Likewise, a recent report from the New Jersey Department of Environmental Protection suggests all new vehicles will need to be electric or hydrogen-powered by 2035 to meet the state's climate goals. At least 15 other countries have made similar commitments toward emissions-free futures, including Germany, France and Norway.
Floridians Vote To Raise Minimum Wage To $15
Voters Approve Oregon’s Tobacco Tax Increase Voters in Oregon on November 3 approved a proposal to increase the state’s cigarette tax by $2 per pack and to create a tax on e-cigarettes, reported OPB.org. Measure 108 will increase the state’s cigarette tax from $1.33 to $3.33, create an entirely new 65 percent tax on e-cigarettes, and increase taxes on premium cigars. e state estimates the tax would generate about $160 million per year. Ninety percent of the tax revenues from the measure would go to the Oregon Health Authority to pay for the treatment of sick people, especially those suffering from mental illnesses. e remaining 10 percent would go to tribal health providers and other culturally specific health programs for tobacco cessation efforts. Oregon has not increased tobacco taxes in 18 years. It has one of the lowest rates in the country.
N.J. Governor Signs Strong Plastic Bag Ban Into Law New Jersey Governor Phil Murphy recently signed a new law banning businesses in the state from handing out singleuse plastic bags, polystyrene food containers, plastic straws and paper bags, reported NJ.com. e measure, which was passed by state lawmakers in September, is seen as the strictest stance against single-use plastics in the nation. e bans apply to a variety of businesses, including restaurants, convenience stores, food trucks, movie theaters and grocery stores that are 2,500 square feet or larger. Grocery stores would be prohibited from giving paper bags to customers. e new rules for plastic and paper bags, and polystyrene containers, become effective in May 2022. e law also re-
On Election Day, November 3, Florida voters approved a measure raising the state's minimum wage to $15 an hour over the next six years, which advocates say will li the pay for hundreds of thousands of workers in the state's service-heavy economy, reported the Associate Press. A supermajority of Florida voters approved the amendment to the “New Jersey recently adopted the strictest stance against singleFlorida Constitution that will raise Florida's minimum use plastics in the nation, banning single-use plastic bags, polywage from the current $8.56 an hour to $15 an hour styrene food containers, plastic straws, as well as…paper bags.” by 2026. Supporters of Amendment 2 had said it is impossible to live on the curstricts food-service businesses from handing out plastic rent minimum wage given the state's straws, unless specifically requested by a customer, beginning cost of living Opponents said it in November 2021. For business that break these rules, the law would stifle growth as Florida’s batallows for a warning for the first violation, a $1,000 fine for the tered tourism economy recovers second violation and $5,000 fines for the third violation and from the impact of the new coronevery violation aer that. All fines collected would go to Clean avirus.
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Legislative Update Communities Program Fund, which pays for litter clean-up grants across New Jersey.
Colorado Voters Approve Tobacco Tax Increase
starting in July 2024. Passage of the measure also adds price floors for tobacco products. e minimum price for moist snuff products will be $1.48 per container and will increase to $2.26 by 2027. Similarly, the minimum price for a pack of cigarettes will be $7 in 2021 and will increase to $7.50 beginning in 2024. Prop. EE is expected to generate $175.6 million in revenue during the 2021-22 budget year and $275.9 million yearly when the tax is fully phased in in 2027, according to Legislative Council Staff. e added revenue is allowed to be spent on a new cash fund for rural schools, preschool funding, tobacco education programs, housing and health care.
Colorado voters on November 3 approved sweeping new taxes on nicotine and tobacco products that are expected to raise $250 million for the state and significantly raise the price of cigarettes and other tobacco and vaping products, reported ABC 7 Denver. Under Proposition EE, which was referred to Colorado voters by state lawmakers as part of HB20-1427, a pack of cigarettes will go from being taxed at $0.84 per pack up to $2.64 per pack by 2027, when cigarettes will cost at least $7 per pack in the “UNDER PROPOSITION EE, A PACK OF state. Tobacco products will see the current 40 percent tax rate increase to 62 CIGARETTES IN COLORADO WILL GO percent by that year, and the new nicoFROM BEING TAXED AT $0.84 PER PACK tine tax will be applied at 30 percent UP TO $2.64 PER PACK BY 2027.” starting in 2021 and go up to 56 percent
Sign Up For The Dispatch Newsletter!
Colorado Paid Family & Medical Leave Ballot Prop Passes Colorado voters on November 3 adopted one of the most progressive continued on page 50
Sign up today to receive Dispatch, the NCASEF’s email newsletter that keeps you up to date on the latest 7-Eleven news and announcements from national leadership. With all the changes and challenges happening within our system, the Dispatch newsletter serves as a direct line of communication between the National Coalition and the franchisee community. Receive urgent information, alerts, and reports directly from national leadership as it happens.
Head over to www.NCASEF.com and click on the Subscribe to Our Newsletter button on the upper right column of the homepage. Then fill out the form to be placed on the Dispatch email list. AVANTI N O V E M B E R | D E C E M B E R 2 0 2 0
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The Light At The End Of The Tunnel
BY JAY SINGH, CHAIRMAN, NCASEF, PRESIDENT, SAN ANTONIO FOA
When the COVID-19 pandemic first hit us in March 2020, I don’t think anyone could have predicted the impact it would have on our personal and professional lives. Everything pretty much shut down for several weeks except for those businesses deemed essential to everyday life, like grocery and convenience stores. Some people were asked to work from home, while others lost their jobs or were temporarily laid off. Many 7-Eleven franchisees across the country found themselves in a labor tight spot when some employees quit because they didn’t feel safe from infection working in their stores. To this day, many franchisees are still operating short staffed because the pandemic fear has a firm grip on many potential employees. Besides its affect on our stores, the pandemic has also impacted the NCASEF and how it conducts business. Due to pandemic restrictions limiting the size of gatherings, and nearly all hotels being closed, the NCASEF was forced to cancel all in-person meetings, with our last physical Board meeting being held in February 2020 in Dallas, shortly before the pandemic started. We adapted by holding Zoom videoconference Board meetings, instead. Although these meetings are effective, there’s really no substitute for physical, face-to-face meetings. Still, we carried on, hoping that as we approached the summer months the pandemic would subside enough to at least allow us to have our annual convention and trade show. Well, that turned out to be wishful JAY SINGH thinking. In some CAN BE REACHED AT 702-249-3301 OR parts of the country JAYS@NCASEF.COM the pan demic actu-
“NCASEF was forced to cancel all in-person meetings, with our last physical Board meeting being held in February 2020 in Dallas, shortly before the pandemic started.” ally worsened, and travel and gathering restrictions stayed in place. We were forced to cancel the convention. The annual convention and trade show is the biggest event of
the year hosted by the NCASEF, and franchisees and vendors travel from all over the country to attend and participate. Our 2019 convention in Long Beach, California was our highest attended event ever, and we were hoping to beat that in 2020. After a long discussion between NCASEF officers and staff, and with the situation still being uncertain in regard to the pandemic, we decided the next best thing we can do in lieu of an in-person convention would be to hold a two-day virtual trade show. This way we could at least still bring our franchisees and valued vendors together. So we contracted an outside com-
pany to put the virtual trade show together and set the date for November 17-18, 2020. The NCASEF Virtual Trade Show (VTS) was accessible via a link on the NCASEF website, and franchisee registration was free. I am happy to announce the event was a resounding success. We had approximately 85 booths, 45 sponsors, 500 franchisees registered, and over 48,000 items ordered. Franchisees were able to view the products and special VTS deals presented by our vendors, place orders, communicate with vendors via live text chat, voice or video, and even download materials like product information and sell sheets. The VTS also featured a raffle contest with a grand prize of $10,000, a second prize of $5,000 and third prize of $2,500. Additionally, the FOA with the most orders placed by its members was awarded $2,500. Entries into the raffle were gained by placcontinued on page 26
“To this day, many franchisees are still operating short staffed because the pandemic fear has a firm grip on many potential employees.”
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The Light At The End Of The Tunnel continued from page 25 ing orders. I would like to “The NCASEF Virtual Trade Show was accessible congratulate each of the winners: Mangesh Patel of the via a link on the NCASEF website, and franCentral Florida FOA, who chisee registration was free. I am happy to anwon the Grand Prize, Hung nounce the event was a resounding success.” (Henry) Nguy of the San Francisco/Monterrey Bay FOA, winner of the Second Prize, and Third Prize winner Linda Brown of the South Florida FOA. The Central Florida FOA won the FOA category with more than 1,675 orders placed by its members. We also awarded a Chairman's Appreciation Special Prize of $1,000 to the Chesapeake Bay FOA, a 19member organization that placed 235 orders total and had the highest percentage of participation. Once again, congratulations to all the winners! Besides exhibiting vendors, we also included a videoconference Legal Seminar hosted by NCASEF General Counsel Eric Karp, who provided an update on the California lawsuit and spoke about other legal issues currently affecting franchisees. Mr. Karp also took questions from franchisee viewers after his presentation. This was a very informative seminar and I am very pleased we were able to offer it in the VTS. To keep the trade show action going, we reopened the VTS shortly after it closed to allow franchisees another opportunity to place orders. We kept the VTS website open until December 10, minus the ability to communicate live with vendors. Given the success of our first Virtual Trade Show, we have a planned a second
“I cannot thank our exhibiting and sponsoring vendors enough! We wouldn’t still be in business without their support, and attending our VTS and placing orders is the best way we can show our appreciation.” 26
one for February 9-10, 2021. Please visit the NCASEF website soon for more information and to register. I cannot thank our exhibiting and sponsoring vendors enough! We wouldn’t still be in business without their support, and attending our VTS and placing orders is the best way we can show our appreciation. Without doubt, 2020 was a rough year. But now there is light at the end of the tunnel with the new vaccines making the rounds. Hopefully, the majority of Americans will be vaccinated in short time and we can return to some semblance of the normalcy we enjoyed before the pandemic. If the pandemic situation turns around soon, we will be able to have an in-person Board meeting in May and our Annual Convention and Trade Show this summer, which we have planned for the Gaylord Palms Resort & Convention Center in Orlando, Florida. Further, the Board meeting we originally had scheduled for Hawaii on November 2, 2020 has been rescheduled for November 2021. I’m sure by then most—if not all—pandemic restrictions will have been lifted. Please visit the NCASEF.com for the latest updates on our Board meetings and annual convention. In the meantime, please stay safe and don’t forget to register for the February Virtual Trade Show.
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soar nationwide, Molson Coors Beverage Company announced that it has increased production capacity by more than 400 percent at its Fort Worth and Milwaukee breweries. • A record $10.8 billion was spent online on Cyber Monday, November 30, an increase of 15.1 percent year-overyear, making it the largest online shopping day in U.S. history and beating 2019’s $9.4 billion record, according to new data from Adobe Analytics. • According to the latest data in the Alignable State Of Small Business Report for December, 48 percent of all small business owners fear they will not earn enough revenue during the month to keep their businesses afloat.The report further shows that 50 percent of retail establishments and 47 percent of B2B firms could close permanently. • CVS is growing its Hispanic-focused CVS Pharmacy y mas chain, which features more than 1,500 grocery products from Hispanic brands, reported Progressive Grocer. The company plans to open 12 CVS Pharmacy y más stores in New York and New Jersey, adding to the more than 200 locations in more than 90 cities across California, Florida, Nevada, Oklahoma, Texas and Puerto Rico. • Mars, the company behind M&M’s and Snickers, recently acquired fruit-and-nut bars maker Kind in a deal reportedly valued at about $5 billion, according to the New York Times. The deal for Kind North America comes three years after Mars took a minority stake in the company. • Coca-Cola announced it has partnered with Danish startup Paboco to develop a 100 percent paper bottle. The first-generation prototype consists of a paper shell with a 100 percent recycled plastic closure and liner inside. The next step, the company said, is to create a paper bottle without the plastic liner. • Shopper visits to U.S. stores on Black Friday, November 27, dropped 52.1 percent compared continued on page 46
Paper Shrink: What It Is And How It Burns Franchisees BY MICHAEL JORGENSEN, EXECUTIVE VICE CHAIRMAN, NCASEF
Shrink. We all have it, and we all look to put an end to it. It’s the bane of our existence and it costs us quite a bit of cash every year. According to the National Retail Federation’s 2019 National Retail Security Survey, average shrink rate in the retail industry is 1.38 percent of sales, and it has stayed around that level since 2014. While this does not sound like much, it amounted to some $50.6 billion in losses for retailers in 2018. To break this down even further, loss prevention professionals responding to a 2019 annual survey in Loss Prevention Magazine said, “Internal theft accounts for 36.4 percent of shrink, and external theft accounts for another 35.1 percent of total shrink.” So where’s the other 28.5 percent? It’s paper shrink, loosely defined as “all the discrepancies between physical inventory and book inventory that are not out-the-door losses caused by shoplifting, theft or fraud.” It’s a system issue, a software glitch, an operational error, an accounting snafu, a paperwork error, and it’s almost one third of our shrink, so it can amount to real bottom line losses for which franchisees are wholly responsible. Why do I bring this up? Because 7Eleven alone is not immune to paper shrink and I’m seeing a number of issues with the 7Eleven system that can cause shrink for stores that they might not be aware of. Throughout COVID-19, the number of items on our KSRs (Known Shortage Reports) has grown exponentially due to manufacturer shortages, distribution issues, and generally problems related to the pandemic. We have that much more to look at to identify our shortages. Between the KSR and the Driver Exception report we must identify the real shortages. Everything that is not on the
“Paper shrink is loosely defined as ‘all the discrepancies between physical inventory and book inventory that are not out-thedoor losses caused by shoplifting, theft or fraud.’”
KSR, my clerk and the driver are supposed to find, accept as shortages, and move on. Cigarette price changes have occurred much more frequently this year. I recently came to know that when price changes are pending, McLane institutes a maximum order quantity to ensure that no one orders significantly more inventory than their normal orders so they can maintain inventory for all retailers. McLane does not ship cigarettes which are ordered above a certain percent of the last 8 weeks order average. I have heard
that the cap is instituted if you are above 130 percent. One week in September I exceeded my McLane cap by ordering a specific brand and did not know it, so they cut my order by a number of cartons. Only they didn’t put the cartons on the KSR, because it is not an actual shortage in their eyes. This leads to the possibility that stores can check in items they didn’t receive. So my driver says the manifest says I received 90 cartons, and he can’t credit me with a shortage. But what the driver doesn’t know is that I ordered 100 cartons, and they sent 90. The system will allow me to check in those extra 10 cartons. The McLane’s invoice and the Legal Tobacco invoice do not reflect the cartons shorted, yet if a store checks them in our accounting system charges us for them. The store experiences an inventory shortage yet there is an overpayment somewhere in the system. Where does this money go? In my case there was no communication to the store either about the maximum order quantity or notification of the overpayments. There are a number of system issues that facilitate paper shrink and this is one of them. Another system issue involves the 7-MD (mobile device), the new handheld that we use to do write-offs. 7-MD is hooked up to the cloud, not our ISP. There are items in the continued on page 30
“Paper shrink is a system issue, a software glitch, an operational error, an accounting snafu, a paperwork error, and it’s almost one third of our shrink, so it can amount to real bottom line losses for which franchisees are wholly responsible.” AVANTI N O V E M B E R | D E C E M B E R 2 0 2 0
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“If I have an overage, I will definitely be asked about my overage. If I have a shortage, there’s nobody calling and asking why I have a shortage. I don’t get emails saying we looked into your audit shortage and here are some invoices that are overpaid.” store that have been deleted by 7-Eleven, and if I scan one to write it off, it will show me cost and retail, and let me believe it is written off. The cloud knows the item but when I go back to my ISP to see the write-off, it never went to my ISP because that item is no longer in my ISP. So there are any number of items in my store that I might have written off and disposed of, but I never received credit for. I find it totally unacceptable that we have a report called the “Check In Accuracy Report” that says, basically, “McLane says they shipped it.” I get an email that asks me to verify the delivery, and now I have to go cycle count my store. The kicker is that if I don’t respond to that email within 14 days, they charge me. Meanwhile, those 10 cartons of cigarettes that I checked in that they knew they didn’t send, nobody sent me an email. In my case there were overpayments for $2,000 worth of cigarettes between September 20 and Nov 1. How much of our retail is lost to paper shrink? We actually don’t know, because 7Eleven does not even report on shrinkage. Many retail businesses have implemented elaborate inventory control programs to reduce real retail shrink, the out-the-door inventory losses caused by employee theft, shoplifting and vendor fraud, but even the most advanced loss prevention programs can come up short if the company does not identify and eliminate the cause of paper shrink. If I have an overage, I will definitely be asked about my overage. If I have a shortage, there’s nobody calling and asking why I have a shortage. I don’t get emails saying we looked into your audit shortage and here are some invoices that are overpaid. Those extra car30
tons? McLane didn’t bill for them, but somehow I was able to pay for them in my system; I never got a report from anyone that said, “You paid for extra product, more than McLane sent, so we owe you a credit back.” Where did that extra money go? While 7-Eleven is certainly a merchandise and gasoline company, it is also an accounting company, given the unique nature of the convenience store franchise system, compared to other mainline franchise companies. Having taken on this responsibility, 7Eleven must invest in state-of-the-art systems, which will make it nearly impossible for franchisees to be charged for products they never received. What we don’t know is how much more is there? As far as we know this has only happened with cigarettes, but who knows? 7-Eleven’s typical response is to say, “We can fix that, but we will do it in the
“For 7-Eleven’s loss prevention department to get control over paper shrink, they need the cooperation of people in many different departments: finance, accounting, inventory control, merchandising/ buying, distribution, IT, marketing, customer services, human resources, our valued vendors, and most of all, franchisees.”
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next download. But these are system integrity issues that can’t wait until it is convenient for them. What we need from our franchisor is assurance in the integrity of the systems we purchased as part of our franchise system. In the old days, my invoice was my invoice. Now, I don’t know what happens behind the scenes with all my accounting, and it takes a forensic accountant to figure it out. We need subject matter experts who are well versed in accounting and corporate logistics to work on a paper shrink solution. For 7-Eleven’s loss prevention department to get control over paper shrink, they need the cooperation of many different people, in many different departments: finance, accounting, inventory control, merchandising/buying, distribution, IT, marketing, customer services, human resources, and our valued vendors. Most of all they need franchisees, who work the system every day to lend their expertise and relate their experiences with the problem. It’s like getting all your doctors together in the same room at the same time. You can have all the computer systems in the world, but you’re only as good as the people who can understand all these things on different levels. The icing on the cake is the franchisees who actually have to execute. We are the only ones with skin in the shrinkage game. Everyone else is going to get their piece: 7-Eleven, McLane, and of course, the manufacturer. McLane is going to track things they think they sent to your store, because they have teams of people who do that. I have teams of people who sell chicken wings, greet people at the door, and ask if you have 7Rewards. I don’t have teams of people who look at my accounting paperwork, because I expect that with a franchise, all these systems are proven and foolproof.
MICHAEL JORGENSEN CAN BE REACHED AT
JORGENSEN.NCASEF@GMAIL.COM OR 347-251-1828
Sign This, Or Do This— Or Else! ERIC H. KARP, ESQ., GENERAL COUNSEL TO NCASEF
As 2020 comes to a close, it is appropriate for us to look back and try to come up with a way to accurately describe the way SEI treats its franchisee community. In a prior Avanti column, I analogized that treatment to what was once a popular (but long since discredited) conception that children should be seen and not heard. Others have suggested that SEI’s approach can be captured by the phrase, “Take it or leave it.” But this too is imprecise, because in many situations franchisees do not perceive that they have the option of leaving it, meaning not signing a particular document presented to them or carrying out a directive during the franchise relationship. In the end, what SEI does over and over again is offer franchisees a Hobson’s Choice, defined by Merriam-Webster Dictionary as follows: “In the late 16th and early 17th centuries, Thomas Hobson worked as a licensed carrier of passengers, letters, and parcels between Cambridge and London, England. He kept horses for this purpose and rented them to university students when he wasn't using them. Of course, the students always wanted their favorite mounts, and consequently a few of Hobson's horses became overworked. To correct the situation, Hobson began a strict rotation system, giving each customer the choice of taking the horse nearest the stable door or none at all. This rule became known as Hobson's Choice, and soon people were using that term to mean ‘no choice at all’ in all kinds of situations.”
HERE ARE MULTIPLE SPECIFIC EXAMPLES OF THAT KIND OF BEHAVIOR.
Payroll Protection Program The terms and conditions of the Payroll Protection Program allowed forgive-
ness of loans based on how the proceeds were used. As amended, the program guidelines allowed up to 40 percent of the proceeds to be used for rent and related expenses. We contacted SEI in May of 2020 to gain information regarding store level rent and occupancy expenses so that franchisees could use that information in their applications for loan forgiveness. In doing so, we noted that there are multiple places in both the franchise disclosure document and in the Individual Store franchise agreement that reflect the existence of a landlord-tenant relationship between SEI and its franchisees. These include provisions stating that SEI has all the rights and remedies available to any landlord and that the gross profit split in favor of SEI covers the franchisee’s required lease of the land, building and equipment. We also pointed out that SEI had for some time used a document entitled “Acknowledgment of 7-Eleven Charge Allocation” in Florida and in other states. This document provides a specific formula for de-
“There was no rational explanation for SEI refusing to cooperate with franchisees who are seeking forgiveness of their PPP Loans.” termining what portion of the gross profit split is allocated to the actual rental of the store, based on SEI’s books and records. Our ask was very simple: that any franchisee that requested the actual rental and occupancy cost of the store would be provided with that information, which would necessarily be subject to the confidentiality provisions in the franchise agreement. SEI’s response was to concede that a
“Our ask was very simple: that any franchisee that requested the actual rental and occupancy cost of the store would be provided with that information.”
landlord-tenant relationship exists between SEI and its franchisees, but to decline to provide any of the information requested, suggesting that a great deal of effort would be required to conduct a store-by-store analysis. Of course, we had not asked for rent-related information on every store, just that those franchisees that sought the information would receive it. The SEI response suggested that franchisees speak with their accountant and/or tax professional and determine “what they think is properly allocated to lease payments.” In response to SEI’s suggestion that what was requested could not be done, we provided examples of budget and profit and loss reports generated by SEI’s accounting system that included a heading entitled “Occupancy and Related Expenses” which included 10 separate line items, including rent, utilities, communication and telephone lines, and property taxes. We pointed out that such a document exists for every single store in the continued on page 34
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United States, and thus the information we requested is readily and easily available. Finally, we compared SEI’s stance on this issue to the so-called Think Method, which was the central theme of the 1950s musical “The Music Man,” where a con artist convinces the unsuspecting populace of a small town to buy musical instruments and form a band. Even though they have no prior musical training or experience, he tells them that if you think of a song, you’ll be instantly able to play it on your chosen musical instrument. There was no rational explanation for SEI refusing to cooperate with franchisees who are seeking forgiveness of their PPP Loans; that lack of cooperation, which included treating SEI’s rent expense as a closely guarded secret equivalent to the military’s nuclear launch codes, undermines the Congressional mandate to provide as complete assistance as possible to small business owners such as SEI franchisees.
Franchisee Certifications
“Yet, while they are demanding that franchisees immediately sign the document pledging to carry out their limited obligations under the law, SEI will make no reciprocal commitment.” are required to use E-Verify for current employees, which is illegal under federal law, and (b) it required franchisees to certify that they have always been using E-Verify, not just that they are currently doing so, which is what the 2019 franchise agreement requires. In order to assist SEI in creating a form of Franchisee Certification that actually conformed to the requirements of the franchise agreement, we submitted a revised form of Franchisee Certification to SEI on April 24, 2020. SEI neither responded nor acknowledged our submission. Instead, SEI informed franchisees that they were required to sign its form of Franchisee Certification by June 30, 2020, or they would be in default of their franchise agreements. SEI’s approach was based on whatever conduct they could engage in for which they perceived franchisees did not have an effective remedy. They ignored valid criticism of their document, and simply demanded compliance.
In March of 2020, we communicated with SEI regarding the company’s demand that certain franchisees who signed the socalled 2019 franchise agreement execute and deliver a Franchisee Certification as to wage, hour and immigration law compliance. Each demand was accompanied by a deadline for California Gasoline Tank the franchisee to submit the Franchisee Cer- Law Amendments California laws regarding the regulation tification. The form of that Franchisee Certiof gasoline tanks were fication was not subject amended to require to any prior discussion or “Our concern was that the form the Owner of a gasoreview with any franof the Franchisee Certification line tank (in this case, chisee community reprewas not consistent with the 2019 SEI) to enter into an sentatives or lawyers. agreement with the Our concern was franchise agreement, and in Operator of the tank that the form of the Fran- particular required franchisees (in this case, the franchisee Certification was to provide certifications beyond chisee) to maintain not consistent with the records, monitor the 2019 franchise agree- those that are specifically tank, and report adment, and in particular required by that agreement.” verse events. The inrequired franchisees to provide certifications beyond those that are formation required to be in those records is specifically required by that agreement. These extensive. In November, SEI created—on its issues included the fact that (a) the Franchisee Certification at least implied that franchisees own—a form of Gas Tank Law Amendment 34
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that was presented to California franchisees on a take it or leave it basis, with a request the franchisee sign “immediately.” We were asked to review this document. Here is a summary of some of our issues and problems with the document: • Conspicuously missing is any serious undertaking by SEI to carry out its extensive obligations under the law. The Owner of the tank has seven separate and distinct responsibilities under California law. Only one of these, to properly close the underground tank at the outlet, is mentioned in paragraph 6 of the Amendment. • While SEI is promising training to franchisees on these rather complex responsibilities, it doesn't say when, where or how the training will be delivered, or even to whom (The franchisee? The managers? Other employees?). • The indemnification undertaking in paragraph 7 is also quite limited because it carves out franchisee negligence. It would be very easy for a franchisee to overlook any one of these very complex requirements and thus be deemed negligent. In the end, what SEI’s legal responsibility as a tank Owner is can be very extensive, can be very expensive and carry a high degree of risk. Violation of any of those responsibilities could put the franchisee's business at a serious disadvantage. Yet, while they are demanding that franchisees immediately sign the document pledging to carry out their limited obligations under the law, which will involve creating yet more obligations for the franchisee to carry out an already complex operation, SEI will make no reciprocal commitment. The California regulations do not prescribe the form of that agreement, and once again SEI is presenting this document withcontinued on page 36
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out any prior discussion or input. Any other franchisor in the country would realize that they need the signature of the franchisee and would thus engage in some dialogue, and perhaps even bargaining. In the end, what SEI is demanding is an amendment to the Consigned Gasoline Amendment and the Gasoline Operations Amendment without really offering anything in return. The French have a saying, “Plus ça change, plus c'est la même chose.” Translated it means “The more things change, the more they stay the same.” SEI’s treatment of California franchisees in this instance is all-too familiar, but no less problematical.
7NOW Program Agreements Among the many revisions of the 2019 Agreement that we characterized as SEI’s attempt to require franchisees to execute a blank check in its favor, are those related to loyalty programs and digital commerce. SEI inserted provisions within the franchise agreement that it would no doubt argue amount to stating that the terms, conditions and economics of these programs will be whatever SEI says they will be from time to
Among the many highly problematical provisions of these program agreements are the following: • Orders must be processed in a prompt and timely manner, and be available for immediate pick up; none of these terms are defined; • SEI alone decides which store fulfills a given order; • SEI can change the price of the order from the store’s actual retail selling price; • Franchisees must participate in all promotional pricing and other offers; • Franchisees must shoulder additional expenses, including packaging, additional labor required for timely fulfillment, maintenance of additional equipment, additional licenses, and payment of higher credit card processing fees; • Partial or total refunds to a customer are at SEI’s sole discretion—the franchisee has no input; • Complete absence of transparency regarding store level economics of the relationship with third party delivery services; and • The Program Agreement is terminable by SEI at will.
“As of June 2020, SEI had issued five successive different versions of a 7NOW Program Agreement, all of which were presented to franchisees on a take it or leave it basis.” time based on SEI’s sole determination. It is our position that these provisions are substantively unconscionable. As of June 2020, SEI had issued five successive different versions of a 7NOW Program Agreement, all of which were presented to franchisees on a take it or leave it basis. In addition, none of these different versions were submitted for prior review or comment to any franchisee representative or counsel. Further, no redlined versions were provided to help franchisees determine how the latest agreement differed from the one they had most recently signed.
2019 Franchise Agreement On June 15, 2018, SEI issued a new franchise disclosure document containing an early renewal franchise agreement. From the moment it was issued, franchisee representatives properly concluded that it was a transparent attempt to force franchisees to figuratively tear up their existing franchise agreements and replace them with new agreements that imposed many new fees and charges and threatened even higher fees, even if their franchise agreements are not due to renew until many years down the road. SEI convened a Franchisee Advisory Committee (FAC) comprised of approxi-
mately a dozen franchisees who met several times with SEI executives in 2017, allegedly to solicit input and feedback, but not to negotiate any terms. The FAC was mere window-dressing, designed to create the false and misleading appearance of a process that would create a fair and balanced agreement. On several occasions, SEI executives demanded acknowledgments from participants in the FAC that their role was not to negotiate, only to listen. When SEI actually rolled out early renewal of the franchise agreement in June 2018, franchisee representatives were shocked to discover that it included strong-arm tactics designed to compel franchisees to discard their current franchise agreements in favor of this new agreement, which threatened higher fees. This is and was a bludgeon, pure and simple. No franchisees would or should agree to such substantively unconscionable terms unless they were subjected to strong-armed tactics, which is what SEI has employed. I presented a detailed analysis of the 2019 franchise agreement provisions at the 2018 National Coalition convention and at two California town halls attended by hundreds of franchisees. As the details of this hideously one-sided and misleadingly presented franchise agreement began to unfold, the reaction of my audience was a combination of outrage and sadness, with many visibly shedding tears. SEI imposed a December 31, 2018 deadline for franchisees whose agreements were not then expiring to sign and deliver the 2019 Agreement, or else. If franchisees did not knuckle under and accept the 2019 Agreement by the end of that year, then they would be subject to a gross profit split even more regressive than the current GGPS instituted in 2006 when their current agreements expire, no matter when their agreements expire. Some franchisees took to calling this even more oppressive form of graduated gross profit split, GGPS-OS, or graduated gross profit split on steroids. This is the very definition of take-it-or-leave-it tactics that courts have many times deemed to be procedurally unconscionable. continued next page
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“When SEI actually rolled out early renewal of the franchise agreement in June 2018, franchisee representatives were shocked to discover that it included strong-arm tactics designed to compel franchisees to discard their current franchise agreements in favor of this new agreement.”
Franchisees faced immediate, unpalatable choices: (1) accept the 2019 Agreement with a rate lock for a defined period of time that maintained their current gross profit split, but under which they face new and higher fees and expenses, as well as other unfavorable terms; (2) continue operating under their current agreements until they expire, but then be forced to renew under GGPS-OS and the same higher fees, expenses, and unfavorable terms; or (3) continue operating under their current agreements until they expire, refuse to accept the 2019 Agreement, and relinquish (i.e., walk away from) their stores, with no compensation for years of effort and investment. Insofar as franchisees decided to choose the first and potentially least-bad option, their choice does not prove that they were satisfied or that the terms are conscionable. Instead, it demonstrates the effectiveness of SEI’s coercive tactics.
Conclusion For years, I have opined in these pages that what is fundamentally wrong with this franchise system is the culture created and fostered by SEI and fully supported by its publicly held parent company. This has included treating the concepts of collaboration, transparency, consensus building and negotiation as if they were a poison pill. In my four decades of representing franchisee associations, I have never seen a more toxic and counterproductive relationship. Here’s hoping that 2021 brings meaningful change.
ERIC H. KARP CAN BE REACHED AT 617-423-7250 or ekarp@wkwrlaw.com
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Vice Chairman Column
LESSONS, CONTINGENCY PLANS, AND ADJUSTMENTS By Ajinder Handa, NCASEF Vice Chairman, President, Greater Northwest FOA Since March, many small businesses have been forced to temporarily close, or alter their hours of operation, or open in phases. Due to their nature, a select few small businesses may not have had to close at all. In contrast, some unfortunate small businesses may have had to make the difficult decision to close their doors permanently. Regardless of the services or products they provide, small business owners, franchisees, and franchisors were rocked by 2020. Due to COVID-19 and the ever-changing economic conditions, all us were forced to learn several lessons. Over the last 10 months, we all learned about the importance of flexibility. It is vital that small business owners are open to adjustments, especially during a pandemic. A few of the adjustments small business owners have had to make “Small business owners, are finding new ways of conducting business, imfranchisees, and fran- plementing new policies, chisors were rocked by working on a leaner 2020 and we were forced budget, and, most of all, to learn the importance of staying healthy. Another lesson flexibility, new ways of that we learned is that emconducting business, new ployees are a small busipolicies, working on a ness’s greatest asset. leaner budget, and, most Through the last 10 of all, staying healthy.” months, small businesses have worked hard to keep their employees and to ensure that they are healthy. Also, we learned how to operate on a much leaner budget than what we are traditionally used to. Many small businesses have had to adjust, due to a reduction in revenues and changes caused by the pandemic. Most importantly, we learned that circumstances can drastically change overnight, and it is important
to have contingency plans in place. A contingency plan is devised to deal with a future circumstance swiftly and effectively. If you look closely, many business owners made adjustments that improved their businesses, not just for now, but also for the future. Based on what we have learned, it is time to: • Renew relationships with franchisees, franchisors, vendors, employees and, above all, customers. • Open new concepts with lower costs. • Identify vulnerabilities and fix them. • Change proactively to customer needs. • Find opportunities where others could not. • Embrace new ways of working. • Open new lines of communication. • Bring your community together. • Prioritize your team’s well being. It is self-evident that we are a resilient group of people who can learn and adapt in the face of adversity. We are willing to fight for our small business since they are not only our livelihood, but the livelihood of many others.
AJINDER HANDA CAN BE REACHED AT 425-438-8381 or ajinderhanda@hotmail.com
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Legal Guest Column
LONS AND NOTICES OF MATERIAL BREACHES: WHAT YOU SHOULD DO IF ONE IS SERVED By Arnold J. Hauptman, Esq., General Counsel, UFOLINY
Maybe it just seems that way, but it issues in your store that your market appears to me from phone calls received manager or field consultant believes are from franchisees, that 7-Eleven local not in compliance with the Store Agreemanagement is issuing more LONs and ment. It presents the franchisee with the Notices of Material Breach than in the opportunity to remedy the condition bepast. Moreover, many (but not all) of these fore it ripens into a full-blown material Notices involve petty deviations from the breach. These notices can contain a myrStore Agreement, requiring franchisees to iad of perceived offenses. In New York, do certain things that would never be at least, the LON du jour advises the even considered as necessary—or even franchisee that there are not enough write-offs for pizza and therefore it indiwise—in a private c-store. That is disappointing because in cates that the franchisee is not making these times of extreme difficulty with enough pizza to be thrown away. While staffing and generally operating your pizza is a proprietary item for which you stores, one would think that SEI would must maintain at all times a reasonable concentrate more on assisting its fran- and representative quantity, does it make chisees to make a decent living rather any sense to have pizza available at times than threatening them with potential ter- when there are no customers to buy it? It is important to note that there is abmination with often minor violations. Sometimes, circumstances such as the solutely no mention in the Store Agreecurrent COVID-19 crisis require a more ment regarding an LON, and it is therefore compassionate and realistic “A Letter of Notification (LON) is nothing approach to the more than a warning regarding specific interpretation and enforceissues in your store that your market ment of SEI manager or field consultant believes are not policy and the in compliance with the Store Agreement.” agreement. It is unfortunate, in my view, that SEI continues to almost ha- of no contractual significance, as opposed rass franchisees with minor issues that to a Notice of one or more material breaches, which can be very significant. just defy common sense. A Notice of a Material Breach can It is never a good idea, in most cases, to simply accept these Notices without have very serious consequences because challenging them if you believe them to it can lead to the termination of your be unjustified. Here’s why: an LON is a franchise if the condition(s) complained Letter of Notification and is nothing of are not timely cured. While you may more than a warning regarding specific not view a specific problem as being
“It is never a good idea, in most cases, to simply accept LONs and Breach Notices without challenging them if you believe them to be unjustified.” “material,” 7Eleven solely determines what is material and what is not. There is no negotiation as to what the word “material” means because paragraph 26 of the Store Agreement, which contains a complete list of all possible material breaches, begins with the franchisee acknowledging that all the listed breaches are material and that these “Material Breaches constitute good cause for termination.” In fact, there are some breaches (for example, understate or fail to accurately report store sales, violate wage and hour laws or immigration matters, conviction of a felony), which are non-curable and can result in the termination of all of a multiple franchisee’s stores. Every franchisee should familiarize himself/herself with the material breaches of most concern. There are 12 non-curable breach categories and 16 categories of curable breaches which have cure periods after delivery of a writcontinued on page 42
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Legal Guest Column continued from page 41
should take it as a warnten notice. These range from two days chise upon a fourth violaing not to repeat the vio(failure to operate the store on a 24 hour tion. I have seen that prolation. basis), to three days (the most common vision waived on occasion, It appears to me from being falling below minimum net worth, but it depends on the many years of dealing failure to make deposits, non-compliance severity of the prior with Notices of a Matewith 7-Eleven Foodservice Standards), to breaches and whether or rial Breach that SEI has a five days (failure to maintain insurance, not the franchisee, in good policy of never withfailure to certify and/or E-Verify em- faith, is attempting to cure drawing a Notice, but ployee eligibility, violate wage and hour the violation. However, if “If you are served your written challenge laws), to 15 days (failure to participate in for any reason 7-Eleven with a termination will be placed in your file. a customer loyalty program, violate any has placed a target on your notice based on Certainly, you should relaw, ordinance or regulation relating to back, this provision can the store’s operation), to 30 days (failure provide it with the ammuthe fourth breach tain a copy of your chalto obtain or maintain all required li- nition to get rid of a franin 24 months and lenge, preferably with proof of delivery to your censes and permits, failure to comply chisee it no longer wants you wish to fight it market manager, and with any other obligation in the Store in the system. If you are served with Agreement or in the Master Lease). in court, not chal- email can easily provide Keep in mind that the above a termination notice lenging a prior no- that proof. TAKE NOTE: Many of breaches are only examples of the more based on the fourth tice is tantamount you have stores in states common violations that, in my experi- breach in 24 months and that have franchise proence, SEI uses as a basis for issuing a No- you wish to fight it in to an admission tice of a Material Breach, but there are court, not challenging a that it was validly tection laws that can supersede any one or more many others that you should be aware of. prior notice is tantamount issued.” of the breach provisions Again, check out paragraph 26 of the to an admission that it was in the Store Agreement. Agreement. Also, it is important to note validly issued. If you did that whether or not an LON or Notice of send a written letter to your market man- Each of those states has varying proteca Material Breach sets forth valid reasons ager stating the reasons why you believe tions, but often do lengthen the period of for its issuance is often not a black or the Notice was not validly issued, then times to cure, permit repeated breaches white issue, but can be rather subjective you can argue in court that one or more to sometimes be cured, or even prohibit and subject to interpretation of the con- of the Notices was improper and should termination or non-renewal for non-subtractual language or based upon your not count as a breach and that you pre- stantial violations of a franchise agreement. These are the states that have market manager’s franchise protection laws that I am opinion, and not “A Notice of a Material Breach can aware of: Arkansas, California, fact. have very serious consequences Delaware, Hawaii, Illinois, Indiana, Here is why you should always because it can lead to the termination Iowa, Michigan, Minnesota, Mississippi, Missouri, Nebraska, New Jersey, challenge, in writof your franchise if the condition(s) Washington Wisconsin, Washington, ing, an LON, but complained of are not timely cured.” D.C., South Dakota, and Virginia. Try most certainly a calling your local legislator for a copy Notice of a Material Breach whether or not you have suc- viously notified SEI of your position. It is of the protection laws in your state. Let’s hope 2021 will be a lot better cessfully cured it, if you believe it was not necessary that your written letter be invalidly or unfairly issued to you. The poetic. It just needs to set forth the rea- than 2020. It can’t be any worse. Agreement provides that a fourth mate- sons why you believe it should not have ARNOLD HAUPTMAN rial breach within a 24-month period can been issued in straight forward language. CAN BE REACHED AT be non-curable. That is not to say that Of course, if you agree that you did, in AJHAUPTMAN@AOL.COM OR (516) 541-7200 SEI will, in every case, terminate a fran- fact, breach the Agreement, then you 42
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Vendor Guest Column
SLIP, TRIP, AND FALL PREVENTION 2020– CUSTOMERS AND EMPLOYEES John Harp, CSP, ARM—Risk Engineering Consultant, MSIG Insurance Group The COVID-19 pandemic may have one positive outcome—studies show that in 2020 people have a heightened awareness of basic safety, health, and wellness. This translates into a need to do the right things, including ensuring a safe walking, working, and shopping environment inside and outside the store. With winter upon us, and changing conditions including rain, snow, ice, or sunny skies, it’s important to remember that no matter the weather, we can’t lose sight of the basic need to manage the risk of slip, trip or falls. Something else to consider is that the jobs situation and economy are affecting people in many ways, leading to distractions (e.g. not seeing the water spill left in an aisle) or desperation and fraud (e.g. looking for a lawsuit).
THE COST Nationally, MSIG-Aon insured franchisee locations since 2014 have suffered 629 employee claims as the direct result of slip, trip, or fall injuries. These claims can be split into a slip or trip leading to a fall on the same level (on the floor to the floor) or a fall from a different level (fall from a step stool, milk case or ladder to the floor).
“The National Floor Safety Institute (NFSI) estimates that 85 ● Employee tripped on mat and wires percent of slip-and-fall accidents behind counter injuring take place on wet surfaces and hip—$455,882 22 percent resulted in 30+ ● Employee tripped over days of employee lost time.” a milk crate injuring ACTUAL CLAIMS— TOTAL COST
shoulder and leg— $100,723 ● Employee was reaching for cups and fell causing shoulder fracture—$258,541
THERE ARE LEGAL REASONS, TOO! OSHA Floor Safety Rule (29CFR Part 1910) basics: ● Regularly inspect all walk areas to guarantee they are free of debris, contaminants, or other defects that could cause a slip, trip, or fall injury. ● Correct and guard any known walkingworking risks to prevent a slip, trip, or fall injury.
COMMON CAUSES OF SLIP, TRIP & FALL INCIDENTS
In today’s environment with masks, new signs, hand sanitizers, queuing at the registers, maintaining social distance, and 2014 - 2020 frequent extreme weather, the challenge to monitoring and Type of Slip, Trip & Fall # of Claims Cost of Claims maintaining a safe sidewalk, Fall to the same level 411 $7,377,875 apron and entire store requires Fall to a different level 218 $2,893,665 greater diligence than ever. The cost for these injuries totals over $10 million in medical bills and lost time. Tips To Avoid Slip, Trip & At an average cost of $16,330 per claim, a Fall Incidents small investment in safety and simple PARKING LOT, SIDEWALK, housekeeping can provide valuable sav- AND APRON ings. ● Potholes, cracks, and uneven surfaces
should be marked as hazards until repaired. Contact SEI immediately and maintain records. ● Parking stops misaligned or damaged. Check and immediately schedule for repair. ● Stops or curbs that are well marked or highlighted in yellow increase visibility. ● Quality of lighting—call immediately if bulbs are out or dim. ● Gas islands can have oil or other liquid spills. Check often and keep absorbent available for use. ● Make sure the trash cans are not overflowing and there is a clear path to the dumpster. ● If there is a mat outside, make sure it is in good condition. ● Avoid low displays, especially near the front door. ● Use a suitable mat at the front door, make sure it doesn’t have upturned corners and is clean. ● Clean spills immediately. Add cones or wet floor signs and supervise the spill. (Your customers may go around the cones. Warning signs alone do not prevent a liability or injury claim!)
SALES AREA
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Vendor Guest Column continued from page 45
● Consider taller caution signs for better visibility. ● Do not leave inventory, cleaning materials, or other items on the floor where a customer or employee could trip. ● Make sure cameras allow for a good view of the aisles in case a record is needed of an alleged incident. ● Consider mats at coffee or other food service areas where spills occur.
SALES FLOOR— MOPPING AND CLEANING
● Check that mop water is clean and mop head is in good condition (time to change if it’s too dirty to see the bottom of the mop bucket). ● Replace mop heads frequently. ● Use wet floor signs before-during-after mopping. ● Mop only during less busy times and clean small areas at a time. ● Follow wet mopping with a quick dry mop. ● Check that employees understand the proper mix for cleaning chemicals. It varies by the flooring type. ● Don’t leave mop buckets unattended on the sales floor.
● Milk crates are not safe—a suitable step should be used. ● Climbing on shelves or dumpsters is dangerous.
WATCH THE WEATHER (CUSTOMERS WILL BRING IT INSIDE)
● Be prepared with salt, shovels and an extra mat. ● In rain or snow add an extra mat at the front door (cardboard is not a good substitute). ● Dry mop frequently. ● Use Caution-Wet Floor signs, but remove when not needed. ● If the landlord is responsible for the sidewalk/parking lot snow removal, make sure it’s okay and take care of entrance areas.
● Cooler floors can be slippery from moisture or leaks. Clean and use caution. ● Crate dollies should be out of the aisle and turned upside down when not in use. ● Lighting should be sufficient to see any trip or slip hazards. ● Restroom—make sure the floor is dry and clean. Make regular checks of the room. Keep it secured unless required by local code.
● Proper non-slip shoes make a difference. ● Always walk with caution—no running. ● No climbing on boxes, shelves, or other items that may tip over. ● Don’t leave spills unattended—cone off the area. ● Only use warning signs when needed. ● No cell phones while walking.
● Attend to the fallen showing concern, but don’t lift them to their feet, especially the elderly. Wait for the experts. ● Get the incident facts—take photos and save surveillance tape. ● Document the incident, whether the employee or customer says they are okay. ● Time is critical in resolving claims. Report any potential employee or customer incidents to your insurance company/broker within three days.
● Sitting stools are not safe for reaching shelves. Obtain and use a proper ladder or step stool.
FALLS
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to 2019, reveals a new report by Sensormatic Solutions. Shopper traffic also decreased 45.2 percent week-to-date (Sunday, November 22 to Friday, November 27) compared to same period last year. The decline in store foot traffic was attributed to retailers closing for Thanksgiving and decreased doorbusters to help consumers stay safe during the pandemic. • McDonald’s Corp was recently hit with a potentially multi-billion-dollar lawsuit by Black franchise owners who accused the fast-food giant of racial discrimination for steering them to underperforming stores, reported Reuters. The lawsuit seeks damages of $4 million to $5 milcontinued on page 49
EMPLOYEE SAFETY PRACTICES—GENERAL
IN CASE OF ACCIDENT
VAULT AND BACKROOM
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CONCLUSION Not all slip, trip, or falls can be prevented, but with proper awareness, training, and safe conditions you can greatly reduce the chances of an employee or customer getting injured in your store. The condition of the floor, mats, and general housekeeping. are vital in creating an environment that feels, looks, and is safer for your employees and customers. For more information on store floor safety, check: https://www.cdc.gov/niosh/ docs/2013-100/pdfs/2013-100.pdf If you need assistance with your slip and fall safety program, contact your broker, insurance carrier or me at 908-604-2951 or jharp@msigusa.com. JOHN HARP CAN BE REACHED AT
jharp@msigusa.com or 908-604-2951
COVID UPDATE: Customers or employees may sue a business if they believe they contracted the virus there. The primary defense is to: • Follow retail store and SEI guidelines. • Maintain social-distancing procedures and a mask-wearing mandate. Even if your customers don’t comply, having those rules in place may afford you lawsuit protection. There is no Federal liability shield as yet, but many states have enacted protection excluding gross negligence or workers compensation. Report all potential claims and contact your broker.
Franchisee Guest Column
FINDING JOY IN 2020
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lion per store, potentially totaling more than $3 billion. • Three c-store chains—Sheetz (#6), Cumberland Farms (#12) and QuikTrip (#13)—have made onto Fortune’s “2020 Best Workplaces in Retail” list. The ranking is based on an analysis of confidential survey feedback from more than 900,000 employees working in the retail industry in the United States. • Amazon recently launched its Amazon Pharmacy service, which offers twoday delivery of medications and price cuts on both generic and brand-name drugs, reported Business Insider. Customers can buy prescription drugs through Amazon’s main website, and Prime members can get discounts of up to 80 percent on generic drugs and 40 percent on brand-name medications when paying without insurance. • Covid-19 Essentials, which sells pandemic-specific face masks, opened its first store in June and has since grown to eight mall-based locations, reported CNN Business. U.S. mask sales are predicted to hit between $1 billion and $9 billion by 2021 based on estimates that call for half the population to be wearing them. • Phillips 66 has partnered with cloud-based mobile commerce company P97 Networks to enable Google Pay across their network of 7,000 sites. Drivers will be able to locate, fill up and pay for fuel at Phillips 66, Conoco and 76 branded stations from within the Google Pay app using P97 Networks’ mobile payment gateway, the company said. • Drivers in Arizona can now renew their vehicle’s registration at their local convenience or grocery store. The Arizona Motor Vehicle Division recently announced that it has partnered with CheckFreePay from Fiserv, which has more than 500 locations statewide, to provide customers the convenient option. • Dunkin’ Donuts and Baskin Robbins chains owner Dunkin’ Brands continued on page 57
By Bob Elkins, Franchisee, Former President, San Diego FOA
We faced a lot of challenges in 2020: wife made a matching face mask. I made an unwelcomed 2019 O.S. Contract (On him an official name tag. He proudly enSteroids), the COVID-19 virus which led tered our store on Halloween as a mini “7to mandates and restrictions, daily con- Eleven Bob.” Who knew this could ever be frontations with frustrated customers a thing? The “Slurpee Kid” in the photo below about their constitutional rights and reis Mason, whose mom fusal to wear masks, trying went the extra mile to creto assure your employees ate his costume. His mom, they are safe working in Michelle, is friends with your store by installing my store manager, Kristi. plexiglass shields and You don't always anticadding additional cleaning ipate the effect you may and sanitizing methods, have on those around protests and riots that you, but these things brought curfews and early closures, safety issues, dwindling sales and warm my heart! I wish you all joy and happiness, and gross profits, and to complicate things even more we had a coin shortage. It's I hope you all can pause long enough to enjoy the little things in life that make you been a lot! Through all the chaos, confusion, and smile. constant changes, it is difficult to see the benefits of being a 7-Eleven franchisee. It is near impossible to be all things to all people, even though that is our mission every day. So, my suggestion to all of you is to treasure the small things that bring you joy, as there have not been many this year. I want to take this opportunity to share some of my joy with you. Allow me to tell you a little bit about my buddy Alex, pictured with me in the above photo. About six or seven years ago his parents, Josh and Suzy, were regular customers at my store. When Suzy became pregnant and delivered Alex, he of course was our “7-Eleven Baby.” Over the past five plus years we have seen him grow and start going to school. Needless to say, when Alex told his parents that he wanted to “Treasure the small things that dress up as “7-Eleven Bob” for bring you joy, as there have not Halloween, I was touched. I had a been many this year.” 7-Eleven, Inc., patch that his mother sewed on to his shirt. My
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Legislative Update continued from page 23
workers as independent confamily and medical leave protractors, reported the Los grams in the country, one that would be run by the state and Angeles Times. At the crux of the measure is a debate about the provide up to 12 weeks of paid time off in most cases, reported changing American workforce. With Proposition 22, voters the Denver Post. Proposition 118 does what Democrats in the were asked to decide whether people who sign into an app to state legislature have failed to in recent years. Funded through deliver groceries or drive riders to and from the airport should a 0.9 percent tax on an employee’s annual pay split evenly bereceive the same employment protections, benefits and wages tween the employee and employer, Prop 118 would create a as more traditional workers. Uber and Ly have long argued social insurance program similar to those that already exist in that state regulations fail to account for the complexity of their states including New Jersey and California. Workers caring for business models and they should be treated as technology platnewborns, sick relatives or dealing with personal health emerforms, not transportation providers. e measure allows the gencies could take up to 12 weeks off and be paid through the companies to avoid paying for a standard, more expensive suite program. e maximum paid time off would be extended to of benefits as required under state law, but still 16 weeks for those dealing with childbirth or provide workers—who would remain indepregnancy complications. pendent contractors—with some benefits. “CALIFORNIA VOTERS e lowest-income workers would reProposition 22 requires the companies to SIDED WITH UBER AND ceive the most support under the graduated provide an hourly wage for time spent driving LYFT, GRANTING RIDEscale system, receiving up to 90 percent of equal to 120 percent of either a local or a their normal weekly income. People with HAIL COMPANIES AN statewide minimum wage. It also requires that higher-paying jobs could get as little as 37 EXEMPTION FROM drivers receive a stipend for purchasing health percent of their weekly check. Proposition CALIFORNIA EMPLOYinsurance coverage when driving time aver118 would exempt businesses with nine emages at least 15 hours a week, a stipend that MENT LAW TO CONTINUE ployees or fewer, though workers could still grows larger if average driving time rises to 25 TREATING THEIR WORKchoose to pay premiums and be covered. hours a week. But work hours only include ERS AS INDEPENDENT Local governments could opt out, as could time spent driving to, picking up and carrying businesses that already provide a similar CONTRACTORS.” a rider or delivery to a destination, not the paid family and medical leave benefit. time spent waiting in between trips. e measure’s passages means workers for ride-hail and delivery comCalifornia Uber & Lyft Drivers panies will receive weaker benefits than they would have Remain Independent Contractors under a state law approved last year. Californians sided with the $200-million Proposition 22 campaign led by Uber and Ly, voting on November 3 to pass the measure and grant ride-hail and delivery companies an exemption from California employment law to continue treating
New York Enforcing Plastic Bag Ban New York’s single-use plastic bag ban is back in effect, reported CBS New York. e ban was passed in 2019 and was briefly on the books in March 2020, but was then put on hold during a court challenge. As of mid-October, it’s once again the law of the state. Under the new rule, prepared food taken to go can still be placed in so-called single-use plastic bags. However, groceries and other products on store shelves cannot and must go in paper bags. Some municipalities are allowing stores to charge a nickel for paper bags. Shoppers are being urged to carry reusable bags. e state Department of Environmental Conservation is counting on consumers to continued next page
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help enforce the new law, providing a form on its website along with a phone number consumers can use to report violators of the plastic bag ban.
California’s New Flavored Tobacco Ban To Go On The Ballot A coalition representing the tobacco industry recently turned in more than 1 million signatures as it seeks to qualify a referendum for the November 2022 ballot aimed at overturning a law banning the retail sale of flavored tobacco products in California, reported the Los Angeles Times. If the Secretary of State’s office determines there is a sufficient number of signatures to qualify the referendum, the new law, which was scheduled to take effect January 1, would be suspended until the voters act on the ballot measure in November 2022. e signatures were submitted to the state by the California Coalition for Fairness, which said in a statement that its
signature drive showed that voters are put off by the new law. e coalition has received more than $21 million so far, largely from companies including Philip Morris USA and its affiliated U.S. Smokeless Tobacco Co., as well as R.J. Reynolds Tobacco Co. Opponents needed to collect the signatures of 623,312 registered voters to quality the referendum. e law Newsom signed would ban the retail sale of flavored tobacco products including menthol and fruit “The law Newsom signed flavors, as well as those used would ban the retail sale of in electronic cigarettes. To flavored tobacco products win legislative approval, the including menthol and fruit bill exempted hookah, expenflavors, as well as those used sive cigars and flavored pipe in electronic cigarettes.” tobacco. It also does not apply to Internet sales of flavored products.
Join Your Local Franchise Owner’s Association Today! The best way to stay informed of the latest changes and challenges to our 7-Eleven system—and the convenience industry, in general—is to join your local Franchise Owner’s Association. FOAs help franchisees share ideas and concerns, and allow us to approach “None of us is as great our franchisor and vendor as all of us together.” partners with a unified voice. Becoming an FOA member also makes you a member of the National Coalition, which consists of all 41 FOAs nationwide. To join your local organization, contact the FOA president closest to you, or follow the instructions below to fill out an online membership form. If you cannot find the FOA closest to you, contact nationaloffice@ncasef.com for more information. We welcome your participation!
How do I join an FOA? 1. Log in to 7 Help using 7 Hub (secured) in-store or using this link https://7elevenna.service now.com/ from any external device. 2. In the search bar type “FOA.” 3. Select the popup suggestion “FOA/PAC: FRANCHISE OWNERS ASSOCIATION.” 4. Type “NONE” in the “Current FOA” box if you are joining an FOA for the first time or you are not a member of any other FOA. 5 Type in the full name of the FOA that you wish to join (No abbreviation) in the “Future FOA” box. 6. Type in the amount of monthly dues as instructed per local FOA. 7. Type “Please enroll (store number) as a member of (name of the local) FOA.” 8. Repeat Step 7. 9. Press the green submit icon.
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NCASEF selves or lean heavily on their families to work in their stores,” Jorgensen said. “We fear the burden will force many 7-Eleven operators to give back their keys and lose their business.” “This is another example of the 7-Eleven corporation’s culture of naked self-interest. We have asked many times for the company to sit down at the bargaining table for a good faith and mutually respectful discussion about how to amend the terms of the Franchise Agreement to pro“7-Eleven vide relief for franchisees who, beoperators cannot cause of the onerous terms of simply raise retail their contract, face a fragile fuprices to make up wage ture,” said Karp. “We are willing to have those discussions any increases due to place and at any time.”
rising minimum wages.”
“Franchisees in three-quarters of the U.S. are paying labor costs that are—in some cases—increasing to twice the federal wage. 7-Eleven store owners say the company’s “one-sizefits-all” financial model just can’t work.”
A 30-Year Franchisee Is Being Driven Out Of Business 7-Eleven franchise owner Serge Haitayan received two noteworthy pieces of mail from 7-Eleven’s Dallas headquarters in September. One recognized him for his 30 years as a franchisee in Fresno, California. The other informed him that his days as a franchise owner were coming to an abrupt end. The corporation has refused to negotiate in good faith to extend or renew the lease on his store. Haitayan is among a group of franchisees who spearheaded a 2017 lawsuit against 7-Eleven for misclassifying him and other California operators as independent contractors. The case is scheduled for trial in early 2021. “This is nothing but retaliation for my role in calling them out for unfair business practices. They’re willing to close a profitable store for 7-Eleven, with an established customer base store and a beer and wine license—even though there are no others available here—just to get me out,” Haitayan said. Under the franchise agreement, if 7-Eleven does not exercise the options on a lease, the franchise owner must be offered another location. In Haitayan’s case, the stores he was offered were not leased locations, meaning he would
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HIGHLIGHTS have to pay out of pocket to buy one. Haitayan says 7-Eleven violated California law regarding market withdrawal because he was not given six months’ notice that the company would not be exercising the option on his lease. “I received a letter stating that 7-Eleven lost the lease on my store, which simply isn’t true,” Haitayan said. “The property owner was approached just once last year about renegotiating or extending the lease, but then heard nothing over the last 10 months. This is just another example of how 7-Eleven abuses power and mistreats franchise owners who question their tactics.” According to NCASEF Chairman Jay Singh, “Haitayan’s leadership roles in his local franchise owners association (FOA) and with the National Coalition were also the target of 7-Eleven’s mission to get him out of the system.” California law protects the rights of franchisees to join independent associations of franchisees, but Singh said, “By making an example of “Haitayan Haitayan, 7-Eleven can intimidate says 7-Eleven other franchisees from actively participating in their FOAs and violated California law speaking out to defend franregarding market withdrawal chisee rights.”
because he was not given
In 2019, Haitayan signed a six months’ notice that the 15-year franchise agreement company would not be with 7-Eleven. He still has 14 exercising the option years left on that contract. “I’m the one who started this whole on his lease.” movement against 7-Eleven, insisting franchisees be treated fairly. Now they think they can get rid of me. I am not a store manager, employed on an at-will basis. I have worked hard as a franchisee to support the 7-Eleven brand and I’m going to fight until they give me a comparable store.”
Sign Up For The Dispatch Newsletter! Sign up today to receive Dispatch, the NCASEF’s email newsletter that keeps you up to date on the latest 7-Eleven news and announcements from national leadership. With all the changes and challenges happening within our system, the Dispatch newsletter serves as a direct line of communication between the National Coalition and the franchisee community. Receive urgent information, alerts, and reports directly from national leadership as it happens. Head over to www.NCASEF.com and click on the “Subscribe to Our Newsletter” button on the upper right column of the homepage. Then fill out the form to be placed on the Dispatch email list.
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by the Americans With Disabilities Act of 1990. e guidance confirmed what employment lawyers had expected. Businesses and employers are uniquely positioned to require large numbers of Americans who otherwise would not receive a vaccination to do so because their employment depends on it.
Small Business Owners Still Feel Pain Of Pandemic Small businesses anticipate the worst of the pandemic is still ahead and half (50 percent) of small businesses see their operations continuing for a year or less in the current business climate before having to permanently close, according to a new poll by the U.S. Chamber of Commerce and MetLife. Amid a new surge in cases across the nation, most (62 percent) small businesses fear that the worst is still to come with COVID-19’s economic impact, and 74 percent of all small business owners say they need further government assistance to weather the storm. at percentage increases to 81 percent when looking at minority-owned businesses. Only 40 percent
of all small business owners believe their business can continue to operate indefinitely without having to shut down permanently.
Increasing Importance Of Snacking
“e report further reveals that snacking is an antidote for loneliness and an avenue for connection, as 3 in 4 global adults have made a connection with others via food in the last 6 months.”
Almost 9 in 10 global adults (88 percent) said they are snacking more (46 percent) or the same (42 percent) during the pandemic than before, with millennials and those who are working from home right now being especially likely to say they prefer snacks over meals (70 percent and 67 percent, respectively), reveals the second annual State of Snacking report by Mondelēz International. According to the study, more than half of respondents said snacking has been a
“lifeline” during the pandemic (52 percent), especially parents who are working from home (69 percent). e report further reveals that snacking is an antidote for loneliness and an avenue for connection, as 3 in 4 global adults have made a connection with others via food in the last 6 months (77 percent), including making a snack together (40 percent), giving a snack as a gi (31 percent), or grocery shopping for someone who could not go themselves (29 percent). Consumers also continue to highlight the importance of snacks that enable them to lead healthier lifestyles and boost emotional well-being: ● Snacking at home is providing consumers with more opportunities for mindful snacking, with two thirds (66 percent) continued on page 57
Want to talk to other franchisees? To find the FOA closest to you. Visit www.NCASEF.com to contact any one of the 41 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. 54
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Paul Lobana, Vice Chairman, President, Southern California FOA
Rehan Hashmi, Vice Chairman, Vice President, Alliance Of 7-Eleven Franchisees
paullobana@aol.com 818.203.2527
rehan711@yahoo.com 847-845-8477
Ajinder Handa, Vice Chairman, President, Greater Seattle, FOA
National Office
425-438-8381 ajinderhanda@hotmail.com
nationaloffice@ncasef.com 210.971.9211
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Group was recently acquired by Inspire Brands, a private equity-backed restaurant company that owns Arby’s, Buffalo Wild Wings, and SONIC Drive-In, reported Reuters. The all-cash deal is valued at $8.76 billion. • Ferrero North America recently announced plans to build a new chocolate manufacturing center in Bloomington, Illinois. It will be Ferrero’s first chocolate production plant in North America, and will allow the company to produce chocolate for Crunch,100Grand, SnoCaps, Raisinets, Goobers, Ferrero Rocher and other Ferrero products. • American cookie consumption has increased by over 25 percent during the COVID-19 pandemic, with 1 in 5 Americans consuming over 3 cookies per day, according to a new study by TOP Data. • Voters in New Jersey and Arizona legalized marijuana for recreational use on Election day, November 3, and in Oregon approved a measure to decriminalize small amounts of heroin and other street drugs, reported Reuters. • Lowe’s paid $100 million in employee bonuses in November, its sixth round of pandemic-related bonuses, reported Business Insider. The home improvement retailer paid $300 to full-time hourly employees and $150 to parttimers or seasonal workers. • Kroger Health, the healthcare division of The Kroger Co., recently announced the launch of COVID19 rapid antibody testing across its family of pharmacies to help inform patients if they have previously been infected with SARS-CoV-2, the virus that causes COVID19. The FDA-authorized rapid antibody tests— conducted using a finger-prick blood sample—are now available at all Kroger pharmacies and clinics. • Walmart has apparently ended its contract with Bossa Nova Robotics, the company that provided shelfscanning machines to its stores, and plans to replace the machines with continued on page 58
of respondents noting they now have more control over their portion sizes and that they are now more aware of the snacks their bodies need (64 percent). ● Snacks are also nourishing their “body, mind and soul during these strange times,” (64 percent), with immunityboosting snacks particularly top of mind (56 percent), and nearly two thirds of respondents noted that snacking has given them “much needed moments” to themselves (65 percent).
Couche-Tard Earnings Jump 32 Percent For its second quarter of fiscal 2021, Circle K parent company Alimentation Couche-Tard announced net earnings
of $757.0 million, compared with $578.6 million for the second quarter of fiscal 2020. Adjusted net earnings were approximately $735.0 million compared with $569.0 million for the second quarter of fiscal 2020, representing an increase of 32 percent. e company said the increase was driven by strong growth in merchandise, service and in road transportation fuel gross profit, as well as by good cost control. Couche-Tard also reported total merchandise and service revenues of $3.8 billion, an increase of 6.3 percent. Same-store merchandise revenues increased 4.4 percent in the U.S., 8.6 percent in Europe, and 11.4 percent in Canada. Merchandise and service gross margin increased 0.1 percent in the U.S. continued on page 58
San Diego FOA
The San Diego FOA recently held elections for its Board of Directors. Pictured is the new Board for 2021. Front row, (left to right): Bobby Brar, Tejal Shah, Vijay Booter. Middle row: Varun Desai, Raj Hundal, Bic Sidhu, Sukhminder Dhillon, Harjinder Singh, Raad Khalaf. Back row: Amir Mousevi, Gurpreet Singh, James Chhina, Ram Chillar. Inset: San Diego FOA 2021 officers. AVANTI N O V E M B E R | D E C E M B E R 2 0 2 0
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to 34.0 percent, while it decreased 1.1 percent to 40.2 percent in Europe, negatively impacted by product mix, and remained steady in Canada at 32.6 percent. Same-store road transportation fuel volume decreased 15.5 percent in the U.S., 4.5 percent in Europe, and 11.8 percent in Canada. Road transportation fuel gross margin increased by 9.19¢ per gallon in the U.S. to 37.48¢ per gallon, by US 2.76¢ per liter in Europe to US 11.10¢ per liter, and by CA 2.16¢ per liter in Canada to CA 10.05¢ per liter.
Dollar General Speeds Up New Store Plans Dollar General plans to accelerate an already galloping pace of new store
openings in 2021, planning 1,050 new locations next year along with 1,750 store renovations and 100 store relocations, reported Winsight Grocery Business. e discount retailer, which already operates nearly 17,000 store locations in the U.S., expects to open 1,000 new stores, remodel another 1,670 units and relocate 110 stores by the end of the 2021 fiscal year on January 29. e fiscal 2021 plan rate equates to more than 20 new stores every week. Including the pace at which it renovates or locates stores, it averages eight real estate projects every day of the year. With store sizes generally ranging between a compact 7,300 and 15,000 square feet, with many units opening in existing buildings and with a number of locations in rural communities, Dollar General stores are relatively inexpensive to build, the article states. e company’s capital expenditure budget for the current year is expected to come in at $1 billion to $1.1 billion. e company said its 2021 real estate plans include adding fresh pro-
“Dollar General, which operates nearly 17,000 store locations in the U.S., expects to open 1,000 new stores, remodel another 1,670 units and relocate 110 stores by the end of the 2021.”
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Questions For The CEO? Got a question you want to ask the CEO of 7-Eleven? Submit it via email to nationalcoalition@NCASEF.com. Include the phrase, “Question for the CEO.” We’ll print your question here next issue. All questions are anonymous. The changing environment franchisees face over the next year is bound to raise many issues we have not faced before. We have all signed a new contract that we have yet to test in practice. So, got a question? Let us know: nationalcoaltion2@ncasef.com 58
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human workers, reported USA Today. Bossa Nova Robotics provided robots to over 500 Walmart stores when the contract ended. Walmart said it learned after the pandemic began that human workers could do the same jobs as efficiently. • Boise, Idaho recently issued a new public health order that instructs police to ticket or arrest people who refuse to wear masks and refuse to leave local businesses when asked, reported the Associated Press. Businesses can also temporarily lose their business license if they pose a “clear and immediate threat” because staffers or customers aren’t following mask orders. • Supermarket chain Albertsons is rolling out a contactless body temperature check and a digital health-screening questionnaire to all of its stores as another way to stop the spread of COVID-19 among employees and vendors, reported Winsight Grocery Business. The technology helps those conducting health screenings avoid potential exposure and provides an effective, scalable solution for added safety, the company said. • Amazon recently launched free, one-hour grocery pickup for Prime members at all Whole Foods stores in the U.S., reported CNBC. To qualify for one-hour pickup, grocery orders must total $35 or more. There are currently 487 Whole Foods stores in the U.S. • Walgreens Boots Alliance, in partnership with VillageMD, plans to open another 40 fullservice physician-staffed Village Medical clinics by the end of next summer, reported Forbes. The partnership launched in July when Walgreen’s invested $1 billion in VillageMD and announced plans to open up to 700 of the clinics over the next five years. • Starbucks plans to increase its store count to about 55,000 by 2030, up from roughly 33,000 today, reported CNN continued on page 61
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duce to about 600 stores, in addition to 1,000 that already have such an offering. About half of its new units—and 75 percent of its remodels—will open under its “Traditional Plus” format, which include 34 cooler doors vs. 22 for the traditional model, bringing Dollar General still further into competition with food retailers.
Japan's C-Stores Rebounding Japanese convenience chains are seeing a rebound in business as the government tries to balance keeping coronavirus under control with stoking the economy, reported Nikkei Asia. Seven & i Holding recently revised up its earnings forecast for fiscal 2020 to 138.5 billion yen from 120 billion yen it predicted in July. Its operating profit in the second quarter rose to 108.3 billion yen from 71.3 billion yen in the first quarter. Lawson's consolidated operating profit for the June-August quarter was 14 billion yen, rising from the 2.6 billion yen reported in the first quarter. e article states convenience store operators are better positioned to adjust to new consumer behavior amid the pandemic. One change they have made is to increase their range of frozen foods and prepared foods. is has also contributed to a rise in average spending per customer. During the June-August quarter, Japan saw a second wave of coronavirus
infections, with many more cases than during the first. However, the government did not declare a state of emergency, like it did earlier, as it did not want to damage the economy further. It has also led a “Go To Travel” campaign aimed at encouraging domestic travel to help boost the economy. While store sales in office districts and near train stations remain weak, sales in the residential areas and tourist destinations are rising.
C-store Dollar Sales Show Slight Decline
Dollar sales at U.S. convenience stores fell slightly during the four weeks ended November 29 because of fewer trips and a decline in overall spend, reported NACS Daily News. However, spend per transaction continued to outperform the year-ago period as it has done for much of the pandemic, according to the monthly report from PDI and NACS on how COVID-19 is affecting consumer behavior. For the four weeks ended November 29, dollar sales edged lower to +2.4 percent, compared with +3.6 percent for the four weeks ended November 1. Trips pulled back to -12.6 percent, compared with -12 percent for the prior four-week period. Although basket spend (dollars per transaction) was still higher than the same period a year ago (+17.2 percent for the four weeks ended November 29 vs. +17.7 percent for the period ended November 1), consumers aren’t spending as much inside the store as they did during the first wave of the “Convenience store operators pandemic last spring and through September 2020. are better positioned to adjust e c-store categories that saw to new consumer behavior the biggest gains in trips were amid the pandemic.” cigarettes (-10.5 percent vs. -11.5 percent for the four weeks ended
“Consumers aren’t spending as much inside the store as they did during the first wave of the pandemic last spring and through September 2020.” November 1), hot dispensed beverages (28.7 percent vs. -29.3 percent) and packaged sweet snacks (-11.7 percent vs. -13.4 percent). e hardest hit categories in terms of trips included packaged beverages (-2.8 percent vs. -0.8 percent), lottery/gaming (-14.4 percent vs. -9.3 percent) and candy (-12.5 percent vs. 10.8 percent). Unlike most months’ end, store services performed quite well during the week ended November 29, likely tied to holiday shopping.
McLane & Koupon’s Loyalty Solution McLane Company and Koupon recently announced that they have partnered to create a seamless integration of Koupon’s digital promotion platform with McLane’s Consumer Loyalty Program application. e companies said their partnership will allow c-store operators to take advantage of hundreds of industry CPG coupon offers within McLane’s Consumer Loyalty Program application, reducing product costs for both the retailer and the consumer. Within McLane’s enhanced Consumer Loyalty Program application, consumers can access digital promotions powered by Koupon’s technology and redeem them at checkout. continued on page 61
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Business. The company is betting that by flooding the market with new types of stores, including smaller locations and ones with drive-thru and curbside pickup, it will be able to steal more customers from the competition. • Shell Lubricants US and Turtle Wax, Inc. recently announced the launch of Move Clean, a total vehicle hygiene company focused on addressing the rising customer concerns around the cleanliness and safety of their vehicles—an issue that has been exacerbated by the COVID-19 pandemic. Move Clean will offer a new suite of total vehicle hygiene solutions, including vehicle surface disinfectants and deodorizers. • Electrify America recently announced that it has opened more than 500 electric vehicle (EV) charging stations across the U.S., bringing its network to more than 2,200 ultra-fast chargers nationwide.The company also said it has recently introduced a new program to add solar-powered canopies at select station locations, providing customers with shade and protection from the elements while potentially reducing their electricity draw from the local utility. • Unilever is testing a four-day work week in New Zealand, reported CNN Business. The distributor of Lipton’s tea, Dove soap and Ben & Jerry’s ice cream is letting all its employees there decide which four days they’d prefer to work each week. The trial started in December and will run for a year. Unilever said if all goes well, it will consider whether to implement its new workflow on a wider scale. • California-based wellness and CBD brand Wild By Nature recently announced its entrance into more than 150 Circle K convenience store locations within Florida and Alabama. • The U.S. Department of Justice (DOJ) recently filed a civil antitrust lawsuit to stop Visa Inc.’s $5.3 billion acquisicontinued on page 62
“While small businesses have had to
McLane and Koupon adapt reluctantly to a cashless world, said there are a number of for many tech firms, banks and credit benefits to their integrated solution, including: card companies that take a percentage ● It is completely free to reof transactions, it’s been a windfall.” tailers who use McLane’s Consumer Loyalty Proeral Reserve started rationing coins, and gram. the U.S. Mint kicked production into ● Consumers can search for and easily high gear, urging people to put spare redeem coupons pertaining to their purchange back in the economy. While chases at checkout. small businesses have had to adapt reluc● Consumers can receive and redeem tantly to a cashless world, many tech store loyalty points based on their purfirms, banks and credit card companies chases, leading to additional offers and have pushed for one. For the companies benefits. that take a percentage of transactions, it’s ● As new coupons are added, consumers been a windfall. can take advantage of them in real time. ● Integrated security identifies or limits age-restricted content.
C-Stores Gain Customers During Pandemic
Pandemic Affecting Coin Use By upending normal habits, the pandemic has dropped coins out of circulation and accelerated a trend toward cards, apps and other cashless payments that could eventually make coins obsolete, reported the New York Times. According to the article, the pandemic has made it much easier to imagine a world without coins, and already reinvigorated the movement to get rid of pennies. For banks, credit card companies and some Bitcoin advocates, the demise of each unit of cash would be welcome news. But for small businesses that rely on coins, it’s a slow-rolling earthquake. As the coin shortage reached its worst in June, trade groups for grocers, gas stations and convenience stores pleaded for help from the government, calling the coin shortage an emergency that threatened their ability to serve customers and stay in business. e Fed-
Restaurants have been hammered by the coronavirus pandemic, but in many cases their loss has been gained by convenience stores—especially those that have emphasized grab-and-go food, reported Consumer Affairs. For starters, convenience stores haven’t had to change their business models much in order to adapt to the new environment, the article states. Many chains have always had sections of prepackaged sandwiches and wraps, all they’ve had to do is increase inventory. Consumers seem to like the graband-go concept at a time when the alternatives are mostly fast-food drivethrus, and some in the industry continued on page 62
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believe this trend may last beyond the pandemic.
Consumers Prefer Contactless Payment Options
going forward, the truly touchless commerce options—where customers order online and have their goods delivered touch-free to their cars or homes—took up two-thirds at the top of the list. For instance, consumers want curbside pick-up (66 percent) and delivery to their door (58 percent).
A majority (57 percent) of consumers say that merchants’ digital payment offerings impacted their willingness to shop in certain stores, according to a survey conducted by PYMNTS.com and PayPal. e survey data also found that consumers have a demonstrable desire to avoid more traditional in-store payment options such as cash or cards that require physical contact with paper bills or POS terminals. at reflects itself in preferences for contactlesspayment options, “A majority with 26 percent of consumers re(57 percent) of porting a desire consumers say for merchants to that merchants’ accept contactless digital payment cards. Some 23 percent also indiofferings imcated a desire for pacted their curbside pick-up. willingness to When asked to shop in certain rank the experiences merchants stores.” must provide
Japan Tests Fuel-Cell Delivery Trucks Seven-Eleven Japan is among the three Japanese convenience store chains that have partnered with Toyota Motor Corp. to carry out trials of fuel-cell electric delivery trucks in 2021, reported e Japan Times. Fuel-cell vehicles use hydrogen to generate electricity and do not emit carbon dioxide. e envisioned tests by Toyota, its subsidiary Hino Motors Ltd. and the convenience store operators— which also include FamilyMart and Lawson—will use light-duty trucks with a maximum payload of 3 tons being developed by the continued on page 64
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.
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tion of Plaid Inc., a fintech firm that is developing a payments platform that would challenge Visa’s monopoly.The DOJ said Visa is a monopolist in online debit services, and if allowed to proceed, the acquisition would deprive American merchants and consumers of Plaid’s innovative alternative to Visa and increase entry barriers for future innovators. • McDonald’s plans to test a meat-free burger in several markets next year as it adds plantbased menu offerings, which it has coined “McPlant,” reported CNBC. The fast-food chain’s meatless patty was co-created with Beyond Meat. • The U.S. Food and Drug Administration recently released a new tool to communicate foodborne illness outbreak information frequently and as soon as the FDA begins an outbreak investigation—prior to a public health advisory or recall of a certain food product being issued. • Chipotle Mexican Grill recently opened its first digital-only restaurant, reported CNBC. Unlike a traditional Chipotle location, it does not include a dining room or a line for ordering—customers have to order in advance on Chipotle’s app, website or third-party delivery platforms. The new restaurant design is meant for urban areas, where real estate is more expensive and a full-size restaurant isn’t possible. • The Coca-Cola Company recently announced that it plans to retire at least 200 underperforming beverage brands as part of a global portfolio refresh prioritizing category-leading brands with the greatest potential for growth and scale. • The average cost of a Thanksgiving feast for 10 dropped to $46.90 in 2020, or less than $5.00 per person, from 2019’s average of $48.91, according to the American Farm Bureau Federation’s annual cost survey. The centerpiece on most Thanksgivcontinued on page 64
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two automakers. e five companies plan to examine whether the use of such lightduty trucks is practical and viable for transporting merchandise between distribution centers and convenience stores. ey will also identify challenges in cost efficiency and establishing the necessary infrastructure.
U.S. House Votes To Decriminalize Marijuana e U.S. House of Representatives recently voted to decriminalize marijuana at the federal level, but the legislation is not expected to advance further as long as the Senate remains in Republican hands, reported Reuters. It was the first time either chamber of Congress has voted to end the federal ban on marijuana since the drug was listed as a “controlled substance” in 1970. Fieen U.S. states and the District of Columbia have legalized recreational use of marijuana, and over 30 states allow some form of the drug for medicinal purposes. But the federal ban on the drug persists, which creates conflicts with state laws and limits cannabis companies’ access to banking services and funding. e bill the House passed would allow states to regulate marijuana, would expunge federal marijuana convictions, and impose a 5 percent tax on cannabis products.
“e House bill would allow states to regulate marijuana, would expunge federal marijuana convictions, and impose a 5 percent tax on cannabis products.” 64
New Jersey Sets New Workplace Safety Rules As COVID-19 numbers continued to rise across the state, New Jersey mandated private and public employers to implement uniform health and safety standards to protect all workers against the coronavirus, reported NJ.com. In late October, Governor Phil Murphy signed an executive order that required employers to follow the new protocols as of November 5. e guidelines mandate: ● Workers to keep at least 6 feet from each other “to the maximum extent possible.” ● Workers and visitors to wear a face mask, with limited exceptions. ● Employers to provide masks to workers at the company’s expense. ● Employers to provide workers, customers, and visitors with sanitizing materials at the company’s expense. ● Employers to conduct daily health checks of workers, such as temperature screenings, visual symptom checking, and more. ● Employers to notify workers when there is possible exposure to the virus. ● Employers to provide workers with breaks throughout the day to wash their hands. ● Employers to routinely clean and disinfect frequently touched areas in accordance to state and federal guidelines. Under the order, the state Labor Department also created an online complaint form for workers and the department will work with the state Health Department to create investigation protocols. e order also calls on the labor department to provide compliance and safety training for companies and employees.
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ing tables—the turkey—cost less than 2019, at $19.39 for a 16-pound bird, down 7 percent. • Barbie sales grew 29 percent in the third quarter and demand for other toys was also strong, leading parent company Mattel to its biggest quarterly revenue increase in 20 years, reported Bloomberg. Mattel attributes its growth to parents looking to pull their kids away from digital screens. • The California Energy Commission recently approved a plan that will invest up to $115 million to significantly increase the number of fueling stations in the state that support hydrogen fuel cell electric vehicles. The funding nearly doubles the state’s investments to date and will help California nearly achieve its goal to deploy 200 public hydrogen fueling stations. • Walmart has joined forces with self-driving car company Cruise to test out autonomous grocery delivery in Arizona, reported Fox Business. Under the program, customers in Scottsdale will be able to order from their local Walmart store and have it delivered via one of Cruise’s all-electric self-driving cars beginning early 2021. Cruise is a subsidiary of General Motors. • Texas-based convenience chain Yesway recently announced that it had raised an additional $235 million of equity to fund an extensive store remodel campaign and accelerate its growth. • The battery recycling industry is poised for a rapid expansion, to more than triple its current capacity by 2030, according to a new analysis by IHS Markit. Recycled materials currently make up a small proportion of the battery supply chain. However, the increasing supply of end-of-life batteries and growing demand will enable up to 15 percent of Lithium, 7.5 percent of Nickel and 43 percent of Cobalt from recycled continued on page 69
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Pandemic Eases Japan’s Worker Shortage Japan's chronically understaffed convenience stores are among the areas of the economy benefiting from the labor market disruption caused by the coronavirus pandemic, reported Nikkei Asia. With more workers at their disposal, franchisees that had broken with the traditional 24-hour business model—sometimes against the wishes of the head office—are switching back in hopes of regaining sales lost amid the outbreak. Same-store sales at convenience
stores have slumped since the government declared a state of emergency in April. Yet, it has seen remarkable growth in one area: applications for part-time work. ese nearly tripled on the year in April, and growth remained in the high double digits through August, going no lower than the 45 percent logged in July. Seven & i Holdings, operator of Seven-Eleven, has seen applications rise by at least double digits year-on-year in every month this year, and doubled in April. While many of these job seekers are university students unable to attend school, the company says it has seen more interest from seniors as well.
Consumers Craving More Baked Goods e ongoing pandemic has sparked a rise in consumers’ cravings for familiar comfort foods and indulgent items like baked goods, with about a quarter of Americans (26 percent) craving more baked goods than they normally would over the past six months, reveals a nationwide survey conducted by e Harris Poll and commissioned by General Mills Foodservice. More than one in four Americans (28 percent) are eating more baked goods as a result of the pandemic continued on page 66
Join The NCASEF Telegram App Forum And Connect With Franchisees Nationwide
con-
The NCASEF invites all franchisees to join our Telegram app forum—Franchisees Are The Brand. It’s simple to join, just follow these instructions:
1. Load the Telegram app on your smart phone and create your profile (use your full names please, so fellow franchisees know who you are). 2. Enter the URL below into your browser to join: https://t.me/joinchat/QR1k9Efl4QmXqtIFtpaCkQ There are just a few basic rules:
4. If your full name is not displayed, you will be removed.
1. You must be a franchisee and paying member of an FOA affiliated with the National Coalition to join the forum.
5. Posts should be strictly business related.
2. Not a member of an FOA? Join one ASAP or become a National Coalition Member at Large. 3. Display your full name and area on your profile so issues can be related to that area.
6. Pro SEI? No problem—we all are, that is why we are franchisees. FOA/National Coalition haters, please stay away. 7. Encourage your fellow franchisees to join. 8. STAY UNITED.
For those of you interested, you can view the YouTube video made by Eric Karp about AB-5 entitled “National Coalition Rebuttal Request for a Franchise Exemption to AB-5” here: https://youtu.be/cqK26ZhOJRk You can also download the video from the NCASEF Dropbox account by typing in this URL: https://www.dropbox.com/sh/7cy7t9ps87uhgu6/AAA2ncRFX5uGh4rsUtDyJO7ia?dl=0 We thank you for your continued support and look forward to chatting with you on our Telegram app forum about all matters 7-Eleven.
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over the past six months. Items such as cookies (57 percent), bread (50 percent) and cake (42 percent) top the list of baked goods Americans have been eating. Results from the poll show that among consumers who are eating more baked goods in the past six months as a result of COVID-19 are doing so because they crave sweet things (48 percent), to get a sense of comfort (42 percent) or induce happiness (41 percent). More than a quarter (27 percent) said it is because they are giving themselves permission to indulge right now.
Gas Demand Lowest Since 1997 U.S. motorists stayed off the road during the anksgiving holiday in overwhelming numbers as the coronavirus surged across the country, according to a survey of retail fuel stations by OPIS, an IHS Markit company. Gasoline sales fell a staggering 8.4 percent (nearly 185 million less gallons) from the previous week for the seven-day period ending November 28, bringing consumption to the lowest level for a anksgiving Week in 23 years, going back to 1997. e company said gasoline sales show that additional waves of the coronavirus are very much impacting travel decisions. Year-on-year comparisons are even more dramatic at the regional level, with some regions seeing declines of 20 percent or more from anksgiving Week 2019. Data within the OPIS report shows considerable variation across the country: ● Northeastern gasoline sales dropped 10.1 percent during the week with the year-on-year loss at a gaping 25.9 percent. 66
● e Rockies saw the smallest slide (5.6 percent). ● California was measured with a year-on-year loss of 17.3 percent. For decades, the Golden State led all U.S. states in consumption of gasoline, but that torch has been passed to Texas, which finds smaller year-on-year volume declines of 15.8 percent. ● New Jersey is the hardest hit state, with gasoline volumes plunging by nearly 30 percent from 2019. ● e Midwest was off 23.3 percent versus last year, led by Illinois which saw a year-on-year deficit of 26 percent. ● Only two states—Wyoming and Utah—are outliers with gasoline consumption rising year-on-year by 0.2 percent and 1.1 percent, respectively.
“ExxonMobil’s new two-in-one contactless payment solution allows customers to ‘point and pay’ using their smartphones.”
ExxonMobil’s Contactless Cell Phone Payment Option ExxonMobil has rolled out a new two-in-one contactless payment solution using Near Field Communication (NFC) technology and QR codes in order to meet consumer demand for mobile payment options, reported C-Store Decisions. More than 11,500 Exxon and Mobil stations across the U.S. now have this new technology at gas station pumps to enable customers to ‘point and pay’ using their smartphones. To use the new payment option, drivers simply tap their smartphone on the QR code sticker or use the camera to scan the QR code to pay. en, they authorize payment using Apple Pay, Google
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Pay or the Exxon Mobil Rewards+ app, and select the fuel grade. For customers who have the Exxon Mobil Rewards+ app, the technology intuitively opens the app to proceed with secure payment.
Lasting Impact On Retail Sector e effects of the COVID-19 pandemic are set to have long-term impacts on the retail sector and will disrupt consumer shopping behaviors and their priorities in the forthcoming year through to 2025, reveals a new report from Edge by Ascential's research and data insight arm, Retail Insight. “e Future of Retail Disruption” report highlights key factors that are set to drastically disrupt established structures and practices within the retail sector. Key trends and priorities include: ● e shi to online and increase in convenience—is shi to online will have an effect on in-store shopping behaviors, as convenience and proximity become important factors in choosing where to shop. Since consumers plan to spend less time in-store, retailers should focus on bringing in-store experiences online. ● Increased demand for health trends— Consumer trends around wellness and healthy lifestyles have been further buoyed by the pandemic and will prompt retailers and brands to focus on “good-for-you” ranges, in-store health continued on page 68
Legal Guest Column
CAN U.S. EMPLOYERS REQUIRE EMPLOYEES TO RECEIVE COVID-19 VACCINATIONS? By Peter Gillespie and Elizabeth Rice, Laner Muchin, Ltd. an unvaccinated employee who poses a direct Based on welcome recent news surrounding plans to distribute a successful threat to the workplace without first deterCOVID-19 vaccine in the coming months, mining whether there are other accommodamany employers are beginning to consider tions that can be made for that individual, such as the ability to work remotely. whether mandatory vaccinations can be inAdditionally, employers can expect that corporated into existing strategies to protect their workforces. The short answer to this the Occupational Safety and Health Adminquestion is yes, employers can require their istration (OSHA) would require employers to provide information to employees about employees to receive a vaccine. As an examthe benefits of a vaccine, if the employer ple, an annual seasonal flu shot can be required by certain employers, such as those in were to require employee vaccinations. Dethe health care industry. Indeed, there may be pending on the circumstances, OSHA may state laws requiring vaccinations, especially also provide “whistleblower” type protec- considered a mandatory subject of bargainunder laws applicable to healthcare providers, tions to employees who refuse vaccines ing under the National Labor Relations Act. Because the timeline for vaccines to bedrug and alcohol treatment centers, or home- based on having expressed safety-related less shelters. Nevertheless, employers should concerns. Similarly, the National Labor Re- come readily available remains unclear, we be cautious about requiring vaccinations, as lations Board (NLRB) might protect em- expect that firmer guidance on vaccination programs will be forthcoming soon, which there are many possible com“Can mandatory vaccinations may include details relating to liability proplications and variables that would need to be considered can be incorporated into existing tections available to employers that offer or require vaccines. Because we can expect that carefully. strategies to protect your employee employers may face accommodation reThe U.S. Equal Employworkforce? The short answer to this quests or pushback about safety concerns, ment Opportunity Commission (EEOC) released new question is yes, employers can require employers should begin planning now. At a minimum, employers should guidance on COVID-19 vac- their employees to receive a vaccine.” begin identifying legal standards, job ducinations on December 16, 2020. According to the EEOC, employers ployees (even in a non-union setting) who ties or responsibilities that might require that require employees to receive a COVID- engaged in “protected concerted activities” a mandatory vaccination requirement. regarding an employer’s vaccination pro- Also, based on the number of exceptions 19 vaccine will have to consider employee requests for exclusion from the requirement as gram. Given the numerous reports in the that may come into play, unless employees news relating to safety concerns and possible are legally required to have been vaccian accommodation for a disability or religious beliefs. If an employee requests an ac- public distrust, employers should anticipate nated, in many cases it may be preferable commodation, the employer must determine some resistance to vaccination requirements to simply encourage all employees to be whether the accommodation is a reasonable and, if such concerns arise, will need to con- vaccinated and to facilitate employee vaccinations. We will continue to monitor sider whether employees who object are enone and whether it imposes an undue burden. However, employers may exclude an gaged in protected conduct. In a unionized these issues and provide updated informaworkforce, vaccination programs may be tion, as it becomes available. unvaccinated employee from physically entering the workplace if the unvaccinated emQuestions and Contact Information ployee poses a “direct threat to the health or Laner Muchin Ltd. concentrates exclusively in the representation of employers in safety of individuals in the workplace.” labor relations, employment litigation, employee benefits and business immigration matters. The firm provides legal services to clients from coast to coast, and currently An unvaccinated employee may pose a acts as the NCASEF’s labor lawyer. direct threat if that employee would expose If you have questions, or need guidance in responding to Covid-19 or other legal others in the workplace to COVID-19. The issues relating to labor, contact Rob Bernstein, Laner Muchin Ltd., 515 North State Street, EEOC cautions that employers should not Suite 2800, Chicago, IL 60654; 312.467.9800 rbernstein@lanermuchin.com. For more information visit www.lanermuchin.com. automatically terminate the employment of AVANTI N O V E M B E R | D E C E M B E R 2 0 2 0
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services, as well as educational and inspirational initiatives. ● New in-store expectations led by technology—COVID-19 has led consumers to grow more concerned about in-store and product safety. As personal contact remains a concern amidst prolonged social distancing, retailers should explore ways to drive excitement and inspiration in-store through innovative merchandising solutions and the greater use of digital touchpoints.
in August, respectively. New Hampshire saw a 91 percent spike in menthol cigarette sales alone in August, and Rhode Island's coffers benefited from 40 percent bump in menthol sales. e ban on menthol cigarettes in Massachusetts took effect on June 1, and while public officials were willing to give up some revenue for the public health benefits of banning all types of flavored tobacco, convenience stores say residents are simply bringing the products back from other states.
Massachusetts Cigarette Sales Decline
Couche-Tard Enters Asia
Alimentation Couche-Tard Inc. recently announced that it has entered Cigarette sales in Massachusetts into an agreement to acquire all were down by 24 percent in August, acthe issued and outstanding cording to convenience store owners, shares of Convenience Reand the state has seen a nearly $32 miltail Asia Limited (“Circle lion drop in tobacco excise taxes in the K HK”) for HK$2.79 bilthree months since its first-in-the-nalion, or approximately tion ban on menthol cigarettes took ef$360 million. Circle K HK, fect, reported the Salem News. e a subsidiary of Convendecline in cigarette tax stamp sales ience Retail Asia Limited, opwould put Massachusetts on pace to exerates a network of Circle ceed the $93 million in foregone revK-licensed convenience stores, with 340 enue projected by the Department of company-operated sites in Hong Kong Revenue last year from the menthol and and 33 franchised sites in Macau. mint cigarette ban. Couche–Tard said this transaction repree New England Convenience Store sents a significant milestone, as it provides and Energy Marketers Association said the company with a platform in Asia from the ban has pushed sales to neighboring which to launch its regional growth amstates, including New Hampshire and bitions. Rhode Island where overall cigarette Circle K HK currently holds the secsales were up 65 percent and 17 percent ond largest market share in Hong Kong, one of the most economically developed markets “Massachusetts has seen a nearly in Asia and most densely populated regions in the $32 million drop in tobacco excise world, with meaningful taxes in the three months since its room to grow organically, first-in-the-nation ban on menthol Couche-Tard said in a released statement. Furcigarettes took effect.” thermore, Circle K HK
has developed solid expertise in loyalty, with approximately 1.6 million “OK Stamp It” members, and has established a strong private label program, as well as advanced merchandising, technology and supply chain capabilities.
Rise In Credit Card & Digital Payments e COVID-19 pandemic is significantly influencing national purchasing habits, pushing a higher share of purchases onto the internet and away from the physical point-of-sale, reports market research firm Packaged Facts in the recent industry study Digital Consumer Payment Trends in the U.S. e report also reveals that survey respondents who pay directly from an app on their phone are five times as likely to use this payment method more because of COVID-19 than to use it less. Other payment methods whose use positively correlates with the pandemic include pre-paying before picking up items and paying with mobile phone/mobile app. Payment method losers include paying with cash, paying with check, and paying by giving card to person at register. Relatedly, while they are most likely to say they will use mobile apps more, consumers tend to perceive pre-paying before picking up items as the safest.
COVID-19 Cases Spike In Nursing Homes The American Health Care Association and National Center for Assisted Living (AHCA/NCAL) has released a continued on next page
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sources to be used in new batteries by 2030, IHS Markit says. • Salt Lake City-based Maverik plans to hire nearly 200 employees for positions available across Utah, ranging from retail to corporate support, and more in its surrounding states, reported CStore Decisions. The company offers perks like tuition-reimbursement, a 401(k) retirement plan, paid time off, affordable insurance, competitive pay, and growth opportunities, according to the article. • The most recent Alignable Rent Poll reveals that 35 percent of U.S. small businesses couldn’t pay their rent in December, up 3 percent from November. The poll also shows that 61 percent of restaurants continued on page 73
report showing nursing homes in the U.S. recently experienced the worst outbreak of weekly new COVID-19 cases since last spring due to the community spread among the general population, surpassing previous peaks since the Centers for Medicare & Medicaid Services (CMS) started tracking cases in nursing homes. According to Johns Hopkins University, weekly new COVID cases in the general U.S. population rose by 330 percent to 1,043,040 new cases the week of November 15. During that same week, nearly half (49 percent) of new COVID cases in nursing homes were from Midwest states with major spikes in community spread in the upper parts
of the region. As a result, the Midwest region saw more than a 400 percent increase in weekly COVID cases in nursing homes since mid-September. e report shows that aer seven weeks of declining cases in nursing homes through mid-September, nursing home cases began to increase as nearly all 50 states started to see significant rising levels of COVID cases. New weekly cases in nursing homes grew by more than 177 percent nationwide between mid-September and the week of November 15. COVID-related deaths in nursing homes also started to rise, crossing more than 2,000 residents lost the week of November 15—the first time since early June.
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SECOND EVOLUTION STORE OPENS IN DALLAS SEI recently announced that the northeast Dallas neighborhood of Lake Highlands is home to the newest 7-Eleven Evolution Store, only the second in Dallas and the fifth in the country. Building on the success of its first Evolution Store located at Sylvan | Thirty in Dallas, the Lake Highlands location will have many of the same Florida—the first of more than 15 planned for features that will draw customers from across the state. The inaugural taco restaurant is loDallas-Fort Worth, the company said. cated in Inverness, with two more scheduled to Number one on the list is a Laredo Taco open later in Palmetto and Parrish. The rest are Company quick-serve restaurant, along with anticipated to open throughout the state by the self-serve, bean-to-cup coffee and end of 2021. espresso with touch-screen orderLaredo Taco Company, ing, cookies and croissants SEI's quick-serve Mexican “SEI recently baked in store daily, a wide food restaurant, is faannounced the selection of organic, natuopening of its very first mous for its tacos ral and better-for-you served on handmade Laredo Taco Company items, an extensive wine flour tortillas made restaurant in Florida— selection, and more. from scratch in on-site the first of more than Located at 9750 kitchens each day. Tacos Walnut Hill Lane at the cor15 planned for the and meals include spener of Audelia Road, SEI said state.” cialties not always seen in the newest 7-Eleven store is an Mexican fast-food chains, such experiential testing ground where as chorizo, carne asada, carnitas, customers can sample and buy the retailer's breakfast tacos made with hand-cracked eggs, latest innovations in a revolutionary store for- and the newest item on the menu, proteinmat. The company opened three of these new packed bowls. Each restaurant also has a salsa concept stores earlier in 2020 in New York City, bar where customers can spice up their meal, Washington, D.C. and San Diego. More Evolu- including a wide selection of on-site, daily pretion Stores are anticipated to open in 2021. pared salsas and pico de gallo.
LAREDO TACO DEBUTS IN FLORIDA 7-ELEVENS SEI recently announced the opening of its very first Laredo Taco Company restaurant in
SEI said Florida taco-lovers can join Laredo Taco Company on social media on Facebook, Instagram and Twitter. There, they'll get the inside scoop about Taco Tuesday specials, new products and other promotions.
NEW IN-APP WALLET UNVEILED SEI recently introduced a new app-based mobile wallet that offers all customers—including those who would like to load cash—a true contactless, convenient way to pay nationally at participating U.S. stores. Easily accessible
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in the 7-Eleven app, 7-Eleven Wallet customers can securely load funds to use upon checkout using cash, debit and credit cards, Apple Pay, Google Pay and prepaid 7-Eleven gift cards, the company explained in a press release. Cash must be loaded in-store at the register, while other payment methods can be loaded in the app. 7-Eleven Wallet users are not charged any loading or transaction fees and incur no interest fees like credit cards charge. Built to be an easy, contactless way to pay, the 7-Eleven Wallet is just the latest feature in the 7-Eleven app. Members are able to earn and shop with points, get exclusive offers, redeem rewards for free merchandise and pay in one easy step, simply by scanning the barcode in the app. Customers using the company's Mobile Checkout shopping experience, or the Fuel Loyalty program at 7-Eleven branded gas stations to save money on gas in participating cities, can also take advantage of the 7-Eleven Wallet perks.
SEI’S MANHATTAN EXPANSION SEI has leased three new Manhattan locations for a combined total of over 8,000
“7-Eleven is making moves to ensure their long-term success in NYC, the best retail market in the country.” continued next page
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square feet, reported Real Estate Weekly. The new stores are slated to open in Q1 2021. The new 7-Eleven locations include 675 Eighth Avenue (3,471 s/f), 800 Sixth Avenue (2,800 s/f), and 110 Church Street (2,500 s/f). 7-Eleven’s Manhattan expansion is being assisted by Katz & Associates, which is helping SEI find prime, high-traffic locations. Katz & Associates said SEI is “leveraging the opportunity to find new locations that in some cases may not have been available to them prior to the pandemic. 7-Eleven realizes that New York City will be back to business as usual in the near future so they are wisely making moves to ensure their long-term success in what is, in ‘normal’ times, the best retail market in the country.”
MORE DELIVERY PLATFORMS ADDED SEI announced that it has added three of the largest U.S. ordering platforms—Uber Eats, Grubhub and Instacart—to its delivery portfolio. Users of these platforms now have access to the thousands of products found on 7-Eleven shelves. With virtual school and work-from-home still the norm, customers can get products delivered directly from 7-Eleven through seven platforms, with Postmates, DoorDash, Google and Favor (Texas-only) rounding out the list. Together with these platforms, SEI said it now offers on-demand ordering to more than 90 percent of its footprint. Instacart, the most recent addition, will offer 7-Eleven products in the majority of its U.S. markets by the end of 2020. For added peace of mind, customers can request contactless delivery for their orders, and they will be left at the door.
SEVEN & I PLANS NET-ZERO EMISSIONS Seven & i Holdings aims to cut its greenhouse gas emissions to zero by 2050 at its retail outlets in Japan and the U.S., reported
“Seven & i Holdings is making zero emissions an official environmental goal and will commit to spend at least 5 percent of its capital investment in the environmental field, for a total investment of 100 billion yen ($960 million) over the next five years.”
cocoa blended with cool peppermint flavor and topped with optional chocolate sauce and International Delight Peppermint Mocha flavored creamer. Up until January 5, participating stores also offered any size hot beverage for just 79 cents every day from noon to 7 p.m. through the 7Rewards loyalty program found in the 7-Eleven app. Stores also stocked up on lots of other limited-edition, 7-Select private label holiday treats: ● Seasonal Sandwich Cookies with pomegranate crème, candy cane crème and pecan pie crème flavored varieties. ● Holiday-inspired Mini Donuts in chocolate covered cherry and gingerbread flavors. ● Choice of two festive yogurt covered pretzel flavors in sweet sugar plum sprinkle and the classic red, white and green. ● Limited edition trail mixes with flavors like butter rum toffee and sugar cookie. ● Fiery cinnamon bear candy for spice-lovers, and holiday flurry and snowman gummies.
Nikkei Asia. The Japanese company is making zero emissions an official environmental goal and will commit to spend at least 5 percent of its capital investment in the environmental field, for a total investment of 100 billion yen ($960 million) over the next five years. In Japan, Seven & i’s green initiative will promote use of solar panels and LED lamps at retail outlets, while fuel-cell trucks will be introduced for the distribution of supplies, in partnership with Toyota Motor. The company is also considering entering the business of operating renewable power plants, such as wind farms and hydroelectric plants, as well as investing in 7-ELEVEN AUSTRALIA renewable energy operators. SETTLES UNDERPAYThe zero emissions campaign will MENTS SCANDAL also cover customer service. By Employees of 7-Eleven 2027, 250 7-Eleven stores in Australia franchises have “7-Eleven the U.S. will be equipped been paid back $173 milwith charging stations for Australia franchises lion ($122 million U.S.) in electric vehicles, which have compensated underpaid wages, interest the retailer hopes will at4,043 current and former and superannuation, retract drivers of electric franchise employees ported The Guardian. cars. Seven & i also plans with an average payout Australia’s Fair Work Omto increase use of recyclabudsman said 7-Eleven Ausof $21,903.96.” ble materials in its privatetralia had implemented payroll label items. improvements after a report in 2016 found that some franchisees had CANDY CANE “deliberately falsified records to disguise the FLAVORED COCOA underpayment of wages,” and the company 7-Eleven kicked off the holiday season had failed to detect or address the breaches. with its new Candy Cane Cocoa—hot, rich continued on page 72 AVANTI N O V E M B E R | D E C E M B E R 2 0 2 0
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Payments compensated 4,043 current and former franchise employees with an average payout of $21,903.96. None of the money has been recovered by head office from franchisees. In 2015, the ABC’s Four Corners revealed unlawful practices at 7-Eleven Australia franchises, including systemic underpayment and instances of workers forced to withdraw their wages to pay back their employers to disguise underpayment. The reports bolstered union campaigns to expose what they call “wage theft,” which persuaded the federal government to introduce higher penalties for underpayment, including potential criminal offences for the most serious cases. In December 2016, 7-Eleven Australia entered a “proactive compliance deed” publicly acknowledging its responsibility for addressing past non-compliance.
NEW SLIDER SANDWICHES HIT SOCAL SEI recently launched cheeseburger and buffalo chicken sliders in Los Angeles and San Diego 7-Eleven stores. Served on buns from BREAD Artisan Bakery, and priced at just 99 cents, one mini sandwich is ideal for a quick snack, or pick up a few to make a hearty meal, the company said. They can be found at select 7-Eleven locations and can be enjoyed hot right away or grabbed cold and saved for later. The new sliders are delivered daily and come in two varieties: Cheeseburger—loaded with an all-beef patty, sharp cheddar cheese, fireroasted onions and signature secret sauce; and Buffalo Chicken—breaded chicken breast topped with spicy buffalo sauce.
pizza offer was available at participating 7Eleven stores for purchase, order-aheadpickup, or for delivery straight to homes nationwide on October 30 and 31. October is 7-ELEVEN CANADA National Pizza Month, and Halloween is DONATES FACE typically one of the top pizzaMASKS & HAND selling days of the entire “7-Eleven SANITIZER year at 7-Eleven, the comCanada donated 7-Eleven Canada pany said in a press reannounced that it has 125,000 masks and lease. donated 125,000 To redeem the 7,000 bottles of hand sanimasks and 7,000 botoffer (twice per custizer to the Government tles of hand sanitizer tomer per day), cusof Saskatchewan for use to the Government of tomers had to head to in schools and other Saskatchewan for use in their local 7-Eleven high-priority schools and other highstore and scan their 7Reareas.” priority areas. The company wards barcode upon checksaid supplies of face masks and out. To sweeten the treat, hand sanitizer are needed for teachers, customers were able to earn points on their students, and other front-line staff to keep BOGO purchase to redeem product in-stores. them safe and help prevent the spread of They were also able to take advantage of the COVID-19. Across Canada, 7-Eleven Canada deal through the 7NOW delivery app where is offering over 1.3 million face masks and customers can place an order for delivery or 77,000 bottles of hand sanitizer in the five for in-store pickup by simply ordering and provinces it serves: British Columbia, Alberta, paying ahead in the app. Saskatchewan, Manitoba, and Ontario. To support Canadians in need, 7-Eleven Canada has also donated approximately 350,000 meals since January to Food Banks Canada and continues to work toward its goal of 500,000 meals.
BOGO PIZZA ON HALLOWEEN SEI had a buy one-get one pizza treat for customers on Halloween. The two-for-one
CANADA’S REVERSE 7-ELEVEN DAY 7-Eleven Canada's reverse birthday on November 7 (11/7) was celebrated with a Reverse Slurpee Run—customers received a free continued next page
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couldn’t pay their rent that month, up 19 percent from November. • Walmart has enrolled 500 employees in Spotlight, a program designed to turn enthusiastic employees into volunteer social media influencers who post behind-the-scenes views of life at their local stores, reported Modern Retail. • IKEA has decided to stop publishing its iconic print catalog after 70 years, citing a decrease in consumers using the popular publication, 200 million of which were published in 32 languages at the catalog's peak in popularity, reported NPR. The retailer has focused on digital investments, as more consumers shifted to shopping online. • Beauty has become a growing category for mass retailers, such as Target and Kohl's, and they have increased their investments in segments including fragrance, cosmetics and nail care, reported CNBC. Kohl's has begun testing the Wellness Market concept at 50 locations, and Target will be home to hundreds of Ulta Beauty in-store shops. • Gasbuddy recently released a list of the top 10 cities with the most aggressive holiday drivers (rapid acceleration, hard braking, speeding, etc.), and the top three are in California: 1—Los Angeles, 2—San Diego, and 3—Sacramento. Memphis, Tenn. comes in fourth, followed by Miami-Fort Lauderdale.
rael, reported large Slurpee Haaretz. The drink delivered two companies right to their doorstep with every delivery order of $10 plan to operate 7-Eleven as 50-50 joint or more. To celebrate this ultimate Reverse venture partners and are looking to Slurpee Run, Slurpee drinks were delivered open 250 outlets in the first several years. Although both Fox and in a fun, newly designed, colElectra are experienced lectible cup. retailers—Fox under Slurpee lovers “Israeli its own name and were invited to try apparel retailer Fox other local and inany one of Slurpee's and Electra Consumer, ternational brands, classic flavors on a unit of the Elco Group, while Electra sells Reverse 7-Eleven have reportedly received appliance and Day, such as the alrights to develop and electronics through ways in style Mug operate 7-Eleven its Machsanei HashRoot Beer or the new stores in Israel.” mal and Shekem Elecexclusive flavor, Fanta tric stores—7-Eleven will Fruit Passion Slurpee. Other mark their first foray into groclassics were available for delivery including Crush Cream Soda Lite, Dr cery retailing. According to the article, Pepper, Crush Grape or Mountain Dew Israeli retailers have been feeling the Blue Shock. Customers also received $0 pinch of internet competition and the Delivery Fee on all delivery platforms with coronavirus lockdowns. The food segment, however, has largely avoided orders over $20. these pressures.
7-ELEVEN STORES TO OPEN IN ISRAEL Israeli apparel retailer Fox and Electra Consumer, a unit of the Elco Group, have reportedly received rights to develop and operate 7-Eleven stores in Is-
Advertiser’s Index
Yowie Surprise Rescue Series includes one of 26 collectible endangered species animals.
AKR Corp Duracel.............................56
JUUL .............................................cover 3
Nestle Waters.....................................40
Anheuser Busch ...................................6
Kellogg's ...............................................27
Path Water ...........................................32
Aon Risk Services..........................14,15
Liquid Death ........................................74
Simply Orange ............................3,4,48
Blue Bunny/Wells .................................1
Living Essentials ................................35
Smuckers/Sahale...............................55
Coca-Cola ...................................cover 2
Mars .........................................................18
Stryve.....................................................60
Cookies United ...................................47
Maruchan ..............................................38
Swedish Match ...................................44
Danone ...................................................13
McLane ...................................................31
Swisher ...................................5, cover 4
Diageo Guinness .................................17
Mondelez ..............................................24
Tell Industries......................................43
Johnson&Johnson.............................53
Monster ....................................................9
Windsor.................................................28
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Soon, 7-Eleven stores will have the opportunity to unlock a sour then sweet mystery with the 7-Eleven Exclusive Sour Patch Kids All Mystery Flavor 8 oz. pack. The fun kicks off with a chance for shoppers to win $50,000 and other instant prizes by trying to solve the Mystery Flavor. The official rules can be found on each pack. Plus, shoppers can bundle up with a fully funded “2 for $4” promotion live in-stores from April 28, 2021 to June Don’t miss out on the 29, 2021 with additional 7REWARDS upcoming 7-Eleven exclusive Sour Patch Kids and 7NOW support. All Mystery Flavor promo. This exclusive doesn’t come around often. Here’s why your store should buy in: The Sour Patch Kids brand is the #1 Sour Confection brand in America with a 25 percent share in convenience and a 34 percent share of the Total U.S. market (Nielsen, xAOC=C & TTL Convenience—FY 2019). Sour Patch Kids have 99 percent brand awareness (Kantar Millward Brown—May 2018). Your customers are looking for this brand and it over-indexes with the biggest convenience target demo of teens/Gen Z (NPD Snack Track, Two Years June 2019). A favorite brand with a hot promotion that’s dynamite for the convenience demographic—it all adds up to a big win for your bottom line.
Monster Energy Unleashes Sales Boosters Take your energy drink sales to the next level with these new products from Monster Energy: Monster Ultra Gold—Kick off 2021 by setting the gold standard. With zero sugar, easy-drinking Ultra Gold has the heavenly fresh flavor of biting into perfectly ripened golden pineapple. From the #1 Diet Energy brand, Ultra Gold gives you the boost you need, so you can Make Today Ultra. Reign Cherry Limeade—Your favorite
classic limeade with a delicious mix of wild cherry flavor, zero sugar, and zero artificial flavor or colors. Bursting with bold natural cherry lime flavor and low calories, meet the all-new sweet and sour superhero. Reign White Gummy Bear—Remember the sweet and yummy mouth-watering goodness after scooping into the gummy bear barrel at the candy shoppe? Now everyone’s favorite white gummy flavor packed with the sweet taste of pineapple is available in Reign Body Fuel with zero sugar and zero artificial flavor or colors. With a desire for pineapple and candy store nostalgia, White Gummy Bear offers the best of both worlds. Reign Inferno Water- Boost your energy drink sales with these new Monster Energy beverages. melon Warlord—Reign Inferno Watermelon Warlord is a mildly sweet, juicy and refreshing watermelon flavor to quench those intense workouts. Reign Inferno’s proprietary thermogenic performance blend includes 300mg of natural caffeine, BCAAs, electrolytes, L-citrulline, panax ginseng extract, L-carnitine, and green tea extract. Thermogenic ingredients increase metabolism, increase blood flow, and burn body fat.
Stock Milk-Bone For Your Customer’s Furry Friends Pets are a bright spot in an uncertain time. Pet ownership and consumer spending on their pets continue to increase. Consumers are seeking trusted, iconic brands to show their love to their furry companions. The Convenience Channel offers the perfect opportunity for consumers to grab a treat for their pup while they grab a treat for themselves. Milk-Bone, America’s #1 Milk-Bone grew more than Dog Treat brand, has grown more than 30 percent in the Convenience Channel in 2020. 30 percent in the Convenience Channel in 2020 (IRI CONV L26) driving increased basket spend. continued on page 76 AVANTI N O V E M B E R | D E C E M B E R 2 0 2 0
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New products and services for 7-Eleven Franchisees
Solve The Mystery Sour Patch Kids Candy Flavor
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Satisfy pet parents and their fur babies with classic Milk-Bone biscuits (SLIN 202835).
Beef Up Your Jerky Set With Stryve Biltong Stryve’s all-natural, air-dried beef has 50 percent more protein than traditional jerky with none of the sugar. The simple process of air-drying meat gives you a clean, deStryve Biltong is naturally Keto licious snack free of preservatives, niand Paleo friendly for your health-conscious customers. trates, soy, sugar and gluten. Stryve is the perfect option for those health-conscious and everyday customers alike who are sure to see (and love) the bold, vibrant “insta-worthy” packaging. Not to mention, Biltong is naturally Keto and Paleo friendly. Give your customers the ultimate beef experience. Stryve Biltong has two flavors in the recommended assortment,
award-winning Original (2020 Chef ’s Best Award) and Spicy Peri Peri. Interested in shelf danglers or IRCs? Send them a note. They would love to support you with in-store merchandising. For more information contact Julie McPherson at julie@stryve.com.
Vital Oxide Travel Size Disinfectant & Odor Remover Vital Oxide 3 oz. Travel Size Disinfectant is tough on germs and odor yet gentle enough for everyday use. The 3 oz. bottle is perfect for keeping in your bag when you are on the go. Vital Oxide disinfects as it cleans and kills 99.9 percent of bacteria and viruses, mold and mildew, is listed by the EPA for use against COVID-19, eliminates allergens, and much more. It will not harm soft surfaces or colorfast fabrics, is colorless, odorless, and so mild it can used to your wash hands. Each display contains 24 units, and the ship pack contains two displays. Display cost is $153.60, unit cost is $3.20, SRP is $5.99, total continued next page
COCA-COLA’S 7-ELEVEN FRANCHISEE INCENTIVE CONTEST Don’t miss out on Coca-Cola’s 7-Eleven Franchisee Incentive Contest. Franchisees could win a $300 Visa gift card. Over 300 winners will be selected. Contest runs from December 14, 2020 to January 31, 2021. Winners will be announced in February 2021. You will be automatically entered into the contest if you:
Enter Coca-Cola’s 7-Eleven Franchisee Incentive Contest for a chance to win a $300 Visa gift card.
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• Purchase 1 case minimum of each SLIN listed at right. All cases must be purchased from Coca-Cola via Red Truck. • Scan at least 1 unit of each SLIN listed below through your register. Winners will be drawn at random. Each winner will receive a $300 Visa gift card. Each Zone will have up to 40 winners.
ELIGIBLE ITEMS Powerade Mountain Blast 28oz Powerade Zero Mixed Berry 28oz Powerade Fruit Punch 28oz Powerade Strawberry Lemonade 28oz Vitaminwater Power-C 20oz Vitaminwater Energy 20oz Vitaminwater XXX 20oz Smartwater 1.5L Smartwater 1L Smartwater 700mL AHA Sparkling Water Blueberry + Pomegranate 16oz AHA Sparkling Water Citrus Green Tea 16oz Minute Maid 100% Orange 12oz PET Minute Maid 100% Apple 12oz PET
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retail is $287.52, to generate GP$ of $133.92 or GP% of 47 percent.
Vital Oxide 3 oz. Travel Size Disinfectant kills 99.9 percent of bacteria and viruses.
Bang Energy Shots Pack A Big Kick From the makers of the world famous Bang Energy Drink comes the newest revolution in shot technology. Introducing the World’s First Carbonated Energy Shot. Now you can get all the great taste and high energy as a 16oz Bang in a convenient 3oz shot. Contains patented super creatine, caffeine COQ10, electrolytes, Branched Chain Amino Acids, and no sugar. It’s fast, potent, effective and delicious. The 3oz Bang Energy Shots are perfect for anyone on-the-go. This conveniently sized shot fits in the tiniest of pockets, yet still packs a whopping 300mg of caffeine. Available in three flavors—Bangster Berry, Rainbow Unicorn, and Peach Mango. GenBang Energy Shots are fast, potent, erates 50.1 percent GP% (SRP—$3.79, effective and delicious. Cost—$1.89, GP$—$1.90)
NEW VOORTMAN MEGA SIZE WAFERS Hostess recently introduced a new pack size for its Voortman Bakery brand: Voortman Mega Wafers. Available in three flavors— Vanilla, Strawberry, and Chocolate—each treat consists of three layers of crème and wafer, and each pack contains 10 wafers. Each caddie holds nine units, and each pack has a 180-day shelf life guarantee. All products are baked without artificial colors, flavors, or HFCS Voortman has a rich brand history and is well established in Food and Mass Channels. It’s the #1 crème wafer brand in the U.S. grocery and has high quality ingredients at an affordable price. Voortman Wafers are now available in a Mega Size containing 10 wafers.
Cure Hangovers For Good With Morning Recovery Morning Recovery is the drink for when you drink. Made with patent-pending technology and designed to boost your body’s natural response to alcohol, restore vital nutrients, rehydrate and help you feel better after drinking. Recovery utilizes breakthrough manufacturing technology that maximizes the solubility of its main active ingredient, DHM. In a randomized, double-blind, placebo-controlled human study, users of Morning Recovery felt up to 80 percent+ better after heavy drinking. Morning Recovery is proven to effectively increase alcohol metabolizing enzymes (ADH and ALDH) activity in the liver, accelerate the metabolism of alcohol to a non-toxic acetate, and reduce the accumulation of acetaldehyde. Users simply take one full bottle Morning Recovery boosts your body’s right before their first drink, between natural response to alcohol to help cure hangovers. drinks, or up to one hour after their last drink. Manufactured in GMP certified facilities, caffeine free, soy free, gluten free, nut free, lactose free, no artificial flavors, TSA friendly, and with 18-month shelf life. Available in Original Lemon and Sugar Free flavors. Case Pack contains 36 bottles (SLIN: 223322, UPC: 850004320334).
Pickle Juice Prevents Muscle Cramps Pickle Juice sport was formulated for the specific purposes of stopping and preventing muscle cramps and replenishing key electrolytes lost through athletic performance or excessive sweating. Scientific studies have validated Pickle Juice's effectiveness in muscle cramp treatment and prevention. While it’s based on the conStock Pickle cept of drinking common pickle brine, the pro- Juice for your prietary Pickle Juice sports formula differs greatly athletic customers. in both form and function and is the preferred sports drink by serious athletes, athletic trainers, coaches and teams from youth through professional ranks everywhere because of it's purity and lack of non essential additives. Pickle Juice shots are formulated with portability and convenience in mind, and contain 100 percent natural ingredients, ten times the electrolytes of common sports drinks, and is fortified with vitamins.
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foa events FOA Of Chicagoland Virtual Trade Show May 10-14, 2021 Phone: 847-343-7777
FOA Of Chicagoland Charity Golf Outing Venue TBD July 22, 2021 Phone: 847-343-7777 (*Pandemic restrictions permitting)
FOA Of Chicagoland Virtual Holiday Trade Show October 25-29, 2021 Phone: 847-343-7777
FOA Of Chicagoland Holiday Party Venue TBD October 28, 2021 Phone: 847-343-7777 (*Pandemic restrictions permitting)
FOA Of Chicagoland Annual Picnic Cook County Forest Preserve South Barrington, Illinois August 21, 2021 Phone: 847-343-7777 (*Pandemic restrictions permitting)
National Coalition 45th Annual Convention & Trade Show Gaylord Palms Resort & Convention Center Kissimmee, Florida August 3-5, 2021
Join Us For The NCASEF’s 2nd Virtual Trade Show February 9-10 | Noon to 8 pm CST Watch for details at www.ncasef.com
FOA Board Meeting Dates FOA Of Chicagoland Please Note: All meetings will be virtual until further notice. Phone: 847-343-7777 January 28, 2021—Board Meeting February 25, 2021—Board Meeting March 25, 2021—Board Meeting April 22, 2021—Board Meeting & General Meeting June 24, 2021—Board Meeting July 22, 2021—Golf Outing & Board Meeting August 26, 2021—Board Meeting September 30, 2021—Board Meeting October 14, 2021—Board Meeting & General Meeting
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NCASEF
Board meetings National Coalition virtual Board meetings are being scheduled one per month. Vendors interested in sponsoring to appear virtually at these meetings should contact John Riggio, JR Planners, at 262-394-5518 or johnr@jrplanners.com.
National Coalition Board of Directors Meeting Hyatt Regency Long Island Hauppauge, New York May 18-20, 2021
National Coalition Board of Directors Meeting Gaylord Palms Resort & Convention Center Kissimmee, Florida August 1-3, 2021
National Coalition Affiliate Meeting Grand Hyatt Kauai Resort & Spa Koloa, Kauai, Hawaii November 15, 2021
National Coalition Board of Directors Meeting Grand Hyatt Kauai Resort & Spa Koloa, Kauai, Hawaii November 16-18, 2021