Avanti September/October 2018

September/October 2018

T H E

V O I C E

O F

7 - E L E V E N

F R A N C H I S E E S

Each Franchisee Must Decide

Town Hall Meetings And The Dilemma Over The 2019 Agreement August 5-8 NCASEF 2019 CONVENTION

Long Beach, California

Franchise Fees Upon Transfer— A Common Sense Approach Would You Become A 7-Eleven Franchisee All Over Again?

Promos Are Not The Answer To Declining Customer Counts Visit NCASEF.com For The Latest Analysis Of The New Agreement

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

THE VOIC E OF 7-ELEVEN FRANC H ISEES

September/October 2018

Contents 35 Town Hall Meetings And The Dilemma Over The 2019 Agreement

Features MWFOA Donates $5,000 to National Breast Cancer Foundation

By Jay Singh, Chairman, NCASEF

39 Franchise Fees Upon Transfer— A Common Sense Approach

By Michael Jorgensen, Executive Vice Chairman

45 Would You Become A 7-Eleven Franchisee All Over Again?

Page 20

By Ajinder Handa, Vice Chairman, NCASEF

51 Store Manager’s Role In Managing Employee And Customer Safety

By John Harp, CSP, ARM Risk Engineering Consultant, Mitsui Sumitomo Insurance Group

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.

TM

Member News..16

NCASEF Survey, Strong Summer Sales, Amazon ‘Go’, Seven & i Profits, SEI Joins Red Cross, Apple Pay, New McLane Distribution Center, Circle K Discount Tobacco, 7-Eleven South Korea, Fastest Option, Dollar Stores, McLane Mobile VTS, New Swipe Fee Settlement, Amazon Hourly Wage, Counterfeit Cash, Long Lines, Slow Checkout, Checkout-Free, Kroger, DD Mobile Ordering, Cannabis-Infused Drinks, Couche-Tard Pot Sales, Corona, FDA Threatens E-Cigs, Card Skimming,

PA R DE

49 Promos Are Not The Answer To Declining Customer Counts

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By Eric H. Karp, Esq., General Counsel, NCASEF

Bits & Pieces........................................................18 Legislative Update..............................................28 Smoking Age, Massachusetts Age Jump, Illinois Governor Vetoes Age Bill, San Antonio Age Now 21, Beer In Utah

SEI News.......................67 7Now Debuts In NYC, Emerging Brands, Texas Motor Speedway, Zombie Invasion, Football Fan Fare, Chip Exclusive

Vendor Focus....................71 Franchisee Calendars....78

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NATIONAL COALITION OF ASSOCIATIONS OF 7-ELEVEN FRANCHISEES

NCASEF Survey Reveals Franchisees Are Weary Of New Agreement

NATIONAL OFFICERS

A new survey of 7-Eleven franchise owners conducted by NCASEF shows that the majority of franchisees believe their stores will not be more profitable under the 2019 agreement. e Franchisee Satisfaction Survey was sent to over 5,300 franchised stores, NCASEF said in a released statement. e majority of the 767 respondents are long-time franchise owners (77 percent have been franchisees for over 5 years, and 27 percent have been franchisees for more than 15 years). According to the survey, 43 percent believe that 7-Eleven's 2019 franchise agreement is the No. 1 issue they face today; 37 percent believe franchisee profitability is most important.

Evident in the survey results is an overall sense of mistrust in 7-Eleven corporate management as well as the belief that those in power do not have the best interests of franchise owners at heart, NCASEF said. Among the findings:

Michael Jorgensen

Jatinder Singh NATIONAL CHAIRMAN

702-249-3301 • jays@ncasef.com

EXECUTIVE VICE CHAIRMAN

347-251-1828 • mcjorg@yahoo.com

• Question No. 11: Based on the new 2019 agreement, my store(s) will be more profitable—85 percent disagree; 5 percent agree; 10 percent neutral • Question No. 8: If I had it to do it all over again, I would choose to enter the 7-Eleven system as a franchisee—72 percent disagree; 18 percent agree; 10 percent neutral • Question No. 15: 7-Eleven gets the lowest cost of goods from vendor partners—79 percent disagree; 12 percent agree; 9 percent neutral • Question No. 4: 7-Eleven executives are honest and ethical—65 percent disagree; 14 percent agree; 21 percent neutral • Question No. 20: 7-Eleven puts franchisees’ success first—84 percent disagree; 8 percent agree; 8 percent neutral e 2019 franchise agreement includes provisions that directly affect the ability of franchisees to operate their stores independently, NCASEF said. It also mandates all stores remain open on Christmas Day. “Franchise owners are at continued on page 18

Nick Bhullar VICE CHAIRMAN

626-255-8555 • bhullar711@yahoo.com

Rehan Hashmi VICE CHAIRMAN

847-845-8477 • rehan711@yahoo.com

Ajinder Handa VICE CHAIRMAN

425-438-8381 • ajinderhanda@hotmail.com

Jaspreet Dhillon TREASURER

310-892-2106 • jaspakam@gmail.com

Eric H. Karp, Esq. GENERAL COUNSEL

617-423-7250 • ekarp@wkwrlaw.com

John Riggio MEETING/TRADE SHOW COORDINATOR

262-275-3086 • jrpinc@charter.net

Sheldon Smith AVANTI PUBLISHER ADVERTISING MANAGER

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

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

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

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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 September/October 2018 © 2018 National Coalition of Associations of 7-Eleven Franchisees Avanti Magazine is the registered trademark of The National Coalition of Associations of 7-Eleven Franchisees.

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a crossroads,” said NCASEF Chairman Jay Singh. “In many parts of the country, more stores are for sale than ever before, and this is a direct result of the unfair franchise agreement which has been put

“e agreement takes away our ability to remain profitable, operate independently and grow our businesses. It is very telling when 72 percent of owners say they wouldn’t purchase a store again and 80 percent say they don’t believe management has franchisees’ best interests at heart.”

—JAy SINgh, ChAIrmAN, NCASEF

forth. e agreement takes away our ability to remain profitable, operate independently and grow our businesses. It is very telling when 72 percent of owners say they wouldn’t purchase a store again and 80 percent say they don’t believe management has franchisees’ best interests at heart.”

Full survey results are available at http://ncasef.com/other-pages/franchiseesatisfaction-survey/

CSD Feature Highlights 7-Eleven’s Future Plans A feature article in the October issue of Convenience Store Decisions touts not only how SEI is addressing all current business challenges, but also how the company plans to maintain its leadership position in the industry going forward.

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e article states that a new 7-Eleven store opens somewhere in the world every 3.5 hours because convenience, 7Eleven style, remains in high demand. how well 7-Eleven is doing on a daily basis is what SEI president and CEO Joe DePinto and his executive team concern themselves with every day at its headquarters, according to the CSD piece. SEI now identifies itself as a “customer-obsessed and digitally-enabled company.” As proof, the company processes 20 billion transactions across its global network each year and recently introduced support for tap-andpay services, such as Apple Pay and google Pay. Company executives are looking at “frictionless” checkout, as well as how to make it even easier for customers to find what they want, as quickly as possible. Eventually, this could include scan-and-pay technology to eliminate lines, enabling customers to depart the store without having to wait for a cashier. e company is already testing such a system at its Store Support Center in Texas. e article notes that 7-Eleven was named the top franchise of Entrepreneur’s “Franchise 500 List in 2017,” with the ranking based on franchise costs and fees, size and growth, support, brand strength and financial strength. e convenience retailer landed ahead of major corporations such as mcDonald’s, Dunkin’ Donuts and Dairy Queen.

DePinto told the publication, “With entrepreneurial spirit and innovations coming from our Store Support Center, a strong franchisee community and dedicated supplier partners, I have no doubt 7-Eleven will reach its corporate goal of having 20,000 stores in North America by 2027.” continued on page 20

The Anheuser-Busch brewery in Cartersville, Georgia brewery shifted gears from producing Budweiser to send 300,000 cans of clean drinking water to help victims of Hurricane Florence in North Carolina and South Carolina, reported Fox News. Anheuser-Busch has donated 79 million cans of emergency water in times of natural disasters over the last 30 years. • Walmart, which ordered 15 new Tesla Semi trucks last year, added 30 more electric trucks to its order recently with the goal of accelerating the electrification of its fleet in Canada, reported Electrek.com. • 7Eleven is going after clothing brand Perry Ellis over a new Slurpee themed line of clothes, reported The Blast. 7-Eleven is seeking an injunction ordering Perry Ellis to cease selling the clothes and wants a chunk of the profits the clothing company made from the frozen fashion. • This year 18 million U.S. adults will use a grocery app at least once a month—up 49.6 percent over last year, according to eMarketer’s latest app usage forecast.

By next year, more than one in five adult smartphone mcommerce buyers will use a grocery app to order food, the study reveals. • The CocaCola Company recently announced that it has reached a definitive agreement to acquire world-renowned coffee brand Costa Limited. The acquisition is valued at $5.1 billion and includes nearly 4,000 retail outlets, a coffee vending operation, for-home coffee formats and Costa’s state-of-the-art roastery. • Myrtle Beach, South Carolina is now home to the first real, full service KwikE-Mart convenience store from “The Simpsons,” reported WBTW Myrtle Beach. The store has plenty of Simpsons memorabilia for sale, as well as famous food items from the show like Squishees and Lard Lad Donuts, along with Duff-branded, non-alcoholic energy drinks. • Chevron Products Co., a division of Chevron U.S.A. Inc., is working with Honda Innovacontinued on page 26

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McDonald’s Franchisees Create National Association more than 400 mcDonald’s operators at a National Owners meeting in Tampa on October 10 gave a “resounding yes” to forming a self-funded advocacy group representing franchisees, to be called the National Owners Association (NOA), reported the Franchise Times. It would be the first franchisee association in mcDonald’s history. Also during that meeting, the attendees, who represent about one-quarter of U.S. franchisees, discussed their concerns about the burger giant’s plans for improving weak sales.

Franchisees of other fast-food chains have cre“Strong sales are pushing retailer ated independent franchisee optimism higher. ree of four c-store groups to agitate for change, retailers said in-store sales increased but this is the first time such over the first three months of 2018.” a large group of mcDonald’s franchisees has taken serious steps to organize, reoempared to the same time last year, and ported the Wall Street Journal. more than half (52 percent) said their fuel mcDonald’s franchisees, who have been sales increased compared to last year, actasked with updating stores, buying new cording to a nationwide survey of U.S. refrigerators to store fresh beef and inconvenience store owners conducted by stalling touch-screen kiosks as part of the NACS. Only 9 percent of retailers said company’s turnaround strategy, say the that in-store sales declined and only 20 cost of those upgrades is becoming a burpercent said fuel sales declined. e den while sales aren’t growing fast strong sales so far in 2018 are pushing reenough to yield a sufficient return. e tailer optimism higher, NACS stated. All group plans to meet again in December. three retailer optimism measures that It intends to narrow its concerns to one NACS tracks are at record highs: 87 peror two priorities where it will seek cent are optimistic about their business changes from mcDonald’s management. prospects for the next quarter, 87 percent are optimistic about the industry prospects and 85 percent are optimistic about the overall economy’s prospects.

Convenience store sales are strongest Nearly three in four (72 percent) conover the summer months as more people venience retailers said in-store sales increased over the first nine months of 2018 continued on page 22

Strong Summer Sales

MWFOA DONATES $5,000 TO NATIONAL BREAST CANCER FOUNDATION

Pictured: Jim Bayci, MWFOA President, Nisar Siddiqui, MWFOA Vice President, Joe Rossi, MWFOA Treasurer, Adnan Siddiqui, MWFOA Board Member, Ike Swaleha, MWFOA Board Member, Khalid Memon, MWFOA Board Member, and franchisees Patty Miller and Cheryl Nilsen.

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The 7-Eleven Midwest Franchise Owners Association (MWFOA) recently hosted a meeting in Troy, Michigan which was also attended by Detroit-area franchisees. The 7-Eleven MWFOA Board and members were accompanied by representatives of the National Breast Cancer Foundation (NBCF), at which time a donation of $5,000 was presented to the organization. With October being National Breast Cancer Awareness Month, the MWFOA was pleased to support an important cause and could not have been more appreciative to the NBCF representatives for joining them from Dallas. Go Pink!

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enjoy outdoor activities because of longer daylight hours in the summer months and more travel. retailers most oen cite good weather, positive economic news and low gas prices as the top three factors that drive sales, and all of these factors were cited as positively affecting sales over the summer months.

3,000 Amazon ‘Go’ C-Stores By 2021 Amazon is considering a plan to open as many as 3,000 new Amazon go cashierless stores in the next few years, an aggressive expansion that would threaten convenience chains like 7-Eleven, Inc., quick-service sandwich shops like Subway and Panera Bread, and mom-andpop pizzerias and taco trucks, reported Bloomberg. e internet giant is considering plans to have about 10 locations open by the end of this year, about 50 locations in major metro areas in 2019, and then as many as 3,000 by 2021. Opening multiple locations in proximity, like it’s doing in Seattle, could also help Amazon reduce costs by centralizing food production in one kitchen serving many stores. e company unveiled its first cashierless store near its headquarters

in Seattle in 2016 and has since opened two additional sites in the city—one in late August in downtown Seattle, and the other a week later in one of Amazon’s office buildings in the South Lake Union neighborhood. Amazon also opened a go c-store in Chicago on September 17—the company’s fourth and the first outside its hometown—located on the first floor of the complex where Amazon’s Chicago office is located, reported the Chicago Tribune. On October 8 the company opened its second Chicago go location, with plans to open a third very soon. According to the Bloomberg article, Amazon is targeting dense urban areas with lots of young, busy, affluent residents willing to spend a little more than a typical fastfood experience for better quality food.

Overseas C-stores Boost Seven & i Profits SEI parent company Seven & i holdings' operating profit rose 3 percent to roughly 200 billion yen ($1.76 billion) for the six months ended August, reaching a record for six straight years on strong overseas convenience store operations, reported Nikkei Asian Review. e result beats the initial estimate calling for a 1 percent increase to 196.7 billion yen. Sales rose 10 percent to just over 3.3 trillion yen.

Seven & i generates 20 percent of its operating profit from overseas c-store operations. U.S. unit 7-Eleven, Inc. acquired 1,000 Sunoco stores in January, bringing the total number of stores to about 10,000.

According to the article, spending is brisk in the U.S., boosting sales of freshly prepared food, such as pizza. gas stations set up on the premises also performed well, helped by rising gasoline prices. however, convenience stores in Japan—which rake in 60 percent of Seven & i's profit—saw a profit decline.

“Seven & i generates 20 percent of its operating profit from overseas c-store operations.”

Existing-store sales edged up about 1 percent, buoyed by the strength of prepackaged dishes, salad and noodles popular among health-conscious consumers. e company slashed advisory fees charged to franchisees by 1 percent as the stores struggled with rising personnel costs amid labor shortages, which eroded operating profit by about 8 billion yen.

SEI Joins Red Cross Disaster Responder Program In its first activation since joining the American red Cross Disaster responder program, SEI raised money to support the relief agency’s efforts as hurricane Florence approached the Carolina coast in September. SEI invited customers to add $1 to their purchase at participating 7-Eleven stores nationwide or donate online at https://www.7-Eleven.com/hurricane-relief. rough its 7-Eleven Cares Foundation, SEI joined the American red Cross Disaster responder program earlier this year. members of the program include leading corporations that donate a minimum of $250,000 annually to provide the highest level of support to American red Cross preparedness and relief efforts. year-round support from 7-Eleven helps ensure the red Cross can act immediately when disasters occur, the company said in a released statement. In the past five years (2012-2017), 7-Eleven has provided more than $700,000 in domestic and international support, helping the continued on page 24

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red Cross respond to disasters such as hurricanes along the coast, tornadoes in Texas, wildfires in the West and earthquakes overseas. e company has also provided emergency product donations.

Apple Pay & Google Pay SEI has announced that most 7Eleven stores now accept Apple Pay and google Pay for contactless payments.

Support for each service rolled out in September and adds to the company's portfolio of mobile payment options that includes Samsung Pay. “Frictionless experiences are the future, and digital payments are key to such experiences.

Consumers prefer shopping at retailers that offer digital payment capabilities,”

said gurmeet Singh CDO and CIO of 7Eleven.

Other recent digital innovations include: • 7-Eleven NOW: e proprietary smartphone app, currently being rolled out into select U.S. markets, enables on-demand ordering of products from local 7-Eleven stores, and offers Apple Pay as a payment option.

• 7rewards: e popular app-based customer loyalty program allows customers to earn and redeem points upon checkout. e app also provides unique and exciting customer experiences in and out of stores.

• 7-Eleven Bot on messenger: 7-Eleven

fans can engage with the brand from within Facebook by simply chatting the 7-Eleven Bot on Facebook messenger.

• Amazon: e in-store package pickup service, Amazon Locker, is in approximately 1,100 7-Eleven stores; and Amazon Cash may be used at more than 8,000 locations.

• BillPay: e app powered by PayNearme enables cash users to pay a variety of bills at participating 7-Eleven stores.

Circle K Discount Tobacco Program Alimentation Couche-Tard Inc., the Canadian owner of Circle K stores, has launched a “Tobacco Club” in the U.S. continued on page 26

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that offers discounts on marlboro packs and other products to more than 4 million patrons who sign in with their mobile number, reported Bloomberg. e company has also expanded distribution of its own cigarette label to recently acquired chains, giving more customers a lowerpriced alternative as the cost to smoke climbs with tax increases on tobacco. e loyalty program is part of a push by Couche-Tard, which hired its first chief marketing officer last year, to create more targeted promotions and spur impulse purchases for high-margin products such as sandwiches. e program is in place in about 5,000 of its almost 7,800 U.S. stores.

7-Eleven South Korea Rolls Out Automated C-Store

A total of four 7-Eleven Express stores are being operated in this trial program: two in downtown Seoul, one in Incheon, and one in Anyang, gyeonggi Province.

7-Eleven is taking steps to commercialize the vending machine-style c-stores and will be accepting franchise applications as early as September.

New McLane Grocery Distribution Center In Texas mcLane Company, Inc. recently announced it will open a new distribution center—mcLane North Texas—in Fort Worth. e 625,000 square foot facility has ambient, cooler and freezer capabilities, the company said. e building is currently undergoing renovations to meet mcLane’s specifications and standards. e facility will begin operations in march 2019 with full utilization by December 2019. e service territory of mcLane North Texas will primarily be the Dallas/Fort Worth metroplex along with portions of Kansas, Oklahoma, Arkansas and Louisiana. e division is expected to employ approximately 600 North Texans—450 teammates in the distribution center and 150 drivers, mcLane said.

7-Eleven in South Korea has been rolling out self-service convenience stores consisting of vending machines, reported e Hankyoreh. e move comes as the conflict among convenience store owners and the South Korean government intensifies over the recent hike in the minimum wage.

Called 7-Eleven Express, these stores provide nearly all the services of an ordinary convenience store with a human staff.

Designed to resemble an express train, the stores consists of five vending machines linked together that carry about 200 products divided into five high-demand cate“Automated gories: drinks, snacks, South Korean prepared meals, processed food and 7-Eleven non-food products. stores offer e prices are the about 200 same as at a normal 7Eleven, in line with products the company’s princiin five ple of charging identicategories.” cal prices at all its stores.

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C-Stores Are The Fastest Option Convenient locations and fast service are what consumers say convenience stores provide best in an increasingly competitive retail landscape, reveals a recent national consumer survey released

by NACS. C-stores sell approximately 80 percent of the fuel purcontinued on page 53

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tions’ Honda Developer Studio on technology to enable drivers to pay for fuel and make convenience store purchases from their vehicle, allowing for a more secure and convenient experience, reported Convenience Store Decisions. • Dunkin’ Donuts announced that it is updating its branding and will now be known simply as “Dunkin’” as of January.

The company said the name change will reflect its increasing emphasis on coffee and other drinks, as well as speedy service and to-go food. • Nearly nine in 10 Americans say that convenience stores provide a good starting point for a career, according to a new national survey of consumers conducted by the National Association of Convenience Stores (NACS). • Amazon recently became America’s second $1 trillion company, just five weeks after Apple achieved that milestone, reported CNN Tech. • A new law that kicks in on January 1, 2019 makes California the first state to bar full-service restaurants from automatically giving out single-use plastic straws, reported the Associated Press. Another new law requires milk or water to be the default drink sold with kids’ meals at fast-food and full-service restaurants. • Starbucks is testing a program that will allow some employees to spend half of their workweek at a local nonprofit, reported CNN Money. For six months, the employees will spend at least 20 hours per week working for Starbucks, and up to 20 hours per week at a local organization. • A Chick-fil-A is opening up in the parking lot of Merritt Square Mall in Merritt Island, Florida, just a few hundred feet from an already established Chick-fil-A sitting in the shopping center’s food court, reported Fox News. The company said the food court Chick-fil-A will remain open for at least the foreseeable future. • Through its partnership with Instacart, Kroger Co. is expanding its same-day delivery program to 75 additional stores by late October, reported Chain Store Age. The expansion will grow Kroger and Instacart’s nationwide footprint by 50 continued on page 46

Legislative Update Towns & Cities Move To Raise Smoking Age A growing number of local governments are acting on their own to ban the sale of tobacco products to anyone under 21, reported Stateline, an initiative of e Pew Charitable Trusts. While two-dozen states considered bills to boost their legal smoking age to 21 this legislative session—and many likely will do so again in 2019—at least 340 towns, cities and counties in 21 states have taken action, compared with about 200 in 14 states in 2016. Anti-tobacco advocates point out that raising the buying age would save lives and cut long-term health care costs, while opponents fear the hits on retail sales and local tax revenue. massachusetts recently became the sixth state to boost its legal smoking age to 21. It joined California, hawaii, maine, New Jersey and Oregon, which have all done so within the past three years. Illinois lawmakers this spring passed a bill, but the governor vetoed it. In some of those states, advocates say local action spurred legislative action.

Although hawaii lawmakers became the first to vote to raise the smoking age to 21 in 2015, hawaii County, the Big Island, led the way by passing an ordinance in 2013. In Illinois, more than two dozen villages and cities, including Chicago, increased the smoking age before the Legislature acted. And in massachusetts, 179 towns and cities, representing about 70 percent of the state’s population, already had raised the smoking age before lawmakers voted overwhelmingly to approve the measure in July.

“Two-dozen states considered bills to boost their legal smoking age to 21 during the 2018 legislative session.”

Massachusetts City Considering Smoking Age Jump

e haverhill, massachusetts Board of health will hold a public hearing soon on a proposal to increase the age for purchasing tobacco products in the city from 18 to 21 and implement various restrictions, reported e Eagle-Tribune. e board is also looking to set a limit on the number of locations where tobacco products can be sold, limit the sale of so called “blunt” wraps and cap the number of smoking shops (vape shops) allowed in the city.

All of the proposals are intended to reduce the health and economic burden of tobacco use by preventing young people

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from starting to smoke, helping current smokers to quit, and protecting children and adults from secondhand smoke, according to officials with the state's Tobacco Cessation and Prevention Program. If haverhill increases the tobacco purchase age to 21, it would be joining 180 massachusetts communities that have already done so. e state has recently passed a new law that will raise the age for purchasing tobacco products to 19 this Dec. 31, then age 20 the following Dec. 31, then finally age 21 a year aer that.

Illinois Governor Vetoes Smoking Age Bill Illinois gov. Bruce rauner recently rejected a bill that would have raised the minimum age to buy cigarettes, vaping devices and tobacco products from 18 to 21 in the state, reported the Chicago Sun-Times. In a letter explaining his veto to the general Assembly, rauner called smoking “detrimental to the health of Illinoisans of all ages,” but argued the bill would only limit consumer choice without keeping tobacco out of youthful hands. “raising the age people can purchase tobacco products will push residents to buy tobacco products from non-licensed vendors or in neighboring states,” rauner added.

“ILLINOIS’ SMOKING AGE BILL WOULD HAVE COST THE STATE $41 MILLION TO $48 MILLION PER YEAR IN LOST CIGARETTE AND SALES TAX RECEIPTS.” Dozens of tobacco and vape shops lobbied against the bill, as did the Illinois Chamber of Commerce, the Illinois retail merchants Association and the Illinois manufacturers’ Association. According to the state Department of revenue, the bill would have cost the state $41 million to $48 million per year in lost cigarette and sales tax receipts.

San Antonio Smoking Age Now 21 On October 1, San Antonio became the first city in Texas to raise the age to purchase tobacco products to 21, reported Texas Public radio. is includes cigarettes, cigars, hookah, chewing tobacco, and electronic smoking products. e ordinance only applies to the sale of tobacco. People under 21 in possession of tobacco will not be fined or cited. Although the rule is now active in San Antonio, businesses will have a continued on page 30

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Legislative Update three-month grace period to adjust to its new rules. Aer January 1, they could be fined up to $500 for selling tobacco products to people under 21.

Big Changes For C-Stores That Sell Beer In Utah Convenience stores that sell beer in Utah are gearing up for big changes, mandated by state law and designed to curb excessive in-store advertising and con-

“THE LAW, APPROVED IN 2017, CONTAINS LANGUAGE THAT TIGHTENS THE RESTRICTIONS FOR BEER DISPLAYS IN GROCERY AND CONVENIENCE STORES.”

sumer confusion over flavored beer and ciders, reported the Salt Lake Tribune. e law, approved in 2017, contains language that tightens the restrictions for beer displays in grocery and convenience stores. Lawmakers wanted to prevent confusion between nonalcoholic beverages and flavored beers and ciders, which oen have similar labeling.

Additionally, stores that want to sell beer must obtain an “off-premise” license from the Utah Department of Alcoholic Beverage Control before march 1, 2019. To get the license retailers must submit, among other things, a license application, a $325 fee and a floor plan highlighting all beer displays and beer storage areas. Stores are also required to implement several new operational requirements, including: • Displays—Stores will be allowed only two beer displays. continued on page 53

Town Hall Meetings And The Dilemma Over The 2019 Agreement

BY JAY SINGH, CHAIRMAN, NCASEF

For 43 years, the National Coalition has intended to be the voice of 7-Eleven franchisees. We have sought to represent the interests of the average franchisee, to be a place for networking, and a source of information for everyone.

Now on the eve of signing the largest and most comprehensive revision to the Franchise Agreement since 2004, we are trying to stand up for franchisees and make revisions to a contract that the majority of franchisees are having trouble understanding completely.

Since June, when the contract was rolled out, SEI has been prompting a large number of storeowners to sign the 2019 agreement by the end of this year. The fact is the majority of franchisees are concerned about when to sign, what their choices are, and the pros and cons of this new contract. To help, the NCASEF and its officers, along with general Counsel Eric Karp, arranged two town hall meetings in California in August to provide information and answer questions. The first meeting in San ramon was sponsored by four FOAs, and 300 franchisees attended. The second meeting, a day later in the City of Industry was sponsored by six FOAs, and over 500 franchisees attended.

At each of the packed meetings NCASEF general Counsel Eric Karp provided a thorough analysis of the contract and highlighted close to 50 points of concern for franchisees. We also developed a worksheet for franchisees, no matter which contract you have, that can help determine the impact the new agreement could have on your bottom line. Both of these items are available on the Coalition website, www.NCASEF.com or by email-

ing the National Office at nationaloffice@ncasef.com.

Franchisee questions at the town hall meetings were about insurance, payroll, extra expenses and why, if a franchisee has to go to court, only Texas law applies. Franchisees questioned the ggPS, the ggPS on steroids, and how much these increases would eat into franchisees’ bottom lines. We all wanted to know about the extra expenses for delivery, for loyalty programs, for digital com-

“The bottom line is that franchisees are genuinely worried about their future because of this agreement.” merce, and why we can’t be guaranteed the best cost of goods from our supply chain. We wanted to know why Indemnification and Insurance were totally eliminated, and why we now have to contract for our own payroll. On the last page of Eric’s analysis of the new agreement, there are now up to 12 points that if you violate, SEI can take back your store. In the 2004 agreement, there was only one.

The bottom line is that franchisees

“We have sought to represent the interests of the average franchisee, to be a place for networking, and a source of information for everyone.” are genuinely worried about their future because of this agreement. The fact that 800 franchisees gathered together over two days shows the high level of concern franchisees feel about the contract situation. We’re all worried that the more we do increase sales, the less profit we will get out of our gross profit split.

As the saying goes, “We don’t know what we don’t know.”

Our town hall meetings revealed just how concerned franchisees are about the 2019 agreement. Some franchisees are being pressured to sign even though they still have several years remaining on their current contracts, and the majority is wondering what precautions they should take, and basically, what they should do. The result is franchisee morale is hurting.

One question that came up repeatedly is why should I sign now if my contract is not up? If this new agreement is so good, why is SEI pushing so hard for franchisees to sign it now? And why are franchisees hesitating? SEI has been holding their own town hall meetings all over the country, and it’s not clear why there is so much push to get franchisees to sign early. Could it have something to do with an appeal related to the franchisee lawsuit filed a year ago?

They emailed the FDDs to us, and then they printed and delivered them to continued on page 36

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Town Hall Meetings And The Dilemma Over The 2019 Agreement continued from page 35

every franchisee through the field consultants. Now we are getting emails urging us to sign promptly. SEI is even having signing ceremonies (cakefests) and hyping these events. I have never seen such a huge push from the company. The question remains, if the agreement is so good, why does SEI need to push it so hard?

The NCASEF’s position is that we don’t want anyone to lose their store(s) because they didn’t sign the new contract. We followed SEI’s suggestion

(disclaimer) that franchisees have their attorney and CPA look at the contract.

Our job is to educate franchisees, which we did through the legal analysis of the agreement and the information we sent through the NCASEF newsletter, Avanti, and the website. We held town hall meetings and provided the information to the FOA presidents and vice presidents.

Ultimately, it is up to every franchisee to decide if it is worthwhile to sign the new agreement. We do advise

“Our job is to educate franchisees, which we did through the legal analysis of the agreement and the information we sent through the NCASEF newsletter, Avanti, and the website.”

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that you consult your own lawyer and CPA and do a thorough analysis on how the new agreement will impact your store, especially if you are not up for renewal. The NCASEF is here to provide you with any information you may need to achieve this.

I cannot stress enough how important it is for every franchisee to join their local FOA and the NCASEF. There is strength in numbers and unity, which is precisely what we need at this time. If you know unrepresented franchisees, I encourage you to do everything you can to have them join their local FOA and our national organization.

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

Franchise Fees Upon Transfer— A Common Sense Approach

BY MICHAEL JORGENSEN, EXECUTIVE VICE CHAIRMAN, NCASEF

I recently watched a youTube video that someone had shared of the Australian Parliamentary Joint Committee On Corporations and Financial Services inquiry regarding the operation and effectiveness of the Franchising Code of Conduct. The Australian government is taking a hard look at the franchising model and the various regulations and methods of oversight currently in place. They have sought submissions and have heard testimony from many within the franchising sector, both franchisor and franchisees, as well as financial institutions and scholars.

The hearing transcripts can be found at https://www.aph.gov.au/Parliamentary_ Business/Committees/Joint/Corporations_and_ Financial_Services/Franchising/Public_Hearings and the submissions at https://www.aph.gov.au/Parliamentary_ Business/Committees/Joint/Corporations_and_ Financial_Services/Franchising/Submissions.

I like to research, and find the submissions and testimonies very informative.

Franchising is a wonderful business opportunity for many and has been for me, but like anything that goes unchecked, it can create issues where the strong can take advantage of the weak. you may not know Lord Acton, the late 19th century British historian, but you may have heard his wellknown quote, “Power tends to corrupt, and absolute power corrupts absolutely.” I applaud the Australian government for taking this approach and doing thorough research. I am confident that through this process they will implement changes that will improve the franchising model for all stakeholders. One can only hope that gov-

“I felt compelled to write about franchise fees upon transfer or sale because it seems there is a lack of common sense in the way the fee is applied.” ernments from around the world will follow their example.

Although my research could have lead me to write about many different items, one particular subject I felt compelled to write about is franchise fees upon transfer or sale.

changes and situation to move on if it were easier to walk away with a significant portion of either the investment they made or the equity they have built up over many years.

I understand these are two different scenarios. I believe an example would help illustrate the issue at hand more effectively.

Joe Franchisee bought a brand new store for a $270,000 franchise fee two years ago. This store came with a ten-year agreement. Joe’s store is performing well; he opened strong and is seeing double-digit sales increases year-over-year. Joe’s mother and father live out of state and his father has become ill. Joe decides that he needs to move closer to his parents to help them and lists his store for sale, asking $270,000. The calculated franchise fee for the store is $275,000. The total that the incoming franchisee would have to pay in goodwill and franchise fee in this scenario would be $545,000.

Let’s assume Joe was able to get a buyer willing to pay the full price. he would re-

The reason this issue appeals to me is because it seems there is a lack of common sense in the way the fee is applied. I like to apply common sense. my high school history teacher, reverend Sanders, had many catch phrases, but my favorite was when he would say, “Thomas Paine, Common Sense…” which would prompt the class to continued on page 40 repeat, “…is not so common.”

“Common sense would indicate that the best way to handle Another reason this topic appealed to the franchise fee in the event of a transfer or goodwill sale me is because of the would be to either prorate the fee charged to the incoming current change and di- franchisee based on the time used of the existing rection in our system. It franchisee’s contract, or rebate the selling franchisee would be far easier for franchisees unhappy the prorated portion of the franchise fee collected based with the current on time still remaining on their existing contract.”

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Franchise Fees Upon Transfer— A Common Sense Approach continued from page 39

coup nearly all of his initial investment plus whatever he was able to make in the two years he operated the store. I would argue that you would need to subtract the salary Joe would have made if employed elsewhere during this period from the calculation. 7Eleven, on the other hand, received $545,000 in franchise fees and the new franchisee has paid double what Joe paid for the store just two years earlier.

I will get back to the rest of the example with some additional questions this raises, but I want to share an excerpt from the September 14, 2018 Australian Parliament Inquiry testimony by 7-Eleven and an exchange with 7-Eleven Australia CEO Angus mcKay, which also prompted me to choose this topic.

Mr. McKay: Senator, if I may: the vast majority of our stores sell on the open market, so these are transactions between franchisees. That's our preferred method of transaction. What I would also highlight is that where we— Acting Chair: Do you have a right of veto over that? If somebody wants to sell their franchise and they find somebody to purchase it, can you interrupt that process?

“This would provide an acceptable path for those wishing to exit the system to recoup a measured portion of their initial investment or equity, and ensure that incoming franchisees are not overburdened with debt.”

40

Mr. McKay: We only have a right of veto over the incoming franchisee, and that's around whether they meet the standards that we expect within our network. We have no right of veto over price. We play an important role in trying to make sure the price is fair, that we're not seeing a store transaction that would put an unfair burden on an incoming franchisee. But our only right of veto is over the individual coming in.

Ms. Kearney: Do you receive an income or royalty for that sale?

Mr. McKay: We charge a franchise fee for the issuing of a further 10 years of franchising to the incoming franchisee, yes.

Ms. Kearney:And that's over and above the purchase fee that they give to the outgoing franchisee?

Mr. McKay: It is.

Acting Chair: And what scale are we talking about in terms of dollar value there, mr mcKay? Mr. McKay: Depending on the size of the store, circa $100,000 to $300,000. That would be a broad range.

Acting Chair: So it's a fairly significant amount of money.

Mr. McKay: It is, and that fee is effectively the IP that we then license to the incoming franchisee to operate that store for the 10 years, so the use of the 7-Eleven trademark and all the things that go with that.

Joe Franchisee only used two years of a ten-year agreement. had Joe remained a franchisee for the remainder of his term 7Eleven would not have seen any franchise fees for this store during this period. What happens if the incoming franchisee cannot make the income they expected to make based on paying over $545,000 for the store? Could they now try to sell the store for $545,000 with 7-Eleven charging another $275,000 franchise fee? If there were an interested franchisee they would be asked to pay over $820,000!

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Looking at the information provided in the FDDs over the years, franchise fees have grown significantly since 2001, when they were approximately $18.3 million. They reached a high of approximately $87.2 million in 2012 and have stayed consistently above $70 million each year. According to the most recent FDD in 2017, franchise fees were approximately $77.48 million. It is important to note that during this time period 7-Eleven also grew from 5,115 stores—3,173 (62 percent) of which were franchised in 2001—to 8,030 stores (Sunoco’s not included), 7,162(89.2 percent) of which were franchised at the end of 2017.

Common sense would indicate that the best way to handle the franchise fee in the event of a transfer or goodwill sale would be to either prorate the fee charged to the incoming franchisee based on the time used of the existing franchisee’s contract, or rebate the selling franchisee the prorated portion of the franchise fee collected based on time still remaining on their existing contract. There would also need to be considerations for administrative costs incurred due to the transfer.

This would solve a number of issues. It would provide an acceptable path for those wishing to exit the system to recoup a measured portion of their initial investment or equity, and ensure that incoming franchisees are not overburdened with debt. Unfortunately, franchise fees have become a large part of the budget for 7-Eleven. A change such as this will absolutely have a financial impact short-term, but will make for a much healthier system long-term. It would also be a step in the right direction to making common sense more common.

MICHAEL JORGENSEN CAN BE REACHED AT

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

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Would You Become A 7-Eleven Franchisee All Over Again?

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

This past summer my wife Steffi and I had the good fortune to celebrate our 40th wedding anniversary, and the even greater good fortune to take a wonderful two-week trip to mark that milestone.

While I am not given to sharing my personal life in these pages, I will tell you that each of us would marry the other again in a “New york minute.”

Every franchise system has an offbalance-sheet asset or liability: the state of the relationship between the franchisor and its franchisees. That asset or liability can have a serious effect on the ability of a franchisor to sell franchises to newcomers to the system, on the market for resales of franchised locations, and on the retention of existing franchisees. It often seems that SEI is one of the few franchisors I know that either doesn’t know this or doesn’t care.

The survey undertaken by the National Coalition this past September demonstrates clearly that the relationship between SEI and its franchisees is a liability to both parties. One need look no further than the oppressive, mean-spirited and take-it-or-leave-it 2019 franchise agreement rolled out by SEI without any input or negotiation with any element of the franchise community. Their strategy seems to be—to use one of my favorite analogies—that they can attract more bees with vinegar then they can with honey.

The survey results reveal that only 10 percent of respondents believe the 2019 franchise agreement shows that SEI cares about the well being of its franchisees. A whopping 84 percent “strongly disagree” or “disagree” with that statement. We could certainly end there, but there is ample additional evidence that the relationship between SEI and its franchisees is at a point where it’s hard to believe or imagine that it could actually get worse.

SEI has never questioned the validity of the 2018 survey or even the 2014 survey conducted by Franchisegrade.com. The 2014 survey was based on 642 respondents and was certified by Franchisegrade.com as statistically valid. The 2018 survey, conducted through Surveymonkey.com, was based on 768 respondents. Fifty-four percent of those respondents have two or more stores and 48 percent have been in

“There is ample additional evidence that the relationship between SEI and its franchisees is at a point where it’s hard to believe or imagine that it could actually get worse.”

“Every franchise system has an off-balance-sheet asset or liability: the state of the relationship between the franchisor and its franchisees.” the system for 10 or more years. Thus, the respondent group consists of seasoned and knowledgeable franchisees.

As in a marriage, the acid test of any franchise relationship is whether the parties, if they had it to do all over again, would choose to enter into the arrangement. In 2014, the National Coalition asked that question of a statistically valid sample of franchisee respondents. Fortynine percent stated that if they had the choice, they would not choose to become a franchisee all over again. In the 2018 survey, that percentage rose sharply to 72 percent. Thus, nearly three out of every four franchisee respondents stated that the relationship has broken down to the point that they wish they had never become a franchisee.

On top of that, only 10 percent of respondents believe that investing in SEI is a good decision, just 11 percent believe that SEI cares about its franchisees and only 8 percent believe that SEI puts franchisees’ success first. Conversely, 84 percent of respondents do not believe that SEI has the franchisees’ best interests at heart.

The 2018 survey provides ample additional evidence that the franchise relationship is seriously damaged, with 76 continued on page 46

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Would You Become A 7-Eleven Franchisee All Over Again? continued from page 45

percent of respondents stating that they do not believe that SEI has a positive relationship with its franchisees. This is even more confounding because SEI has refused to acknowledge, or even respond to recent written communications from the National Coalition extending a hand of conciliation, offering to engage in dialogue and collaboration.

Both the 2014 and 2018 surveys demonstrate a widespread belief by franchisees that SEI does not trust them. Seventy-five percent of respondents held that belief in the 2014 survey and 76 percent in the 2018 survey. responsibility for this sad state of affairs rests not with the hard-working franchisees that are represented by the Franchise Owners Associations that comprise the National Coalition. rather, that responsibility rests firmly and solely at 3200 hackberry road, Irving, TX. Over

graduated gross profit split on steroids, and many other issues and concerns have fallen on deaf ears. moreover, the rollout of the 2019 franchise agreement was handled in a rushed fashion, with SEI issuing frequently updated FAQs that were still vastly incomplete and in some cases misleading to the franchisees.

The incredibly well attended National Coalition-sponsored town hall meetings in California, with more than 800 combined attendees, saw franchisees deeply concerned, indeed terrified about their future, when they were fully and carefully informed of what was really in the 2019 agreement. many were shocked at the inconsistency between what they were being told was in the contract and what it really says. Some were even on the verge of tears.

As your general Counsel, it is my job to keep you fully informed of developments which can affect your bottom line and the value of your business. A famous Supreme Court justice once said that

“Nearly three out of every four franchisee survey respondents stated that the relationship has broken down to the point that they wish they had never become a franchisee.” the years, we have exhorted SEI to change the culture of this franchise system, to be more open and transparent about the supply chain, to disclose their intentions with respect to replacement of worn out equipment and the refurbishment of stores which are tired and cannot meet the competition posed by new, gleaming, high ceiling, well-lit stores with modern fixtures and equipment. Questions about the true profitability of fresh foods and hot foods, the ultimate cost of delivery which will be borne by franchisees, the impact of 46

“sunshine is the best disinfectant.” So we will continue, in every forum and to anyone who will listen, to shed the light of day on what SEI is doing to this franchise relationship, with the hope that one day at least a majority of SEI franchisees will be glad to say that if they had to do it all over again, they would be proud to enter the system as a 7-Eleven franchisee.

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ERIC H. KARP CAN BE REACHED AT

617-423-7250 or ekarp@wkwrlaw.com

continued from page 26

percent, making the delivery service available through more than 1,600 stores. • In a bid to tackle childhood obesity, the New York City Council recently introduced a bill that would ban soda from kids’ meals served at restaurants and instead make water, milk or 100 percent fruit juice the default beverage option, reported the New York Post. • Sandwich chain Subway is allowing its franchisees to decide whether to sell the chain’s $5 Footlong, reported USA Today. When Subway brought back the $5 Footlong last winter after a years-long absence, many franchisees complained loudly of the slim margins they earned off of the discounted sandwich. • U.S. online retail sales will approach $525 billion by the end of this year, a 15.9 percent increase over $452 billion in 2017, reveals a new report by FTI Consulting. E-commerce now accounts for 13.2 percent of the U.S. retail sales market, the report states. FTI Consulting expects U.S. online retail sales to top $660 billion by 2020 and surpass $1 trillion in 2025. • Dunkin’ Donuts announced that On-the-Go Mobile Ordering is now available through Alexa, Amazon’s cloud-based voice service. To start their order guests need simply say, “Alexa, order from Dunkin’ Donuts.” • Molson Coors Brewing Co. said its Canadian unit, Molson Coors Canada, has entered into a deal with Canadian cannabis producer, The Hydropothecary Corporation, to develop cannabis-infused beverages, reported CNBC. Marijuana use in Canada became legal on October 17. • Telecom giant AT&T is opening a concept store with coffee robots that will use precision technology to brew coffee, reported Marketing Daily. The Lounge by AT&T will be in the Capitol Hill area of Seattle and is designed to be part retail store, part coffeehouse and part hangout space. • Walmart recently launched a new pilot called Spark Delivery, a delivery platform that allows Walmart to learn even more about the full last-mile delivery process. Combined with third-party crowdsourced delivery providers, Walmart is well on continued on page 54

Vice Chairs’ Forum

PROMOS ARE NOT THE ANSWER TO DECLINING CUSTOMER COUNTS

BY AJINDER HANDA, NCASEF VICE ChAIrmAN, PrESIDENT, grEATEr SEATTLE FOA

Not too long ago we used to generate your business at risk. here’s how discount- “IF YOU SPEND MANY YEARS more profit at our stores thanks to traffic ing hurts your business: KEEPING PROMOTIONS FOR drivers that helped us maintain our cus- • It creates an expectation of future disAN EXTENDED PERIOD OF TIME tomer counts and margins. But lately, it counting.

AND TRAINING YOUR CUSseems like our whole store is on promotion. • It complicates your business dealings.

TOMERS TO WAIT FOR YOUR In the last three to four years, I have counted • It demonstrates a lack of confiPRICE PROMOS, THEN IT’S as many as 159 promos during a cycle. 7- dence in your product and VERY HARD TO GET Eleven, Inc. claims that having these dis- company, and erodes BACK TO BETTER counted promos helps move foot traffic trust in yOU. PROFITABILITY.” inside the store. however, I don’t think we • It squeezes your us to increase customer should set the precedent that every time our profit margin unneccounts and sales without customer buys from us it’s at a discounted essarily. slashing our prices? here • It forces you to cut price. That’s just bad business. are a few ideas: Companies invest in building strong corners (or at least con• Focus on value, quality brands not because it’s a fun thing to do, but sider cutting them). and customer experience. because stronger brands pay off for them in • When you’re offering • Show your confidence, prove terms of more revenue, bigger margins, your customer a discount, that what you’re selling works. higher customer loyalty, better talent acqui- you're going to have to sell a whole lot • Avoid bargain hunters who may overuse sition and ultimately, greater shareholder more in order to meet your monthly goals. value. yet on a regular basis many compa- While this might not necessarily affect your your customer service resources and never nies do something that hurts their brand current sales, think about what it means for convert into loyal, returning customers. value now and erodes it significantly over your workload, which in turns affects your • Preserve your brand’s integrity by limiting the number of coupons and promos the long term—they run price promotions. ability to sell effectively.

The truth of the matter is, if you spend • When you offer a discount, you are tak- and steering clear of deep discounts. many years keeping promotions for an ex- ing the focus away from the value you pro- • Encourage new product trials, repeat tended period of time and training your vide and placing it squarely on your price. purchases and higher average transactions through incentives that motivate customers to wait for your price promos, then it’s very “I don’t think we should set the precedent buyers to add more items to their cart. hard to get back to better that every time our customer buys someWe are hearing—from our profitability. A perfect exCEO to our field consultants— thing in our stores, it’s at a discounted ample of this is Subway and that our brand is hurting due to a its $5 foot long sandwich price. That’s just bad business.” decline in customer counts. Don’t deal. The same will happen you think it’s time to think out of the box to us with our $2.22 for a quarter-pound There is no way to escape then. Not only hot dog and Big gulp deal. The focus here that, studies show that discounts actually and work on value and quality, instead of is on the price instead of how good the hot reduce the effectiveness of whatever is having worthless or too numerous promos?

Warren Buffett once famously said, dog is. Also, you will not be able to focus being discounted. In a buyer's mind, the “Price is what you pay. Value is what on taking the quality product to the next discounted offering literally does not peryou get.” level since you have to sell it cheaper or on form as well at full price.

We can see how discounting can negpromotion. It forces you to cut corners.

When business and sales professionals atively impact our business and cause AJINDER HANDA CAN BE REACHED AT accept a lower price, it opens a veritable more pain than it may be worth. But what AJINDERHANDA@HOTMAIL.COM OR 425-438-8381 Pandora’s Box of problems that could put methods can we leverage that will still help AVANTI S E P T E M B E R | O C T O B E R 2 0 1 8

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Vendor Guest Column

STORE MANAGER’S ROLE IN MANAGING EMPLOYEE AND CUSTOMER SAFETY

By JOhN hArP, CSP, Arm Risk Engineering Consultant, Mitsui Sumitomo Insurance Group The new agreement requires owners with more than one store to employ a store manager. Despite the new agreement, many owners already have designated a manager to be responsible for the operations when they are away.

A store manager has a significant influence in the overall operations, including safe behavior of employees or responding effectively to a customer issue, such as slip and fall. But how did you choose your manager or decide who should be promoted?

Were they the most experienced? The best with customers? Perfect attendance? The most trusted?

Not every good performer can be an effective manager.

Ideally a manager should have the following traits: • Organized. managers have to juggle many tasks and be able to prioritize needs to ensure the employees get the job done, and on time.

• Communication. A manager needs to effectively communicate to all types of employees and customers. Strong verbal and written skills are essential.

• People Skills. Beyond communica- “How did you choose your tion, the ability to relate and get manager or along with different personalities, and understand employee needs decide who while making sure every employee should be plays their part. They also need to promoted? be adaptable to different customer situations. managers need to be coaches and mentors to help employees build essential skills in managing the job, safety and relationships with customers.

• motivation. A good manager knows how to motivate individual employees and the entire team.

• Leadership. This is the most difficult trait that is now always natural for people. The ability to build trust and know when to delegate, and most importantly set a positive example in all their actions.

A successful leader is one that manages the behavior and risks that can lead to employee injuries and customer incidents.

Key manager safety traits and actions include: • Setting a safe and positive example at all times.

• Know the employees and their tendencies (e.g. are they too emotional when confronting a shoplifter?).

• may be active in the new employee selection process—do they know what to ask?

• An active or primary trainer for a new hire—do they know or use the “Tell, Show, Do, Practice, review” method?

• Know the importance of an immediate response to unsafe behavior.

• how to manage an alleged customer injury or issue, and who to call.

• What and how to document any customer or employee incident.

• Understand how and when to discipline.

SUMMARY OF EFFECTIVE SAFETY LEADERSHIP The most effective managers are a tough, but caring leader because he/she cares about the employees’ and customers’ safety. The manager needs to understand that complying with the laws, improving sales and preventing injuries can occur if the employees are motivated to act safely and are physically able to perform the job.

MANAGER TRAINING Although the store manager section of the agreement requires training to be completed for the new manager, it does not as we understand require current managers to undergo training.

But the reality is that for an effective store manager to be your on-site risk manager ultimately reducing costs, some level of training is needed. continued on page 52

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Vendor Guest Column continued from page 51

Another thought on the manager’s training and their ability to train: Who follows up on new employee orientation and training? Who provides or checks on a manager’s training?

When your manager is an effective risk manager, your employees take fewer risks.

“Safety Instruction affects attitudes. Attitudes shape safe behavior.” As an owner and manager, one might think employees have common sense about safety. The dictionary defines common sense as “the ability to use sound judgment.” When it relates to shoplifting or assault prevention, have your managers instilled and reinforced common sense?

Training provides the manager information and tools, but imbedding the training content into daily activities whether it’s responding to an assault or employee technique stocking drinks in the vault, success requires a steady stream of feedback and reminders, verbal and non-verbal. And as the owner, your manager

may take the role of owner, CEO, “Who follows up human resources manager and on new employee more when you’re absent, making orientation and it critical they are prepared. training? Who This training can be accomplished through various types of reading materials, a PowerPoint or web-based content through a safety video library. (mSIg has a library for free access to franchisees.)

If you need assistance with your safety training efforts please contact your broker, insurance company or me at 908-604-2951 or jharp@msigusa.com.

provides or checks on a manager’s training? When your manager is an effective risk manager, your employees take fewer risks.”

JOHN HARP CAN BE REACHED AT jharp@msigusa.com

908-604-2951

continued from page 26

chased in the United States, and nearly half of all gas customers (48 percent) also go inside the store when they’re buying gas for easy one-stop shopping. Of those who enter the store, 53 percent say their prime reason is to buy a beverage. e time consumers spend in stores also is incredibly fast—nearly half of all consumers (45 percent) say they are in and out of the store with a purchase in 3 minutes or less. It’s for these reasons that c-stores are considered the fastest location to buy something to eat or drink, with consumers selecting convenience stores over fast-food restaurants as the shortest wait times in lines by a 2-to-1 margin (35 percent vs. 18 percent). NACS consumer surveys also suggest that consumers are looking to save even more time inside the store, with 92 percent of respondents saying they’d be interested in using automatic check-out technologies, and 67 percent saying they’d like to try same-day grocery delivery.

Dollar Stores Continue To Thrive Americans living paycheck to paycheck are a boon for dollar stores even as the economy strengthens, reported CNN

their 15,000th store opening. Dollar general has added more than 1,100 stores in the past year.

“Dollar Tree and Dollar General in July both marked their 15,000th store opening.”

NACS & Retailers Balk At New Swipe Fee Settlement

Money. Sales at Dollar general stores open for at least a year increased 3.7 percent last quarter compared to a year ago. higher foot traffic and customers spending more on packaged foods, groceries, home essentials, clothes, and personal care products boosted revenue. Fourfihs of the items it sells costs less than $5. e company has posted 28 straight years of same-store sales growth. Dollar general said many of its customers have fixed or low incomes, and have limited discretionary spending dollars.

Dollar Tree, which sells everything for $1, also reported higher traffic. Samestore sales there grew 3.7 percent last quarter compared to a year ago. e company bought Family Dollar in 2015, which sells most of its merchandise under $10 and is marketed as a “neighborhood discount store.” In July, both Dollar Tree and Dollar general marked

Visa and masterCard, along with some top U.S. banks, have agreed to pay as much as $6.2 billion in a class action settlement with retailers over swipe fees, reported CNN Money. e settlement ends a 13-year old suit brought by the nation's leading merchants, which claimed that Visa and masterCard violated antitrust laws by fixing prices to benefit the banks. It's the largest antitrust settlement ever. e suit has been settled before, but the original settlement reached in 2012 was rejected by major merchants as unfair and overturned on appeal. Opponents of the earlier agreement argued it would have limited the retailers' ability to bring future lawsuits and done little to end uncompetitive practices. e amended settlement represents a $900 million increase over the previous one. however, many of the largest mercontinued on page 54

Legislative Update continued from page 30

One can be the cooler, aisle or room where beer is the only beverage displayed. e other display can be anywhere in the store, except “adjacent to a display of nonalcoholic beverages,” unless there is a door, physical divider or other display separating the products.

• Warning Signs— “To get a Utah beer license, Stores will be required retailers must submit a license to post signs at each beer display that read: application, a $325 fee and a “ese beverages confloor plan highlighting all beer displays and beer storage areas. tain alcohol. Please

read the label carefully.”

• Badges—Cashiers who are at least 16 are allowed to sell beer if they are under the supervision of a person 21 or older.

• Training—managers and staff must complete alcohol training within 30 days of hire.

• Sale-To-minor Penalties—In addition to any criminal penalties that may be imposed, employees or supervisors who are caught selling beer to minors will face tiered penalties. On the first violation, employees will be given a warning and be required to retain alcohol training; subsequent violations will include fines ranging from $250 to $500 and possible suspension.

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chants in the nation, including Walmart, Target and Kroger, have already opted out of this settlement. Additionally, the National Association of Convenience Stores (NACS) called the settlement “inadequate” and said it supports lawyers and merchants advocating for reforms, reported CSNews Online. NACS said the antitrust case will continue as merchants that opted out of the 2012 settlement pursue lawsuits and legal claims by the class of merchants seeking changes to the rules that restrict the payment card market. e retail Industry Leaders Association (rILA) and retail Litigation Center (rLC) said the agreement fails to fix a broken payment system.

McLane Launches Mobile Virtual Trade Show

mobile VTS can be accessed with a mcLane login or popular social media accounts, including Facebook, google+, LinkedIn and mSN. With mobile VTS, operators can designate the Quick Order process that applies a specific item quantity to all stores and ships products on the first date available or use a normal ordering method to specify quantities individually. mcLane said franchisees and independents who have limited or no IT resources, or those who don’t have or want to use a computer, are expected users of this new technology solution.

Supplier community members can also use the application to introduce new items, make site visits or correct issues at store level. mcLane teammates, such as host Account managers and Independent Sales managers, are also expected users of mobile VTS.

mcLane Company, Inc. launched its mobile Virtual “Amazon is increasing its minimum Trade Show (VTS)—a new wage to $15 an hour and lobbying the ordering application for US government to increase the federal convenience store retailers—during the mcLane minimum wage from $7.25 per hour.”

National Tradeshow in early September. mobile VTS allows operators to place orders using any Apple or Android smart device. With a convenient scrolling feature, detailed Amazon, which has been under fire product listings, easy-to-order summaries over its pay for low-ranking workers, is and new items added weekly, mobile VTS increasing its minimum wage to $15 an is a simple, handy and money-saving orhour, reported Fortune. e move applies dering solution. e items presented each to all full-time, part-time and seasonal week will be part of the best deals offered employees across the U.S., as well as temto the retail community, mcLane said. porary staff, even those retained through agencies. It also applies to workers at subsidiaries such as Whole Foods. e new pay floor takes effect at the start of November. Amazon—the second-largest private-sector employer in the U.S.—is also lobbying the government to increase the federally-mandated minimum wage, set nine years ago, from $7.25 an hour.

Amazon Raises Minimum Hourly Wage

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its way to bringing Grocery Delivery to 100 metro areas covering 40 percent of U.S. households. • According to new data from the Synchrony 2018 Digital Study, 67 percent of consumers have downloaded a retailer’s app on their phone. More than half of those did so specifically for a coupon or discount offer.

Nearly half of consumers that have downloaded a retailer’s app use it for purchases. • Aldi and Instacart are rolling out online grocery delivery to all of the hard-discount grocer’s stores across the United States by Thanksgiving, reported Supermarket News. • A new report released by the Brightfield Group found that the cannabidiol (CBD) industry nearly doubled between 2017 and 2018 alone and is expected to grow exponentially to become a nearly $22 billion market over the next five years. • Sedano’s Supermarkets and Takeoff Technologies have partnered on what they call the “first robotic supermarket,” reported Supermarket News. In the next month, Takeoff plans to launch an automated, hyperlocal fulfillment center that will serve 14 Sedano’s stores in the Miami area and offer grocery pickup services to the Hispanic supermarket chain’s customers. • The No. 1 manmade contaminant in the world’s oceans is the cigarette butt, and it has mostly avoided regulation, reported NBC News. According to The Ocean Conservancy, cigarette butts have been the single most collected item on the world’s beaches for 32 consecutive years. • Walmart’s Canadian unit is exploring the possibility of selling cannabis-based products, but has no immediate plans to get into the business, reported Reuters. Walmart is the first major retailer to show an interest in being part of Canada’s burgeoning marijuana industry, the article states.

• Amazon has opened a general store in New York City that sells merchandise highly rated on its website—like toys, books, household goods, and products popular with New Yorkers, reported Reuters. The shop, known as Amazon 4-star, marks Amazon’s latest continued on page 58

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Checkout-Free Technology Technology company Zippin recently announced the launch of its next-generation, checkout-free soware platform that enables retailers to quickly deploy frictionless shopping in stores and brings an end to waiting in line for good. e San Franciscobased startup has also opened a concept store in San Francisco's SOmA neighborhood to showcase its automated shopping technology in a real-life retail environment.

While early approaches to autonomous shopping have relied solely on cameras to track purchases, Zippin's ecosystem—which integrates its proprietary software with readily available hardware— uses a combination

of overhead cameras and smart “Counterfeiters in Philadelphia have figured shelf sensors for out how to avoid detection by marker pens the highest level of accuracy. Zipthat show whether a bill is real or fake.” pin said its approach stands Officials said the counterfeiters of out for its ability to work accurately those bogus bills have figured out how to even in a crowded store. avoid detection by marker pens that show whether a bill is real or fake. “If somebody bleaches a dollar bill and they print $20 on top of that, that pen is not going to detect anything,” Emmanuel said. e Secret Officials are warning about counterService pointed to a site called Know your feit cash being circulated around the money to give people information on how Philadelphia area, and one 7-Eleven franto tell the real currency from the fake. chisee has fallen victim to the scam, reported WPVI-ABC 6 Action News.

Vincent Emmanuel is frustrated with what's been happening recently at his 7Eleven store at 23rd Street and Passyunk Long lines and poor checkout experiAvenue in South Philadelphia. “All of a ences reduce shopper morale, and are sigsudden, we saw a surge of counternificant reasons for why consumers would feit $20 bills and $100 bills in the shop elsewhere or shi to buying groceries store,” Emmanuel told the news staonline, reveals a new survey by Digimarc tion. e money looks real enough, Corporation and Forrester Consulting. Acand it wasn't until the bank notified cording to the survey, 84 percent of shopEmmanuel that he realized some of pers said the checkout experience was the money he had deposited was ac-

Franchisee Stung

By Counterfeit Cash

Long Lines, Slow Checkout Reduce Revenue

tually counterfeit.

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Want to talk to other franchisees?

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

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Nick Bhullar, Vice Chairman, Board Member, So. California FOA

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

bhullar711@yahoo.com 818.571.1711

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

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important or very important, falling closely behind only location and price as criteria for deciding where to shop.

In addition, 39 percent of shoppers have le a store without making a purchase because of long lines, and 56 percent are likely to change stores if the primary difference was better checkout.

Other key findings from the study include: line length and the checkout experience has become as important as price in determining customer satisfaction and where they choose to shop; and slow checkout experiences have a detrimental impact on retailers' revenue as shoppers buy less or abandon trips.

“Coke, PepsiCo, Molson Coors and Corona are all exploring cannabis infused drinks.”

Beverage Comapnies Exploring Cannabis Drinks Coca-Cola is considering a move into the growing market for cannabis-infused drinks, reported CNN Money. Coke said that it is “closely watching” the growth of CBD, a non-psychoactive component in marijuana, as an ingredient in what it called functional wellness beverages. CBD has been used for medical purposes, including easing inflammation, pain and nausea.

Coca-Cola has reportedly been in talks with Aurora Cannabis, a Canadian cannabis company. Aurora has also expressed interest in cannabis drinks.

Neither would comment on a possible deal.

In early October, PepsiCo joined the growing list of big companies to confirm potential interest in making drinks with cannabis, reported Medical Xpress. e company’s chief financial officer acknowledged the company's interest in an interview with CNBC, but said he was not ready to share any plans PepsiCo may have at the moment. molson Coors is also working with a Canadian company on cannabis-infused non-alcoholic beverages, while Constellation Brands has announced a $4 billion investment in Canada's Canopy growth in exchange for a 38 percent stake in the company.

Dunkin’ Donuts Mobile Ordering Dunkin’ Donuts is putting cash in the hands of its franchise owners to equip stores to better serve customers accustomed to ordering on mobile devices, reported the Wall Street Journal. e doughnut chain plans to unveil 50 U.S. test stores this year that aim to make it easier for customers to grab coffee on the run with dedicated pickup areas, digital kiosks and expanded drive-through windows that prioritize orders via mobile app. e continued on page 60

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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incursion onto the turf of rivals such as Target Corp.

• Mondelez International, the parent company of Nabisco, has redesigned the packaging of the classic Barnum’s Animal crackers to remove any cages from the front after relenting to pressure from the People for the Ethical Treatment of Animals, reported the Birmingham News. The new box now shows a zebra, elephant, lion, giraffe and gorilla walking through grasslands. • IBM has been granted a patent for delivering coffee by drone when sensing that a drink is desired by an individual, reported Media Post. The system would determine if a person needs a coffee by assessing sleep quality, time of day, biometrics, blood pressure, and other factors. • Seven Bank, a unit of Seven & i Holdings, recently revealed that it will book 14.6 billion yen ($131 million) in writedowns and slashed its full-year earnings forecast after stumbling in an attempt to duplicate its convenience store ATM network in the U.S., reported Nikkei Asian Review. The bank now expects a 12.8 billion yen profit for the year ending next March, down from an earlier forecast of 26.8 billion yen. • Target is launching a line of “easy meal offerings” under its Archer Farms private label line that can be mixed and matched to quickly build a meal for the whole family, reported the Progressive Grocer.

The line comprises more than 100 ready-to-heat meats, salads, pasta, sides and soups, and each component is priced between $2.99 and $8.99. • Panera Bread recently launched a new “Build Your Own Mac” experience that allows customer to craft their own mac & cheese creations with toppings ranging from fresh avocado, pico de gallo and bacon to BBQ sauce, frizzled onions, smoked pulled chicken and fresh cilantro. • Once-dominant retail chain Sears has filed for bankruptcy, reported CNN Business. The 132-year-old company has been struggling for several years and is drowning in debt, according to the article. Sears said it will close at least 142 Sears and Kmart stores near the end of this year, in addition to the 46 store closcontinued on page 60

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company will invest about $100 million in the effort, with more than half going toward store equipment to aid the on-the-go beverage strategy. e rest will go toward technology infrastructure and training.

Couche-Tard Considers Pot Sales In Canada

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Kroger To Stop Using Plastic Bags Kroger, America's largest supermarket chain, said it will phase out all plastic checkout bags by 2025, reported the Cincinnati Enquirer. e retailer said it will transition from single-use to reusable bags and ultimately eliminate 123 million pounds of garbage annually sent to landfills. at would quadruple the amount of plastic the grocery chain currently recycles.

Kroger now sells reusable bags starting at $1 each, and said it will ramp up the availability of those bags. Shoppers for the fore-

With recreational marijuana now legal in Canada, Circle K parent company Alimentation Couche-Tard is seriously considering selling the product in its Canadian stores, reported Bloomberg. e company said it’s looking into the cannabis market, where it feels its expertise selling age-restricted products such as beer and tobacco can “Kroger’s transition from single-use help. “is is a train that’s gathering momentum and to reusable bags could ultimately the chances are it’s going to eliminate 123 million pounds of be more readily available 10 years from now than it is garbage annually sent to landfills.” today,” CEO Brian hannasch said. “We’d rather be part of that solution, part of that journey, seeable future will still have the option of than sit on the sidelines and wait too long.” asking for paper bags. Kroger said it is also hannasch also said the company needs to looking to cut back or phase out plastic consider the implications for its brand, so bags for produce and meat, but it's focusing for now the word is “go slow.” on eliminating checkout bags for now.

Corona Invests In Cannabis

Card Skimming

Constellation Brands Inc. is positioned to grow a global cannabis empire with Canopy growth Corp. and rocket the Canadian pot grower to a leading position on the world’s weed stage, reported Bloomberg. e brewer of Corona beer is spending C$5 billion ($3.8 billion) to increase its stake in the Canadian cannabis grower to 38 percent, with the company touting the move as the biggest investment in the burgeoning marijuana industry yet. e transaction closed in October 2018, the same month Canada legalized recreational pot, and it may even act as a “prelude to eventual full ownership,” according to one analyst.

Credit and debit card skimming is a growing threat to consumers filling up at the gas station, so much so that it has made an impact on how Americans pay for gas, according to a recent survey by CompareCards. Among the survey’s revelations: 15 percent of Americans said they’ve been a victim of skimming at the pump; 43 percent of Americans said they’ve changed the way they pay for gas because of concerns about skimming; and paying inside versus at the pump is the most common way (20 percent) people have changed their habits because of the risk of skimming.

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ings already planned for November. • Nestlé and Starbucks recently concluded their $7.15 billion licensing deal for the Swiss food giant to market the U.S. coffee maker’s packaged coffees and teas around the world, reported Reuters. The deal will also result in about 500 Starbucks employees shifting to Nestlé. • Total spending for Halloween is expected to reach $9 billion, the second highest in the survey’s 14-year history, according to the National Retail Federation’s annual survey conducted by Prosper Insights & Analytics. • Americans have different words for soft drinks depending on which region of the U.S. they’re from, reported Business Insider, citing a survey by the website Pop Vs. Soda. Soda is the preferred term in the Northeast, most of Florida, California, and pockets in the Midwest around Milwaukee and St. Louis; Pop is what people say in most of the Midwest and West; and coke—even if it’s not Coca-Cola brand—is what people call it in the South. • Whole Foods Market and parent Amazon.com are adding 10 more cities—including Seattle, Las Vegas and Phoenix—to their Prime Now online grocery delivery service, reported Supermarket News. The expansion makes the quick delivery service available in 38 markets. • Discount chain Dollar Tree, Inc. held its third annual Nationwide Hiring Event on October 17 at Dollar Tree and Family Dollar stores across the country, with the goal of hiring 25,000 associates. • A new crop of niche convenience stores aimed at millennials have completely overhauled the shelves, making gluten-free and organic products their staples, along with compostable straws and on-demand delivery, reported the Sacramento Bee. Millennial shoppers also like to see their stores support what they consider worthy causes. • NACS recently announced a new partnership with In Our Backyard for its Convenience Stores Against Trafficking (CSAT) program. Working together, the groups said they will help raise awareness of the problem of human trafficking continued on page 74

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To avoid having their credit card information stolen at the pump again, roughly two-thirds of victims said they had changed how they pay for gas. Combined, 38 percent of non-victims of skimming who are concerned about the risks said they have changed how they pay for gas. Of the victims who changed the way they pay, 45 percent said they use credit cards more, 39 percent said they choose to pay for gas inside the gas station more, and another 16 percent said they use cash more.

FDA Threatens E-Cigs e Food and Drug Administration is threatening to pull flavored electronic cigarettes like Juul off the market if the to-

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bacco industry doesn’t do more to combat growing use of the products by children and teens, reported Bloomberg. FDA Commissioner Scott gottlieb said the agency will soon release data that show a “substantial increase” in youth vaping this year compared with 2017. he said the problem had reached “epidemic proportion.” e FDA told five major e-cigarette manufacturers in mid-September to come up with ways to address youth use in 60

“e FDA Commissioner Scott Gottlieb said youth vaping in 2018 has reached epidemic proportions.”

days or the agency could require them to stop selling flavored products that appeal to children. e products being targeted are: Juul, Altria group Inc.’s markTen, Fontem Ventures BV’s blu, British American Tobacco Plc’s Vuse and Logic.

Listing Added Sugars May Influence Consumers A majority of consumers said the listing of added sugars on the upcoming new Nutrition Facts Label would impact their purchase decisions negatively, reported Food Business News. A new survey by Ingredion, Inc. asked consumers how the listing of added sugars would impact their purchase decisions for cookies, fruit continued on page 64

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drinks, spoon-able yogurt and snack bars.

Fiy-two percent said it would have a negative effect on their purchase of snack bars while the percentages were 53 percent for cookies, 71 percent for fruit drinks and 72 percent for spoon-able yogurt. e study also asked what an acceptable amount of added sugar was per serving. e answers ranged from 5 to 10 grams for snack bars, 5 to 15 grams for cookies, 0 to 15 grams for fruit drinks and 5 to 15 grams for spoonable yogurt.

Changes to the current Nutrition Facts Label include the listing of added sugars in the up-

coming label set by the Food and Drug Administration. e compliance dates for the new label are January 1, 2020 for manufacturers with $10 million or more in annual food sales and January 1, 2021 for smaller manufacturers.

Parker's Rolls Out Self-Checkout Savannah, georgia-based convenience retailer Parker's is preparing to roll out selfcheckout across its footprint of 54 convenience stores in georgia and South Carolina, reported CSNews Online. Developed in conjunction with NCr, the new self-checkout technology speeds up transaction time and frees up cashiers to serve as in-store concierges, enabling them to

focus on the total customer experience.

Parker’s debuted its new self-checkout technology at its high-volume retail store at in Pooler, georgia. “Our new self-checkout technology is designed to offer Parker's customers a frictionless shopping experience," said Parker's Chief Operating Officer Jeff Bush. "e customer feedback to the new self-checkout stations at our Pooler store has been overwhelmingly positive."

Japan’s C-Stores Offering Perks To Attract Workers Convenience store operators in Japan, facing a deepening labor shortage, are offering fringe benefits to attract part-time workers, reported Nikkei Asian Review. continued next page

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Among them, Seven-Eleven Japan is revamping its incentive system to attract and retain workers. In July, the convenience store operator opened a day care center for employees on the second floor of a store in the northern city of Sendai, hoping to attract working mothers. e Sendai outlet is the third to have such a facility. Additionally, in April 2017 SevenEleven began offering discounts to part-time workers on hotels and travel services through employee benefit agency relo group.

Convenience stores in Japan are also hiring more foreign workers, according to the article. At the end of march, SevenEleven had more than 28,000 such workers on their payrolls as part-timers, an increase of nearly 40 percent from a year earlier and 7.4 percent of its total part-time staff.

Online Grocery Sales Set To Quadruple By 2023 Online sales of groceries more than tripled between 2013 and 2018, and will more than quadruple between 2018 and 20123 as online options become more available and consumers become more open to trying online shopping more frequently, according to a new report by Packaged Facts, “Online grocery Shopping in the U.S., 2nd Edition.” Amazon and Walmart are currently the key par-

ticipants in the market, together accounting for nearly 28 percent of online grocery sales. Instacart, Kroger, FreshDirect, and Peapod represent other large providers in the online grocery market, with Instacart being the largest third-party pack-and-deliver company. Looking ahead, Packaged Facts anticipates Walmart’s dominance as a grocer, nationwide presence, and large number of rural stores give it a competitive advantage in expanding online grocery shopping to much of the U.S. population.

“Amazon and Walmart are currently the key participants in the online grocery market, together accounting for nearly 28 percent of online grocery sales.”

7NOW DEBUTS IN NYC SEI recently launched its mobile delivery app, 7Now, in New york City, making their products with SEI’s merchandising it easier for customers in the Big Apple to get team and learn more about 7-Eleven. Attheir hands on essential merchandise, from tending brands also got an inside peek of munchies to toiletries, according to Chain the merchandising world at 7-Eleven.

Store Age. The service, which launched in The event included sessions with inAugust, is available to customers in manhat- dustry experts who discussed the importan, Brooklyn, and Queens. Delivery times tant role of emerging brands in the retail vary based on location. Shoppers can down- space. Keynote speakers included SEI load the app from the Apple Store or google Senior Vice President Jack Stout, in charge Play, and receive free delivery on their first of merchandising, marketing and three orders. In addition to paying Demand Chain, as well as forfor orders through the app, they mer Whole Foods Co“7-Eleven’s can track orders and receive CEO, Walter robb. The notifications of orders in mobile delivery day ended with a nettransit, and a promotion and app, 7Now, working event where enmessage center keeps custrepreneurs shared ideas debuted in NYC tomers abreast of deals. with the 7-Eleven merin August.”

SEI began testing the orchandising team in a more dering app at select Dallas stores informal atmosphere. in December 2017. Participating stores enabled customers to place orders for deNEW STORE AT TEXAS livery or pick them up in-store. SEI plans MOTOR SPEEDWAY to expand the service to Washington D.C., SEI recently announced its first locafollowed by a national expansion. tion at a professional sports venue. The store opened at Texas motor Speedway in ‘NEXT UP’ FOR time for the AAA Texas 500 NASCAr EMERGING BRANDS Playoff weekend beginning October 27 In its search for innovative and until November 5. The tripleheader feaemerging brands, SEI recently invited tured the monster Energy NASCAr Cup vendors to participate in its inaugural Series, Xfinity Series and Camping World “Next Up” event on October 11 at the 7- Truck Series. The store operates 24 hours Eleven Store Support Center in Irving, a day during race weeks. 7-Eleven is the Texas. The full-day event gave up-and- “Official Convenience Store of Texas coming brands an opportunity to share motor Speedway” and the two entities will collectively develop onsite and in-market promotions the company said in a released statement.

The 5,000-square-foot store is located on the Lone

Star Circle inner ring road outside of the infield's North Tunnel exit. Tram service is offered to and from the store and gives customers access to all other tram stops located throughout the Texas motor Speedway's property. The new 7-Eleven location will be available to fans during the speedway's major race weeks throughout the year, including the O'reilly Auto Parts 500 NASCAr tripleheader in march, DXC Technology 600 INDyCAr/NASCAr doubleheader in June and the AAA Texas 500 NASCAr Playoff doubleheader and Texas Sprint Car Nationals in November 2019.

ZOMBIE INVASION An outbreak is spreading at 7-Eleven stores with Sour Patch Kids Zombie candy: exclusive 5-ounce take-home bags of orange and grape candy kids are available for a limited time at participating 7-Eleven stores. Suggested retail price is $1.99 for one 5-ounce take-home bag or $3 for two bags. mondelez International's Sour Patch Kids is the No. 1 sour candy brand, and a topselling candy at 7-Eleven stores.

On the dawn of World Zombie Day—Sunday, October 7—customers who scanned their 7-Eleven app, used their 7-Eleven physical card or key chain fob, or entered their Alt-ID (phone number) at purchase were entered into the Sourpocalypse Sweepstakes with the purcontinued on page 68

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chase of Sour Patch Kids. Ten winners will receive a Zombie Sourpocalypse Survival Kit that includes a tablet computer, $100 7-Eleven gift card, $25 iTunes gift card and Sour Patch Kids Zombie candy, all packed into a Sour Patch Kids backpack.

“Mondelez Sour Patch Kids is the No. 1 sour candy brand at 7-Eleven stores.”

Prize value is approximately $500. Winners will be announced mid-November.

Furthermore, on National Candy Day (November 4), customers can satisfy their candy needs at a discount with a buy one-get one offer.

Available through the 7Eleven app, customers can choose two 5-ounce bags for $1.99, the suggested retail price for a single bag.

FOOTBALL FAN FARE 7-Eleven stores are becoming football fan headquarters this fall with everything needed for tailgate and “home-gate” parties, as well as a few surprises. SEI is bringing back stadium-style souvenir cups that can be used for either Slurpee or Big gulp drinks, with helmet straws that team up perfectly with the collectible cups.

The party starts as soon as fans enter participating 7-Eleven stores, where augmented reality (Ar) puts them on the continued next page

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playing field with football filters, activities, and new surprises through the end of the year. All Ar activities can be accessed through the 7-Eleven mobile app, where customers can earn 7rewards loyalty program points daily and weekly, depending on the activity. Even football star Dak Prescott shows up. Participating stores in select markets include Baltimore, Dallas, Denver, Detroit, Washington D.C., Buffalo, Chicago, miami, New England, New york, Philadelphia, San Francisco, Seattle, and Tampa Bay.

TACO BELL HOT SAUCE-FLAVORED CHIP EXCLUSIVE During October, 7-Eleven stores exclusively carried Taco Bell's newest hot

sauce-flavored tortilla chip—the Diablo, reported Delish.com. Taco Bell's “hottest chip yet” has a kick of hot peppers and a hint of lime. It's also black, which helps it stand out from the fire-engine-red chips of its class. The chips are somewhat surprisingly vegan, as well as kosher and gluten-free. Their dark color comes from natural vegetable juice. The Diablo is the fourth tortilla chip to come from Taco Bell—earlier this year the fast food chain launched Classic, mild, and Fire-flavored chips in bags that looked like their hot sauce packets.

Pop-Tarts Splitz Offers Duo Of Flavors Get ready to excite Pop-Tarts fans and create lots of new ones with a double flavor snacking experience: new Kellogg’s Pop-Tarts Splitz combines two irresistibly different fillings, side by side within each tart with sprinkled frosting on one half and drizzled icing on the other. New PopTarts Splitz meet the demand for all-day, between meal snackers on the hunt for new flavor experiences. In fact, 18 to 24year-olds choose their favorite flavor Pop-Tarts as a snack 50 percent of the time. Now with Pop-Tarts Splitz offer Pop-Tarts Splitz trendy pairings like two flavors in one Pop-Tart.

Frosted Strawberry & Drizzled Cheesecake and Frosted Brownie Batter & Drizzled Sugar Cookie, you’re sure to please customers’ tastes.

Fun flavor innovations are a hallmark of the Pop-Tarts brand and have shown to drive purchase and trial across every day part. Pop-Tarts is the #1 brand of toaster pastries in convenience. Offering new, remarkable flavor combinations not only increases interest in Pop-Tarts, it can also help boost your bottom line.

moted, can lift sales by up to 15 percent. You can be sure new Keebler Whoopsy Fully Fudged Cookies will appeal to Indulgent Explorers.

Snackers who munch all day are always looking for something new, and have a passion for rich chocolatey treats.

Be ready with New Keebler Whoopsy Fully Fudged Cookies, the grab-and-go cookie bound to drive sweeter sales as they fulfill chocolate cookie cravings as never before. See for yourself why now is a good time to partner with Kellogg’s.

Swisher Sweets Coco Blue Offers Delicious Taste Combo Customers looking for a unique taste combination can find it in Swisher Sweets Limited Edition Coco Blue, which combines tangy blueberry and creamy coconut. Available for a limited time in a resealable 2-count pouch with the “Sealed Fresh” guarantee, Swisher Sweets Coco Blue is ready for shipment to stores nationwide. It is offered in “2 for 99¢,” “Save on 2,” and “2 for $1.49” options. This edition of Swisher Sweets is available only while supplies last. For more information or to place an order, contact your Swisher representative at 1-800-874-9720.

Limited edition Swisher

Indulgent Keebler Whoopsy Sweets Coco Blue.

Fully Fudged Cookies Keebler has taken its Fudge Stripes cookMCLANE UNVEILS PRIVATE LABEL PIZZA continued on page 72

ies to the next level of sweet, chocolaty temptation by totally enrobing them in rich, thick fudge. Today’s consumers want more indulgent, rich cookie experiences to satisfy their sweet cravings. Plus, with cookies continuing to be the fastest growing sweet snack in the America—and Keebler cookies growing at 9 percent in the Total U.S. Convenience Channel—these new Keebler Whoopsy Fully Fudged Cookies are a sure hit.

Popular Fudge Stripes Single Serve cookies are growing at 8.8 percent, and, when pro-

Keebler Whoopsy Fully Fudged Cookies are enrobed with fudge.

McLane Company, Inc. recently debuted a new brand: Fly Guys Pizza. The brand launched at the McLane National Tradeshow in September through its private label subsidiary, Consumer Value Products (CVP), in coordination with McLane’s foodservice-at-retail program, McLane Kitchen.

Made with premium toppings on a self-rising crust, Fly Guys Pizza arrives frozen and fully packaged for retailers to serve hot by the slice or by the 12” pizza, or the 12” pizzas can be merchandised for retail sale in the frozen section for consumers to bake at home. Fly Guys combines great taste with incredible value and is offered in three flavors: pepperoni, five-meat and breakfast.

McLane Kitchen and CVP offer customers Fly Guys-branded packaging including pizza boxes and slice trays, equipment ranging from pizza ovens to serving utensils, as well as signage such as posters, menu boards and banners.

McLane’s Fly Guys Pizza can be served hot or merchandised for retail sale in the frozen section.

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Tai Pei Frozen Chicken Fried Rice Tai Pei Frozen Chicken Fried Rice offers an Asian fast-casual meal option for today’s on-the-go consumer. Tai Pei has taken this Offer customers a quick, traditional takeout meal and made it even affordable meal with Tai Pei better. With white meat chicken, crisp vegFrozen Chicken Fried Rice. etables, and flavor-infused fried rice mixed together in an oyster-flavored sauce, Tai Pei offers a delicious alternative to the takeout menu. Ready in minutes, Tai Pei Frozen Chicken Fried Rice contains no additives, preservatives, artificial flavors or colors. Give your customers what they crave—a quick, affordable Asian meal solution with Tai Pei.

New Airheads White Mystery Bites Airheads has taken its well-loved, playfully delicious White Mystery bar and made it bite-sized. Airheads White Mystery Bites are available in 2-ounce and 6-ounce packages.

Everyone loves the tremendously tangy, playful Airheads. Of course, Airheads Bites provide that same playfulness and incredible flavor in bite-sized pieces. But what if they were all the same color? Could you guess the flavors? #PlayDelicious. Can Airheads White Mystery Bites provide incredible flavor in bite-sized pieces. you guess the flavors?

Mike And Ike & Hot Tamales Are Back At 7-Eleven Just Born Inc. would like to thank all the franchisees and consumers who requested the #1 Theater Box Brand, Mike and Ike, and America’s #1 Cinnamon flavored candy, Hot Tamales. Both brands have earned spots on the Top 10 brands list in Large Size Immediate Consumption in Convenience. Your shoppers are looking for quality chewy candy at an affordable price, and these brands deliver on both.

Mike and Ike Original Fruits 5-flavor mix and Hot Tamales Fierce Cinnamon varieties are sold in 5-ounce theater boxes and will be line priced and placed in the King Size Earn up to a 60 percent margin with Hot Tamales and Mike set. You can earn up to a 60 percent margin and Ike candy.

when line pricing with other King Size items. Both brands have the perfect demographic fit for your consumers and account for a significant portion of 7-Eleven’s candy shoppers and sales.

Make room in your King Size Set for these classic brands and satisfy your shoppers’ desires with these delicious sweet treats while filling your pockets with profits!

New Cakebites Peanut Butter Chocolate Ripple Cakebites is excited to introduce the newest flavor to an already amazing line up—Peanut Butter Chocolate Ripple. Layers of peanut butter cake, peanut butter cream and chocolate cake are enrobed in a silky smooth peanut butter coating and rippled with chocolate drizzle. Cakebites has improved a classic flavor combination and brought it to the next level of portability. Cakebites are available in 12-count displays, 4-count family packs, as well as our Cakebites raises the bar with Peanut Butter Chocolate Ripple. new smaller 90-count gravity feed displays, perfect for small c-stores. Peanut Butter Chocolate Ripple will be available nationwide in November 2018. For more information please visit www.cakebites.com or call 631-581-4000.

HI-CHEW Superfruit Mix 7-Eleven Exclusive HI-CHEW Superfruit Mix is the latest in immensely fruity, intensely chewy candy from Morinaga America, Inc. Containing three delicious Superfruit flavors—Kiwi, Acai, and the #1 customer-voted flavor Dragon Fruit—this bag is bursting with on-trend tastes and backed by category research and fan approval. Each piece is individually wrapped and HI-CHEW Superfruit Mix is a “Find it First at coated with Chia Seeds, offering 7-Eleven” exclusive. a unique mouth feel along with the longlasting flavor and unique chewy texture HI-CHEW is known for.

As a “Find it First at 7-Eleven” Exclusive, this product will be featured on www.hi-chew.com, where customers will be directed to their local 7-Eleven to try Dragon Fruit, a flavor exclusive to 7-Eleven stores during the three month launch window. continued on page 74

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Celebrate Morinaga America’s and HI-CHEW’s 10th Anniversary in the USA by prebooking a display this November. Displays will ship to your store in late January, but don’t forget to continue to restock Superfruit Mix throughout the first half of the year to reap the rewards of HICHEW’s biggest exclusive launch ever and create lifetime HI-CHEW fans that will return to your store again and again.

Low-Carb Spiked Seltzer Packs A Big Sales Punch Spiked Seltzer is the original Hard Seltzer since 2013.

Transparency and simplicity are important to the company, and their product is naturally flavored, naturally gluten free, 6 percent ABV, and only has 5 carbs. It comes in 6 great tasting flavors including Indian River GrapeSpiked Seltzer is naturally flavored, gluten free, and has only 5 carbs. fruit, Cape Cod Cranberry, and West Indies Lime.

SWISHER AND E-ALTERNATIVE SOLUTIONS LAUNCH LEAP VAPOR Swisher International sister company E-Alternative Solutions, which previously introduced the award-winning Cue Vapor System that is now available at 7-Eleven stores in Florida, has launched Leap Vapor—a nicotine-salts-based vapor system brand that takes adult users beyond smoking. Leap features a sophisticated design, more powerful battery, and higher capacity e-liquid pods than the leading competitor.

The Leap Vapor With Nicotine Salts franchise includes both rechargeable and disposable models—each offering a wide range of e-liquid flavors and three nicotine levels (including a 0 percent), so adult consumers can experience a unique, customizable satisfaction.

Leap Rechargeable System: The Leap Device is offered in two kits, with (Leap e-Vapor Kit) and without (Leap Device Kit) a 1.5 ml e-liquid pod. The e-Vapor Kit includes a smooth Carolina Tobacco flavor with 4.8 percent nicotine, while both include a USB charging cable. Leap Pods come in eight bold flavors, including Carolina Tobacco, Sweet Tobacco, Menthol, Creamy Mint, Arctic Berry, Apple Strawberry, Watermelon Kiwi and Island Cream. Each flavor is initially available in a 4.8 percent nicotine level, and will soon be offered in 2.4 percent and 0 percent, creating a total of 24 distinctly satisfying vapor experiences. Suggested retail price per package of two 1.5 ml pods is $7.99.

Leap Vapor offers disposable and rechargeable models, each in three nicotine levels.

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Leap Go: The disposable Leap product comes in six fresh flavors: Smooth Tobacco, Menthol Mist, Cool Mint, Georgia Peach, Mixed Berry, and Fresh Mango.

Each Leap Go flavor is available in a 5 percent nicotine version for the roll-out, and will soon be offered in 3 percent and 0 percent, for a total of 18 SKUs to choose from. Leap Go carries a suggested retail price of $7.99.

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and share their resources with the convenience store community to help address the problem. • Starbucks plans to create 10,000 “greener stores” across the globe by 2025, through both new store openings and renovations, reported CNBC. The move will save Starbucks some $50 million in utility costs over the next decade, building on its current 10-year legacy of utility cost savings generated from its green practices already in place. • Walmart Inc has agreed to pay $65 million to nearly 100,000 current and former cashiers in California who accused the retailer of violating state law by refusing to provide them with seating while they worked, reported Reuters. • Dunkin’ Donuts recently unveiled its new Shot in the Dark coffee espresso blend, the brand’s first-ever coffee beverage served in a can. Manufactured and distributed by the Coca-Cola Company, Shot in the Dark is served in a special 8.1-ounce slim can and comes in three flavors. • Kroger and Walgreens Boots Alliance are experimenting with a program that would allow Walgreen’s shoppers to pick up online orders of Kroger’s groceries at some of the pharmacy’s locations, reported CNBC. Walgreens will also start selling some of Kroger’s privatelabel brands. The two are testing the idea at 13 Walgreens stores. • QuickChek recently opened a store in Central New Jersey sporting the company’s new “fresh convenience” concept and design—more than 50 percent of the store is dedicated to fresh food and beverages, reported the Bridgewater Courier News. • Attendance for the NACS Show topped 25,000 for the first time ever, led by a 7.0 percent increase in “buyers” at the four-day event held October 7-10 in Las Vegas. echnology developed in conjunction with NCR. • Sam’s Club is expanding its same-day delivery service to half of its stores nationally by the end of the month. Members in 1000 zip codes will still receive lower, members-only pricing. • continued on page 76

FOA Board Meeting Dates

7-Eleven FOAC Phone: 847-353-9999 November 29, 2018—Board Meeting December 13, 2018—Board Meeting

Central Florida FOA Phone: 347-251-1828 November 8, 2018

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The National Association of Convenience Stores says there are now 97,643 independent c-stores, and 57,315 chain stores in the U.S. Brick and mortar outlets still generate over 90 percent of retail sales. • Wawa created a secret menu for Halloween that includes three specialty beverages available only on ordering kiosks by touching an orange pumpkin with the company logo on the touchscreen. • Get the 7NOW delivery app on the Apple store now. Only works in specified areas, like New York City.

Advertiser’s Index

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

Amy's Kitchen ..............65 Anheuser Busch ...........12 Aon Risk Services..........30 Blue Bunny...................27 Bug Juice......................55 Buy4Store.....................63 Chobani........................50 Coca-Cola..............Cover 2 Cookies United .............37

Dean Foods...................34 Diageo............................8 Dr Pepper Snapple .......19 Fiji/Wonderful ........14-15 Hormel .........................38 Iovate/Muscle Tech.......73 Just Born ......................69 Kellogg's...................4, 41 Kretek .............17, Cover 4

Lifeway Foods...............24 Li'l Debbie ....................64 Logic Ecig................42-43 Mars Ice Cream...............6 Maruchan.....................29 McLane.........................23 Miller ....................Cover 3 Mondelez .....................21 Morinaga......................31

National Tobacco..........66 Nestle Professional.......47 Pepsi Quaker...........52, 68 Perfetti Van Mele..........25 PWM.............................36 Reynolds American......59 Seneca ....................32-33 Shamrock .....................77 Simply Orange........10-11

Smoky Mountain..........61 Swedish Match.........3, 48 Swisher International7, 44 Vixxo.............................77 White Castle.................70 Whitewave Foods...........5 Windsor........................57 Yowie..............................9

foa events Chesapeake Division FOA Holiday Party & Table Top Show Hilton Springfield Springfield, Virginia November 5, 2018 Phone: 571-344-2781

7-Eleven FOAC Holiday Trade Show Holiday Inn Skokie, Illinois November 15, 2018 Phone: 847-353-9999

Midwest FOA/ Alliance of 7-Eleven Franchisees FOA Holiday Party Chicago O'Hare Marriott Chicago, Illinois December 5, 2018 Phone: 815-210-2950

San Francisco/ Monterey Bay FOA Holiday Party Biltmore Hotel Santa Clara, California December 7, 2018 Phone: 510-693-1492

Greater Bay FOA Holiday Party Hiddenbrooke Golf Club Vallejo, California December 7, 2018 Phone: 707-280-1776

UFOLINY FOA Holiday Party Crest Hollow Country Club Woodbury, New York December 10, 2018 Phone: 631-696-0575

Midwest FOA Michigan Holiday Party Detroit Troy Marriott Troy, Michigan December 12, 2018 Phone: 815-210-2950 78

San Diego FOA Holiday Party

National Coalition Affiliate Meeting

San Diego Marriott Del Mar San Diego, California (Carmel Valley) December 15, 2018 Phone: 619-713-2411

Pacific Palms Resort City of Industry, California November 5-6, 2018

Columbia Pacific FOA Holiday Party

National Coalition Board of Directors Meeting

Hilton Hotel Vancouver, Washington December 15, 2018 Phone: 360-513-0289

FOA Of Greater LA Holiday Party Royal Vista Golf Club Walnut, California December 15, 2018 Phone: 619-726-9016

FOA Of Greater LA/ San Diego FOA Annual Trade Show Pechanga Resort and Casino Temecula, California January 23, 2019 Phone: 619-726-9016

FOA Of Southern Nevada Trade Show Alexis Park Resort Las Vegas, Nevada April 17, 2019 Phone: 702-646-8383

FOA Of Southern Nevada Golf Tournament Rhodes Ranch Golf Club Las Vegas, Nevada April 18, 2019 Phone: 702-646-8383

San Francisco/ Monterey Bay FOA Trade Show Paradise Ballrooms Fremont, California April 24, 2019 Phone: 510-693-1492

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Pacific Palms Resort City of Industry, California November 7-8, 2018

National Coalition Affiliate Meeting Sheraton Four Points DFW Coppell, Texas February 18-19, 2019

National Coalition Board of Directors Meeting Sheraton Four Points DFW Coppell, Texas February 20-21, 2019

National Coalition Board of Directors Meeting TBD May 2019

National Coalition Board of Directors Meeting Renaissance Long Beach Hotel Long Beach, California August 4-5, 2019

NCASEF 44th Annual Convention & Trade Show Long Beach Convention Center Renaissance Long Beach Hotel The Westin Long Beach Long Beach, California August 5-8, 2019