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Santa And Dancing Take Center Stage At FOAGLA Holiday Party
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Santa And Dancing Take Center Stage At The FOAGLA Holiday Party
Members of the FOA of Greater Los Angeles dressed to impress on December 4 to attend the association’s first holiday party since the start of the COVID-19 pandemic. Held at the Diamond Bar Center in Diamond Bar, California, the night featured a delectable buffet spread, a special visit by Santa, and dance entertainment provided by Karmagraphy. Franchisees and their guests had a wonderful time, happy to celebrate the holidays together after nearly two years of social distancing restrictions. The FOAGLA thanks its vendor sponsors for making this magical evening possible: Barbot Insurance, Jeff & Tony’s DSD, Monster, AnheuserBusch, Mike’s Hard Lemonade, and McLane.
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of Commerce. While offering competitive wages remains important, workers have had a chance to reconsider their priorities during the pandemic and are seeking jobs that offer scheduling flexibility so they can better enjoy their personal lives, training that will help them advance in their career paths, and other benefits. Walmart exemplifies the strategies that retailers are taking to attract and retain workers. Included among the perks the company is touting to potential employees are regular schedules that are set two weeks in advance; advancement opportunities, with promotions and raises for entry-level employees after seven months; and matching stock ownership plans for employees seeking to invest in the company.
It’s Been An Honor And A Privilege
BY JAY SINGH | CHAIRMAN, NCASEF; PRESIDENT, SOUTH TEXAS FOA
Serving as Chairman of the National Coalition of Associations of 7-Eleven Franchisees has been one of the highlights of my career as a franchisee. Since the time I joined my local FOA many years ago, I recognized the importance of having an organization that unites franchisees so they can share their knowledge and experience, as well as engage with our franchisor in one voice to express our issues and work on solutions. I have also realized the importance of sharing your expertise and leadership skills to help the franchisee community in every way possible. I first began my association with 7-Eleven in 1985, when I worked as a cashier for a franchisee in California. I then worked my way up to store manager, which I did for 12 years. In May 2001, I moved from California to Las Vegas to operate my own store. From there, I worked my way to having three stores. While in Las Vegas, I joined the local FOA and was a member for almost 14 years. During that time I was elected Vice President of the organization, and then President for about seven years. Simultaneously, I served as a Vice Chairman of the National Coalition for three terms. In 2016, I was elected Executive Vice Chairman, and in 2018 I started my first term as Chairman of the National Coalition. By this time I had moved from Las Vegas to Texas, and became President of the South Texas FOA. I have sailed a long journey from cashier to head of the national organization, and at every single step I tried my best to help franchisees and improve the system for everyone. Even as a member of many SEI-led committees, I tried my best to represent franchisee interests. I always led with integrity and kept my word, which are two very important qualities to me. The job of a franchisee leader is not easy, whether it be on the local or national level. Besides running your store, you take on the added responsibilities that include representing your colleagues in meetings with SEI management, organizing Board meetings and events like trade shows and the convention, talking to vendors to solve delivery or invoicing issues, and raising funds to keep the organization going, to name a few. During my administration, I went through at least three lawsuits. I’m the first chairman to ever have to deal with a global pandemic that affected many aspects of
our personal and professional lives, and continues to do so. Due to all the restrictions at the outset of the pandemic, we couldn’t hold an in-person convention and trade show, so the National Coalition officers and I organized a virtual trade show that benefited vendors, franchisees, and the organization. But even though revenue was down big time in this period, we saved money by lowering expenses and were able to keep the National Coalition in good financial health. Throughout my tenure I, along with the other National Coalition officers, served at the behest of the Board. Whatever motion they passed, we followed to the best of our efforts. My team can take credit for the best transparency ever. Ours was the first administration to allow any franchisee to ask any question regarding the finances and expenses of “I have sailed a long journey from cashier to head of the national organization, and at every single step I tried my best to help franchisees and improve the system for everyone.”
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It’s Been An Honor And A Privilege
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the organization, such as loss and profit, convention revenues, and so forth. As I step down as Chairman, I would like to thank every franchisee and Board member for allowing me to help you. I appreciate all your support throughout the years. It was a great privilege and honor to serve you. And now, after this long journey, I’m moving on to the next phase of my life. By the time you read this article, I will be out of the system. It’s been a long 36 years, and now it’s time for me to retire and enjoy time with my family. At the end of the day, as I look back and reflect, I am very happy I was able to send my kids to college and give them a great education. I am also happy and grateful for all the franchisee and vendor friends I have made over the years.
I wish the best of luck to the new executive officers and their communication efforts with SEI. I hope they are “My team can take credit for the best successful franchise in changing agreement the to terms benefit of the both transparency ever. Ours was the first parties and improve franchisees’ bottom administration to allow any franchi- lines. see to ask any question regarding the finances and expenses of the JAY SINGH CAN BE REACHED AT organization, such as loss and profit, 702-249-3301 or jays@ncasef.com
convention revenues, and so forth.”
A Fresh Start
BY ERIC H. KARP, ESQ. | GENERAL COUNSEL TO NCASEF
When I humbly accepted the position of General Counsel to the National Coalition nearly eight years ago,I made three very simple promises. First, I would always tell the truth, never mincing words, no matter the consequence. Second, my client would always be the National Coalition and not any particular leader or group of leaders within the organization. Third, I would, to borrow a baseball metaphor, call them as I see them. I believe the record reflects that all of these promises have been kept. The single disappointment that I have to date is that the relationship I had hoped for and initially worked very hard at establishing, between the in-house and outside lawyers of SEI and my law firm,would be marked by collaboration, transparency and mutual respect. For reasons that I do not wish to recount in this space, that relationship began in a very promising fashion but went off the rails. As we look toward 2022, I want to set out my goals for a new beginning in the management of the relationship between SEI and its franchisees. As it happens, my philosophy on this subject is set out in great detail in a book published by the ABA Forum on Franchising entitled Franchise Law Compliance Manual, Third Edition, 2021. Chapter 4, “Franchise Relationship Management,” describes my opinion, grounded in more than four decades of representing independent franchisee associations, that both parties to the franchise agreement have a vested interest in pursuing mutual goals, cooperation and a shared sense of responsibility. The book is available on Amazon at https://www.amazon.com/ s?k=The+Franchise+Law+Compliance+ Manual&ref=nb_sb_noss. On more or less the first day of my first-year law school class on contracts, the learned professor told us that the relationship between two parties to a contract is governed by that contract. But over time the validity of that statement has become less and less apparent to me. In fact, in my experience, the day-to-day relationship be-
tween a franchisor and its franchisees is defined by the unique culture in the system, which is typically driven by the franchisor. Greg Nathan, a corporate psychologist and founder of the Franchise Relationships Institute, whose career involves both having been a franchisee and a senior executive for a franchisor,summarizes this elementary principle as follows: “Cooperation, commitment and communication are the real building blocks of success in a franchise chain. These largely come, not from legal agreements, but from ethical dealings, strong leadership and the mutual respect of each party for the goals of the other.” Mr. Nathan describes two franchise systems he has studied. Company A’s franchisees make up on aver-
age 30 percent more in profit than those of Company B. Company A is marked by authoritarian and confrontational leadership obsessed with control. Company B has leadership committed to collaboration, resolution of conflict through open discussion, positive two-way communication, and rewarding franchisees for good performance. Despite making less money, the franchisees of Company B were significantly more satisfied on a whole range of measures studied by Mr. Nathan. He concludes,“the point is that the corporate culture of a franchise network will have a significant impact on franchisee satisfaction. In some cases, culture will be an even more important determinant of franchisee satisfaction than financial performance.” The sense that there are more ways in which a franchisor and franchisee can be aligned “As we look toward 2022, I want to set rather than is bolstered in conflict by the pubout my goals for a new beginning in lished writings of Cherthe management of the relationship yl ly Bachelder, successful the highCEO of between SEI and its franchisees.”
A Fresh Start continued from page 23
Popeyes from 2007 to 2017. Her mission was to turn around a company which was then in disarray, losing money and market share. Having decided that part of the solution was to shift from local to national advertising, she requested that franchisees increase their advertising contribution from 3 percent to 4 percent.The franchisees responded by saying that they would pay that increase, but only if the franchisor invested $6 million of its own money in advertising and marketing. Ms. Bachelder and her Board agreed. While this had the effect of lowering earnings and disappointing Wall Street,the long-term dividends were exponential. Ms. Bachelder came to the conclusion that her company must acknowledge the sizable investment that franchisees make by purchasing the franchise and agreeing to a long-term contract. She correctly concluded that if franchisees did not prosper at the unit level, there was no chance that the franchisor’s revenue would go up or that new locations would be developed. As she stated, “Either franchise owners would succeed or Popeyes would fail.” I was fortunate to have a ringside seat to these developments, as I have been counsel to the Popeyes International Franchisee Association since 2010. Not incidentally, my first undertaking in that capacity was to negotiate the renewals of the two major national beverage contracts for the franchise system shoulder to shoulder
with in-house counsel for “Ms. Bachelder correctly concluded that if franchisees did not prosper at the unit level, there Popeyes. The benefits of this collaborative approach were was no chance that the franchisor’s revenue would truly remarkable. From go up or that new locations would be developed.” 2011 enue to 2015, Popeyes’ grew from $154 rev mil lion to $259 million and its net income from $24 million to $44 million. By 2014, average restaurant sales were up 25 percent. The result was that franchisees voted with their checkbooks by reinvesting in the brand, remodeling restaurants, and building new units. There is no denying that the shortterm goals of a franchisor and a franchisee can be, and frequently are, at odds. In the 7-Eleven system these include the fact that although the franchisor owns the equipment and decides when worn out equipment should be replaced, franchisees shoulder the cost of maintenance, which escalates as the equipment ages. SEI’s gasoline consignment structure incentivizes profit over gasoline volume. And the 2019 form of agreement has seriously undercut franchisee profitability and value. But these built-in conflicts of interest can be accommodated with leaders on both sides who value a long-term relationship over short-term gain. SEI would do well to acknowledge that in these and other areas, it has simply gone too far. But for SEI and the remaining franchisees in the system, the effects are not irreversible. A constructive and collaborative relationship between SEI and its franchisees, marked by transparency and mutual respect is not an end in itself. Rather it is a pathway to a partnership which can meet internal and external challenges, adapt to evolving consumer preferences, find inno“But these built-in conflicts vative rising responses to wages, and employee shortages where both parties and can of interest can be accom- achieve long term and sustainable financial modated with leaders on returns. Here’s to a fresh start. both sides who value a long-term relationship ERIC KARP CAN BE REACHED AT over short-term gain.” 617-423-7250 or ekarp@wkwrlaw.com
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recently, after raising it from $15 to $16 early this
year, reported Business Insider. More than half of the retailer’s staffers earn over $25 per hour and Costco boasts a high retention rate, with staffers staying for an average of nine years. • Retailers
opened more stores in 2021 than they’ve
closed, reported ReJournals.com. According to a study by Retailsphere, 52 percent of grocery-based retailers expanded in 2021, while 52.5 percent of fast-casual restaurants did the same. Retail-
sphere also found that 58 percent of value retailers—such as dollar stores—expand-
ed in 2021. • The House of Representatives may consider a bill called the INFORM Consumers
Act that’s designed to curb organized retail
theft by requiring high-volume online sellers to verify their identity, reported the New York Times. •
More people are quitting their jobs in Ken-
tucky than any other state in the country, reported WAVE 3 News. Citing data from the Bureau of Labor Statistics, the article states 84,000 Kentuckians left their jobs in August, which is 26,000 more than in July. However, the state also has one of the highest hiring rates and the second most job openings based on worker population. • A spate of brazen smash-and-grab robberies committed by flash
mobs grew in November at retailers including Best Buy, Home Depot, Nordstrom and Louis Vuitton, which were stocked up in antic-
ipation of holiday shoppers, reported the Washington Post. The trend has spurred some stores to lock up more of their merchandise and some retailers said the threat of violent attacks by organized retail theft gangs is making it even harder to hire and retain staff. • Dollar Tree announced
that it has expanded its partnership with In-
stacart to offer same-day delivery in as fast as one hour from nearly 7,000 Dollar Tree stores. • Ma-
cy’s plans to raise its minimum wage for hour-
ly employees to $15 by May 2022, after which the average total hourly pay will be $20, reported CNBC. The company has also teamed with Guild Education to launch a program that will invest $35 million over the next four years to cover 100 percent of employees’ tuition and books in a range of education programs including bachelor’s degrees, professional certificates and English language classes. • Popshelf, the format launched by Dollar
TIL DEATH DO US PART
BY ARFAN “ART” FAROOQI
FRANCHISEE
In August I began my 27th year in the c-store business and my 11th year as a 7-Eleven franchisee. Out of all my years in the c-store industry, I have not found a better way to grow sales and increase profits than the 7-Eleven franchise system. I feel like this is the enterprise I was destined to manage. All my skills are honed and used regularly to meet the ever-changing operational challenges of my 7-Eleven franchised store. I love this business! But my fondness for this industry alone is not enough to fulfill my financial needs. In order to make this work, I have to manage my side of the franchise agreement and daily store operations nearly to perfection.
Franchisees have to build extensive value for our customers,and the many 7-Eleven system-related issues create an extensive amount of stress when trying to navigate solutions to keep the store functioning.Most of these daily challenges occur at various times throughout the business day/night.There are hundreds of unique challenges we face, and it makes the important goal of providing top notch service to the most important people—our customers—that much more difficult. In the “before times”— before the COVIDfueled societal and economic changes—a launch of a single new platform would be both a joyous and anxious event in our system. (Looking at you, hot foods!) It would be sought after by the ambitious and rejected by those who prefer the classic operations. Eventually, the program would go through a few transitions and adjustments to become a core part of our overall growth and profit generation strategies. Many of the new program and platform launches, both experimental (7-Eleven self-checkout, unstaffed automated stores, and even drone delivery) and necessary (ASI 2, RIS 2.0, 7NOW, and WIN Coffee), were put on hold due to the uncertainty of the pandemic, although some programs were recently soft launched in select markets (7BOSS, DEX, and WIN Coffee). All of these programs and platforms, when properly functional, are a much-needed upgrade for 7-Eleven stores to remain a market leader in the c-store channel in the 21st century. But in order for them to be truly successful and useful they must be fully developed and tested, with all the bugs worked out, before they are rolled out to our stores. To wit, the main source of pain for me has come from the crossing and concurrent rollout of these immature platforms. The following are the greatest source of my 7-Eleven anguish.
TECHNOLOGY
7-Eleven has been one of the most innovative and dynam-
“All of these programs and platforms, when properly functional, are a much-needed upgrade for 7-Eleven stores to remain a market leader in the c-store channel in the 21st century.” ic c-store companies worldwide. Their role in the implementation of new and pioneering technology to make store operation efficient and competitive in the marketplace has had tremendous positive results. Such as our top-ofthe-line rewards program (7Rewards), a best-in-class introduction of flexible delivery platform to reach new customers at their place of need (7NOW), and key part“Franchisees have to build extensive value for our cusnerships with top brands like InstaCart, and DoorDash. Amazon Box, tomers, and the many 7-Eleven system-related issues However, there are many points of pain create an extensive amount of stress when trying to caused by the rollout of immature, unrelinavigate solutions to keep the store functioning.” able, untested gy platforms, and poorly planned technoloincluding our retro POS, 7MD scanners,the aging ISP,7BOSS cloud,DEX gas system, and the constant network communication issues. Oh, and don’t get me started on the near daily credit card pin-pad issues. It seems to me that the departure of key 7-Eleven support staff and department heads in Dallas in the past year has had its effect on the ability of many of the remaining and new support staff to investigate and correct the integration issues of all these platforms. The daily tsunami of new and unique “There are many technology technology issues appears to be hurting the issues that are unique to support staff’s morale and psyche. The loss individual stores that sometimes take months to decipher of decades of experience dealing isting 7-Eleven technologies, with uniqueness, has left a blackhole in with exall their the soluand diagnose, from cash safe tions department. The “Problem Solvers” count issues to phantom have left the building. This leaves the end delivery check-ins with billing user, me included, to spend countless hours that never arrived.” continued on page 30
trying to coerce a solution from the various un-integrated help desk departments. When I spend most of my management time on the phone with the help desk trying to fix these system issues, I do not have time to recruit, hire, train, and support my staff. There are many technology issues that are unique to individual stores that sometimes take months to decipher and diagnose, from cash safe count issues to phantom delivery check-ins with billing that never arrived. My personal favorite is the vanishing custom retail prices in 7BOSS—after many attempts to change the price of an item, it continues to be sold at the POS for the previous price.
SUPPLY CHAIN MANAGEMENT
7-Eleven has the size and experience to provide exceptional supply chain management.However,as the pandemic exposed the entire U.S. supply chain system to the most strenuous stress test imaginable, 7-Eleven’s reliance on the thousands of suppliers, vendors, and distribution companies has exposed them in a way we cannot yet calculate. Their exposure was exponentially increased to the horrible points of failure of every vendor and item supplier weakness. 7-Eleven has to ensure that we have the right products for the customers, at the right time, at a lowest possible cost,to maximize the revenue for the business. Even though many of the supply chain issues are not 100 percent in the control or ability of 7-Eleven to manage,there are a litany of small scale and local issues that 7-Elev-
en’s own mistakes have magnified and made worse. I am in awe how easily a small entry mistake can and often does cause monstrous disruptions in the daily operations of my store. A recent one that affected many stores was the inability to sell new scratch-off games from the state lotteries. After several “fix-by” promise dates came and went, and after repeated failures to input the game data into the master item file, it took nearly two weeks to get it corrected. Who pays for those lost sales, and lost customers who went down the street to our competition to find ample inventory available for their needs? It may seem small to those who are responsible for these oversights, but I have to look the customer in the eye and make excuses for failures I had no part in committing. Another is the input of incorrect information for our only coffee lids at the wholesaler warehouse, meaning the info transmitted did not match the item info, needed to pick the proper item. This caused hundreds of stores in my area to run out of the only lid that fits all our custom coffee cups.Again, it took three weeks for this to be rectified. In 7-Eleven’s defense, this was ultimately a wholesaler issue, and the 7-Eleven Merchandise Team overnighted cases of lids to each store in need. I can’t help but wonder, however, if the loss of senior personnel in the 7-Eleven Merchandise Department has caused more routine oversights and errors.
ACCOUNTING
Given the uniqueness of the Retail Accounting Method and the shared profit model of our franchise fee method, 7-Eleven has 100 percent of the responsibility to provide complete accounting services. This should be an accurate, transparent, efficient, timely and reasonably simple accounting system for the entire system. It should allow the franchisee to clearly understand the financial status of the current business period, and this has to happen on a daily, weekly, monthly and annual basis without the franchisee having to traverse extreme hurdles and multiple help desk requests. The issues with our new ASI 2 accounting system are, in my opinion, a direct result of the shortsighted and frugal decision by 7-Eleven to try to modify and bend existing incompatible software (Oracle) into something it was not designed to manage (Retail
Accounting Method). To further compound the matter, the person who designed ASI 2 and managed the transition from the legacy database accounting system resigned in the middle of the rollout. Additionally, some of ASI 2’s design features were made with incomplete input from franchisees and accounting professionals with retail accounting expertise. The hasty planning of the transition has caused tens of thousands of dollars in inventory audit variances. This has directly impacted the franchisee bottom line negatively. The way the systemcalculatesgrossprofits,managesinventory,and details item level pricing is in itself a jambalaya mishmash of accounting and inventory management techniques never before tried in a franchise model. Many of the CPAs and retail experts I have tried to explain a DMR to cannot understand why the complexity of simple retail math is so distorted from clear view.The countless daily reports that have to be navigated to make sense of a few Slurpee sales and inventory purchases from regular vendors is both irritating and frustrating. The inability of an average franchisee to clearly see and navigate their daily accounting reports without having to open pages of other reports creates a system so complex, andcalculationssodistorted,itisborderlinemalicious in its design. The inconsistency of the accounting system is routine. Every day the reports load at different times, are placed in cue in a different order, and have various reporting data included across multiple reporting days. There are entries being made days and months later with no explanation as to the “7-Eleven has to ensure that we have the right nature we try of to these charges ask questions or credits. about daily When errors, products for the customers, at the right time, the easy answer of the operations team is to at a lowest possible cost, to maximize the “open a CHD case.” This is an added layer of revenue for the business.” work to the money and end user that further costs them time. When a franchisee has to wade through pages and pages of reports in order to determine the profits or loss of a single item, there is a serious problem with the system. The introduction of each new platform has created a comedy of errors at the store level preventing visibility into the accounting of inventory, costs, and profits. This comedy
MORE ABOUT THE LONG TERM TENURE REBATE
ARNOLD J. HAUPTMAN, ESQ. | GENERAL COUNSEL, UFOLINY
In my last article in Avanti, I discussed the very serious dual problems of effectuating a “good will” sale of your store and the severely reduced price that you would get in such a sale. The reasons are many which created the perfect storm to hit your pocketbook and deny you of the expectations of a decent profit or retirement. In that article, I made brief mention of the Long Term Tenure Rebate (LTTR) which, from the inquiries I received after this article was published, deserves a more expanded explanation. To those franchisees in the system on or before March 31, 1991, (more than 30 years ago), this program is often the saving grace of realizing some additional and substantial money on the sale of one or more of your stores. To those not eligible for the program,this article may be of interest to you only in comparing the culture of the Southland Corporation and the value it placed on its franchisees in 1991 and the value that 7-Eleven, Inc. places on its present franchisees. The Long Term Tenure Rebate was offered to all franchisees in 1991 and contains the following language: “Whereas, in recognition of the dedication of its franchisees, 7-Eleven desires to establish a program giving all franchisees who executed a 7-Eleven Store Agreement prior to March 31, 1991 … the opportunity to receive a rebate in an amount equal to a specified percentage of the then current Franchise Fee (actually 50 percent in most cases) upon the qualified sale of franchisee’s interest in a 7-Eleven Franchise.” In short, when you sell your store for its good will and the buyer pays a $250,000 franchise fee, SEI will credit your open account for $125,000. However, that rebate is reduced by the same percentage that SEI has reduced its franchise fee in a promotion from time to time by as much as 25 percent. Caution: If you are about to list your store for sale, do so if possible when the promotion is not in effect. To make the deal even better, the rebate was offered to all then current franchisees, as well as to any future stores that the franchisee may franchise. That is a big deal if a 1991 owner was to go on to franchise several more stores. However, consistent with SEI’s pattern of often not upholding its bargain, many of the stores that would have and should have been entitled to the rebate were compelled to sign a waiver of its rights to the rebate as a condition of getting a new and additional store. Note the language “in recognition of the dedication of its franchisees.” In my experience of 40 years dealing with 7-Eleven corporate, this is the
first and last time that I ever actually saw, in writing, any mention of its general recognition of its franchisees. Note also that the LTTR was offered to every franchisee “To make the deal even without Quo in any expectation of a Quid Pro the form of the franchisees taking better, the rebate was on additional expenses. That is not the case offered to all then current now. Any additional renumeration paid to franchisees, as well as to 7-Eleven franchisees comes with a price tag. any future stores that the Take, for instance, the short time $200 per month payment to franchisees subsequentfranchisee may franchise.” to the signing of the 2019 Store Agreement in exchange for the additional financial burdens placed on the franchisees, such as insurance and payroll processing. This additional burden for sure cost a franchisee more than $200. I understand that the Long Term Tenure Rebate means little financially to the post 1991 franchisees,but I thought it would be interesting to compare the treatment of franchisees by the Southland Corporation, when it was an independent company, to 7-Eleven, Inc. which is part of a Japanese conglomerate. As to those franchisees who were in the system in 1991—and there are still surprisingly many of them—it should be remembered that the rebate is applicable not only to the store(s) you“To those franchisees in the system on or franchised then, but to all subsequent stores before March 31, 1991, the LTTR program franchised by you. is often the saving grace of realizing some Anyquestions,givemeacall.Besttoall. additional and substantial money on the sale of one or more of your stores.”
ARNOLD J. HAUPTMAN
CRIME AND ASSAULT PREVENTION— AN UPDATE FOR 2021
BY JOHN HARP, CSP, ARM—RISK ENGINEERING CONSULTANT
MITSUI SUMITOMO INSURANCE GROUP
As we close out a year of new COVID variants, rising costs and labor challenges, injuries resulting from crime—including robbery and assaults—continue to be a real threat for the 7-Eleven community. As seen in the chart below the MSIG/ Franchisee workers’ compensation experience shows high costs, but a dramatic decline in the number of assault-related claims in 2021. Costs tend to increase over time, but when the number of claims declines, costs usually follow.
Background—Crime And Assaults
A recently released FBI report shows a 25 percent increase in homicides in 2020 than in 2019. The violence and severity of crime, in general, have increased, and more people are carrying guns than ever before. These issues are most prevalent in larger urban areas, but the entire country is affected. The numbers also show c-stores are the fourth most common location for violent crime after home, alley/street, and parking lot. MSIG provides workers’compensation insurance for almost 4,000 U.S.franchised stores. Since 2016 there have been 377 assault-type claims for a current cost of $16,006,257. As seen in the chart, the number of assaults was increasing each year with costs varying depending on the severity of the assault. The number of claims so far in 2021 has declined significantly for multiple reasons despite the increased traffic compared to 2020.
Claim Examples
• Employee tried to stop the customer from stealing beer. The employee was stabbed in the back. Current costs are $39,120. • Employee followed customer outside to retrieve stolen goods. The customer hit the employee with his car, resulting in injury costs of $46,940. • The assailant stole five packs of cigarettes and then stabbed the employee. Current costs are $379,552. • Employee said a customer was stealing items and would not let them leave the store. The assailant then hit the employee. Current injury costs are $190,559. • The most serious injuries occur from two basic causes: 1) The employee is unable or ineffectively de-escalates the situation. 2) Leaving the counter or store to chase. Nothing good ever happens if an employee leaves the store.
What Can You Do?
Look at your store with fresh eyes and an open mind! Ask an expert for their advice!
Consider the following:
De-Escalation Tips (In These Potentially Violent Times)
Tempers can flare over a mask, demand for cigarettes, or questioning a customer’s ID. As patience is lower, effective de-escalation can be the difference in life or death. A few tips for your employees in dealing with a difficult customer: • Listen—Let the person vent their frustration by actively listening. • Do What They Say— Sometimes this is the best
and only option. • Remain Calm—But refrain from telling the customer to remain calm (this makes most people madder). • Control Your Body Language—Show your concern and do not reach for anything. • Find a Solution—Talk about how to fix the situation with facts. • Keep Yourself and Others Safe—Do not leave the store or register area. 1. Customer Service. Ensure your employees make eye contact and greet the customer. 2. Cleanliness. A clean store inside and out shows customers and possible assailants there is a high level of care. 3. Employee training including Operation Alert. Follow-up with frequent reminders, especially for new employees. continued on next page
Count & Cost of MSIG Assault Claims
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General a year ago to court more af-
fluent shoppers, has proven so successful that the company plans to grow the chain from 30 locations to around 1,000 by the end of 2025, reported CNN Business. Dollar General also plans to open 1,110 new stores in the coming fiscal year, including Popshelf, Dollar General and international locations. • Convenience stores and other businesses in Japan that are struggling to find staff due to the labor shortage are hiring elderly people in long-term
nursing care for mild dementia and other ill-
nesses to work one hour shifts at their stores, reported Kyodo News. The jobs give the elderly a feeling of purpose and a sense of satisfaction, and the program has proven mutually beneficial to social welfare service providers and understaffed businesses. • The
average U.S. household paid $724 a year for credit card fees in 2020, whether or not they
used cards, reported The Balance. That’s $261 more than in 2012, and it’s likely to go even higher for 2021 because of inflation and increased spending. • Family-owned convenience chain Stewart’s Shops re-
cently gave its 4,900 part-time and full-time employees bonuses that in some cases equaled
a week’s worth of pay, reported the Times Union. The company said the bonuses, which totaled $2.8 million, show its gratitude for their employees’ commitment during the pandemic. • C-store chain Royal
Farms is expanding its partnership with NCR to equip all of its 250+ stores with self-checkout
solutions. The company said this self-checkout rollout adds to the existing NCR solutions that it has in place, and will improve efficiencies for staff and the in-store experience for customers. • Traffic congestion
around the U.S. is creeping back up but remains
lighter than before the pandemic, a result of many workers not yet returning to the office full time, reported the Wall Street Journal. On average, U.S. commuters are on pace to lose 36 hours to congestion in 2021, 10 hours more than in 2020 but 63 hours less than in 2019. • Global legal cannabis sales reached
nearly $21.6 billion in 2020—an increase of 50
percent over 2019 sales of $14.4 billion—due largely to legalization, according to a new report by BDSA. The research firm forecasts global cannabis sales will grow to $62.1 billion in 2026, more than double the 2021 estimated global sales of $30.6 billion, at a CAGR of more than 15 percent. • Coca-Cola recently
continued from previous page 4. Limit outside activities after dark. Employees should not take out the trash after midnight. 5. Make sure employees know how and when to use the panic alarm. 6. Inside and outside lighting should be bright and cover the store parking lot and sides. A poorly lit store increases the risk. Make sure windows are not obstructed at the register area. 7. Cash limit in registers should be strongly enforced. If a robber succeeds in getting excess cash, you are a likely target again. 8.Cigarettes are a valuable target item.Limit these and other target items in the register area of the store. Secure them in a cage in the backroom and minimize inventory. 9. Keep the office door closed or locked to limit the temptation from a would-be criminal seeing cigarettes or cash. 10. Encourage the police to stop in for coffee or drinks and park in your lot after hours. Now more than ever, work with enforcement to understand criminal or gang activity in your neighborhood.
Summary—The Good News!
The pandemic has changed the retail world as customers seek stores that feel safe, clean, and help support their community. This is an ideal time to build on the loyalty of your employees and customers. Look at the physical safety and appearance of your store and continue to enhance the employees’ skills at managing tough situations and making the right decisions. Perform a security/violence prevention audit using the information from OSHA at this site: https://www.osha.gov/ Publications/osha3153.pdf or request a Safety-Security Store Audit from MSIG or your insurance company. MSIG, your insurance company, or your broker can help you develop practical and effective strategies to protect your employees from violent crime.
JOHN HARP, CSP, ARM
CAN BE REACHED AT jharp@msigusa.com or 908-604-2951
Key Questions
• Is your store prepared for crime and assault prevention through physical controls like quality high resolution surveillance,signs,and general clean appearance? • Are your inside and outside lights bright enough to create a safe space? • Did you know assaults or robberies do not always occur after midnight? • Didyouknowstudiesshowfreestandingstoresaremore vulnerable than strip mall locations and more common near busy highways for a more effective escape? • Are your employees trained, tested and ready if a shoplifting event escalates or someone enters the store demanding money or cigarettes? • Have you communicated concerns or issues to SEI Asset Protection or Store Support?
“The number of assault claims has decreased in 2021 by 42 percent. This is a significant achievement considering the current state of things. It’s not certain what the reasons are, but keep doing what you are doing with continuing diligence to preserve the health and safety of you, your family and employees.”
AFTER A ROBBERY OR ASSAULT
• Lock the doors – Call 911. • Find any witnesses and get their information. • Call the SEI Hotline! But remember, they cannot process a workers’ compensation claim! • Preserve any evidence of the crime, including video—take pictures. • Contact MSIG, your workers’ compensation company, or your broker within 24 hours.
WANT TOP-SELLING PRODUCTS AND EFFICIENT SERVICE?
Take Another Look At SBT
BY IAN PECORARO, VICE PRESIDENT OF SALES | SRP COMPANIES
SRP Companies has a long history partnering with 7-Eleven franchisees and providing innovative products to help increase profitability, improve efficiency and drive value. I hope this article answers some common questions about our partnership, particularly SBT (Scan-Based Trading), that I’ve heard as I’ve traveled around and talked with franchisees.
SBT Background
First a little background. SBT is the process where suppliers like SRP maintain ownership of the inventory and products within retailers’ stores until items are scanned at the point of sale for purchase by a customer.The earliest use of this inventory management system was in 1998 by magazine distributor Current News and was followed by successful pilot programs in grocery stores in 2000. Analysts in the grocery sector estimate scan-based trading accounted for $21 billion dollars in consumer goods purchased in the grocery industry alone in 2020, or nearly 3 percent of overall sales. SRP is proud to be a leader in bringing new technologies and more efficient service to our customers. We led the way in the convenience store channel by initiating the SBT model in 2016. In true partnership with 7-Eleven franchise and corporate stores, we rolled out this model for all product categories and sales have skyrocketed ever since.
COMMON QUESTIONS What are the benefits of the SBT model?
There are many benefits to SBT,but most importantly there is no inventory cost to the store. SRP carries all of the financial burden of the inventory. Items are only invoiced to the store when they are sold through the register. Additionally, our data and analytics help ensure that popular, in demand, products are stocked and available for sale, with SRP route representatives providing regular deliveries and merchandising—all of which drive profitability.
Are stores charged for shrink? “SBT is the process where suppliers like SRP maintain ownership of the inventory and products within retailers’ stores until items are scanned at the point of sale for purchase by a customer.”
SBT eliminate the risk stores have because SRP absorbs 100 percent of the cost of loss due to shrink and theft. Stores also are not charged a higher cost for goods if there is a high incidence of shrink or theft. If this does become an issue at a store, SRP will notify the store and work through measures to better protect inventory. This benefit significantly reduces the risk to franchisees and helps maximize revenue.
What are the measures to protect against theft? What additional programs and brands does SRP offer?
As a leading supplier for convenience stores, SRP offers a wide variety of innovative, impulse products that are ideal for our customers. These include MagBuddy, stickers, light-up and colored tech cables; and coming in 2022, we will be introducing torch lighters. All of these items are sourced, purchased, delivered and merchandise by our experienced SRP staff.
Because we both benefit when products are sold, we are working on initiatives to better protect against theft in stores. We’re partnering with 7-Eleven stores to install peg locks, free of charge, making it more difficult to easily remove products without being noticed. We are also working on improved positioning of products to decrease theft.
7-ELEVEN SALES GROWTH %
2018 – 2021
Electronics ................................ 36% Eyewear ...................................... 61% Work Gloves/Apparel........... 189% Is everything 100 percent guaranteed?
All SRP products and services are 100 percent guaranteed. We pride ourselves on delivering exceptional value to our customers by providing quality products and efficient customer service.
What’s next for the SRP/7-Eleven partnership?
SRP is committed to growing sales among our customers and will be focusing on offering innovative, on-trend products that customers are demanding. We’ll also be expanding our offerings via SBT to provide incremental sales. We recently announced
continued from page 35
unveiled its first-ever beverage bottle made
from 100 percent plant-based plastic, excluding the cap and label, that has been made using technologies that are ready for commercial scale. A
limited run of approximately 900 of the pro-
totype bottles have been produced. • World food prices have surged to the highest level in more than a decade, driven by robust demand and lackluster harvests, reported CNN Business. The Food
and Agriculture Organization’s Food Price Index has risen by more than 30 percent over
the past year, and it now stands at its highest level since July 2011. • CVS Health is closing 900 stores over the next three years—nearly 10 percent of its footprint—in response to the changing of “consumer buying patterns,” reported CNN Business. The closures are part of the drug store chain’s broader realignment of its retail strategy for its roughly 10,000 locations. • DoorDash recently
introduced fast grocery deliveries in 10-15
minutes from a DashMart in New York City, with the goal of expanding to select DoorDash grocery and convenience partners over the next year. •
The U.S. energy drink market was $19.63 Billion in 2020 and is expected to grow at a CAGR of 5.34 percent to reach $28.25 billion by
2027, according to a new report by ResearchAndMarkets.com. • Walmart and Coinstar are collaborating on a test of bitcoin kiosks at 200 of the retailer’s U.S. stores. The pilot program is part of Walmart’s initial exploration of a strategy regarding digital currency and a larger initiative by Coinstar and the cryptocurrency cash exchange Coinme, which currently makes bitcoin available through more than 8,000 kiosks. • Starbucks has part-
nered with Amazon to explore a new store format that will utilize automated checkout
technology developed by Amazon, reported Forbes. The first concept store opened recently in New York City, and the companies currently have plans for at least two more locations. • According to the National Association of Business Economics, 47
percent of respondents to its Business Conditions Survey reported a shortage of skilled
workers in the third quarter of 2021, which is up from 32 percent reporting shortages in the second quarter. Additionally, respondents think the labor shortages will not disappear in 2022. • Some
restaurants, struggling with labor shortages
WANT TOP-SELLING PRODUCTS AND EFFICIENT SERVICE?
continued from page 37
the purchase of Aerial Bouquets, which will introduce popular latex balloons and gift accessories to our customers, and we will be the exclusive provider of 24/7 Life wearing apparel. This year SRP also worked to transition all our 7-Eleven routes to Radio Frequency Identification (RFID). We are the first to market in the convenience store sector with this next-level technology. This will provide us detailed information to make real-time, evidence-based decisions on products by showing us what is selling and what isn’t, so we can make sure our custom-
“SRP is committed to growing sales among our customers and will be focusing on offering innovative, on-trend products that customers are demanding.” ers have the right products at the right time. Wevalueourlong-standingpartnership with 7-Eleven franchisees and will always work with you to improvetheproductsandservices weoffertobenefit both of our bottomlines.
IAN PECORARO
CAN BE REACHED AT 214-425-5702 or
Ian.Pecoraro@srpcompanies.com
TIL DEATH DO US PART
continued from page 30
of errors became a horrible tragedy in the first few months of 2021. From the 7BOSS launch and program immaturity, to the catastrophic launch and jerky integration of ASI 2 on the Oracle servers,franchisees have been subjected to a cruel and inhumane game of whack-a-mole that has many of them on the brink of mental and financial collapse. Alas, my franchisor has not left me on an island alone in the darkness. Rather, I am inundated daily with communication via emails, SMS texts, group chat messages, PDF documents, training opportunities, Zoom calls, and even the occasional old fashioned phone call. This provides me with an overwhelming amount of information about all of the factors affecting my day-to-day store operations. However, many days it is so overwhelming it is like dying of thirst while being hit in the face with water from a fire hose. By the time today’s challenges have faded into distant memories of the past, our franchise model will have been completely transformed. Our day-to-day operations will have changed in ways yet to be fully understood. But this will require an even more nimble business model that is capable of evolving into the magnificent brand needed to succeed, and a level of foresight and leadership from 7-Eleven executives that perhaps does not exist at this time. A new breed of franchisee will also need to be developed. One who has the extreme mental capacity to understand the complexities of the 21st century c-store business. They will need to have dynamic business management acumen and personnel development skills, not to mention a lot of luck on their side to be successful. As the complexity and challenges of our business increase daily, we are losing our most valuable resource—the desire to remain “in love” with our profession.
