7-Eleven began its story in 1927 when Joe C. Thompson began selling milk, bread, and eggs across its stores. Until then, they were only selling ice blocks. With the growing success of the store’s innovation, Joe Thompson was eventually able to buy Southland Ice Company. Then converted to Southland Corporation – a company focused on opening convenience stores across the state. By 1946, the new store model had increased dramatically across several locations.
This success led the stores to extend their opening hours from 7 am until 11 pm, seven days a week. Hence, the store’s name. Franchising began in 1964 after the Southland Corporation purchased an additional 126 Speedee Mart franchised convenience stores in California.
These have finally been incorporated into the 7-11 business model. Today, 7-Eleven currently has more than 9,000 stores across the United States. Also, additional units across several continents such as Europe, Asia, and Oceania. The 7-Eleven brand continues to this day, to be headquartered in Dallas, Texas. At the moment, it is run by its President and CEO, Joseph DePinto, who is in this position since December 2005.
When investing in a 7-Eleven’s franchise, the first factor to consider is the financial requirements that accompany this endeavor. The total investment amount required to open a 7-Eleven’s franchise ranges from $47,050 to $1,165,400. This includes the company’s franchise fee that can range from $0 to $1,000,000. It depends on several factors, particularly the location the investor will be pursuing.
Once the store has been built and operations begin, the parent company receive a royalty fee from the franchisees. This varies according to the growth percentage of the store’s Gross Profit for that month. And an additional marketing fee of 1% in return for the franchisor’s marketing services.
The franchisor is particularly looking for candidates who are residents of the United States. They must have previous management or customer service experience and have an excellent credit history. This franchise model is structured in a way where a franchisee receives a fully stocked turnkey store. In addition, the corporate team have been handled the land purchasing and building operations.
Because 7-Eleven offers multi-unit investment opportunities in addition to single-store purchases and business conversions, candidates must have minimum liquid assets ranging from $50,000 to $250,000.
When evaluating a 7-Eleven’s franchise’s potential for growth, one does not need to go beyond their internal numbers to better understand the prospect for success of the investment opportunity at hand. 7-11 currently operates more than 7,000 franchised stores in the US and an additional 1,800 plus corporate-owned stores.
Additionally, the annual revenue across all 7-Eleven’s stores in 2019 was $4.20 billion, while the average gross profit from 7-Eleven’s franchised stores in Wisconsin for example, ranged from $217,080 to $435,394 out of which 50%-60% of stores within this group met or exceeded this range.
Looking at 7-Eleven’s franchise program performance, although limited data was made available on the financial status of the company’s franchisees, 7-Eleven’s had a total increase of 535 franchise to its system from 2016 to 2017, thus indicating a strong franchise system that continues to attract new applicants. Moving forward, 7-Eleven is looking for candidates willing to run franchised stores across the states of Florida, Illinois, North Carolina, Utah, and Washington, so that it can maintain and up its rank status on Entrepreneur’s Franchise 500 List which was number 10 in 2019.
The U.S. Retail Products and Services industry is well-established and depends on a strong distribution channel for all types of retail companies. The market provides several goods such as food, apparel, furniture, jewelry, as well as many others. The retailer’s subsector within the industry employs 1 out of 5 Americans. In addition, independent and privately held retail businesses account for 95% of the whole retail industry. The Retail industry directly employs 29 million people and supports over 42 million jobs. It accounts for 5.5% of gross domestic product (GDP) and generates around $5.3 trillion in sales.
For the businesses we have studied in the retail space, we have seen a range of investment amounts that can start at $8,800 and can go all the way up to $14,261,150. Based on the retail business you decide to choose, it can be a very large retail space in a high foot-traffic location or a small shop in a local neighborhood. Additionally, in our research, the average royalty fee was around 5.7%, and the average marketing fee is 2.5%.
Generally, 7-Eleven corporate will open up the franchise for you then you buy the franchise from them after the business is making money. The purchase price depends on a number of factors, including, but not limited to, historical sales at the location, age of the location, the number of stores available for franchise in the area, and many other factors. In lieu of a purchase price, 7-11 charges an initial Franchise Fee between $0 and $1,000,000. You have to pay this upfront fee when opening or buying a 7-Eleven franchise. This fee varies immensely by location. This fee includes Training but not anything else like transportation, accommodation, etc.
The estimated total investment necessary to begin (or take over) the operation of a 7-Eleven Franchise ranges from $53,600 to $1,163,000. The following costs are part of the upfront costs included in the initial investment for a 7-Eleven. Many of these are one-time fees that are needed to launch the franchise. Review the chart below to see how much it costs to buy a 7-11 franchise in 2022.
|Type of expediture||Amount|
|Franchise Fee||$0 – $1,000,000|
|Training expenses||$0 – $9,000|
|Down Payment for opening inventory||$20,000|
|Additional opening inventory||$15,100 – 44,500|
|Cash Register Fund||$500- $1,500|
|Store Supplies||$500- $2,500|
|Licenses and permits||$8,000- $10,000|
|Real estate and equipment||You do not buy the land, building or equipment where the store is located.|
|Insurance||$1,500 – $7,500|
|Grand Opening Fee||$8,000|
|Goodwill||If you buy a current franchisee’s interest in a franchise, you may have to pay “goodwill” to the selling franchisee.|
|Additional funds during first 3 months||$0 – $60,000|
|TOTAL||$53,600 – $1,163,000|
To franchise with 7‑Eleven, you must:
If the store’s Gross Profit for the 12-month period before the current month is $200,000 or less, the 7-Eleven Charge for the current month will be 45% of the current month’s Gross Profit.
If the store’s Gross Profit for the 12-month period before the current month is over $200,000 but no more than $250,000, we will calculate the 7-Eleven Charge for the current month according to the following formula:
If the store’s Gross Profit for the 12-month period before the current month is over $250,000 but no more than $300,000, we will calculate the 7-11 Charge for the current month according to the following formula:
If the store’s Gross Profit for the 12-month period before the current month is over $300,000 but no more than $350,000, we will calculate the 7-11 Charge for the current month according to the following formula:
If the store’s Gross Profit for the 12-month period before the current month is over $350,000 but no more than $400,000, we will calculate the 7-11 Charge for the current month according to the following formula:
If the store’s Gross Profit for the 12-month period before the current month is over $400,000 but no more than $450,000, we will calculate the 7-Eleven Charge for the current month according to the following formula:
If the store’s Gross Profit for the 12-month period before the current month is over $450,000 but no more than $650,000, we will calculate the 7-Eleven Charge for the current month according to the following formula:
If the store’s Gross Profit for the 12-month period before the current month is over $650,000 but no more than $900,000, we will calculate the 7-Eleven Charge for the current month according to the following formula:
If the store’s Gross Profit for the 12-month period before the current month is over $900,000 but no more than $1,400,000, we will calculate the 7-Eleven Charge for the current month according to the following formula:
If the store’s Gross Profit for the 12-month period before the current month is over $1,400,000 but no more than $1,600,000, we will calculate the 7-Eleven Charge for the current month according to the following formula:
If the store’s Gross Profit for the 12-month period before the current month is over $1,600,000, we will calculate the 7-Eleven Charge for the current month according to the following formula:
Advertising Fee: The Advertising Fee is 1% of the Gross Profit of your store for the current month
Looking at listings on BizBuySell, we can take a store that makes around $2,000,000 in sales yearly.
|Initial Investment (Midpoint)||% Profit Margin of Average franchise sales||Estimated Profits||Time to recoup Investment|
Based on the median sales estimated for 7-Eleven’s franchise locations, at an average of a 5% profit margin, it will take around 9 years to recoup your investment. This is longer than other franchise opportunities. You may not get a 5% profit margin, which would elongate getting a return on your investment.
Many factors affect the sales, costs, and expenses of your Franchised Store. Such as the Franchised Store’s size, geographic location, menu mix, and competition in the marketplace. The presence of other Retail Goods & Services, and Convenience stores; the extent of market penetration and brand awareness that 7-Eleven stores have attained in your market. Also, the quality of management and service at your Franchised Store are major factors.
To assign a valuation multiple for 7-Eleven franchises, we leverage estimates from DealStats, a database of acquired private company transactions sourced from U.S. business brokers and SEC filings. We reviewed the larger franchise industry as well as selling price multiples for larger systems where more transaction data is available.
The revenue multiple for convenience stores like 7-11 is 0.20 below $5 million in sales and 0.38 for stores with sales of above $5 million.
When you go to sell a 7-Eleven franchise based on the median multiple of .22 and estimated sales of $2,000,000, it would sell for $440,000. This is lower than the midpoint investment of $608,300.
However, as an owner of multiple 7-Eleven franchises, you do have the ability to make a profit. Owners in the Retail Goods & Services Industry with over $5 million in sales have a median multiple of .38. So, if you had 5 7-Eleven franchises, this would be $10,000,000 in sales. That would sell for $3,800,000. This is higher than the initial investment of around $3,041,500.
The more franchises you own, the more earning potential you have as private equity firms become interested in your business instead of individual owner-operators.
The 7-Eleven company builds a lot of locations for franchisees and sometimes even operates them until someone buys the store from them. There are two kinds of 7-Eleven Franchises for sale: Company-owned and franchisee-owned.
Company-owned: The listing of stores that a franchisee owns and wants to sell is here.
The benefits of buying an established store are that they provide you with an established customer base, have established financials you can look at before deciding whether you want to buy the store, and are fully stocked and ready for operations to be handed over with no startup cost.
Franchisee-owned: Once again, we go back to have a look at BizBuySell and see that there are multiple listings:
|Santa Clara, CA (Santa Clara County)|
|Asking Price:||$225,000||Cash Flow||$120,000|
|Largo, MD (Prince Georges County)|
|Asking Price:||$250,000||Cash Flow:||$165,000|
|Miami, FL (Miami-Dade County)|
|Asking Price:||$690,000||Cash Flow:||N/A|
When buying through this channel, you do not have to go through the company and contact directly with the current franchisee. The biggest con of this channel is that you might not have established financials for these stores. However, when you buy through the company, they are likely to charge you money for brokering the deal between the previous franchisee and you. EBITDA multiple for stores available on BizBuySell goes anywhere between 1.5x and 3.5x depending on location and customer volume, but between 1.5x and 2.2x is more typical.
The last time the franchisor publicly disclosed income statements was in 2019. We’ll look at pre-COVID figures for them. For current figures, we will dive more in-depth later – however, those figures are from 7-Eleven’s Japanese parent and as such do not include separate figures for the US franchisor.
|Years ended on December 31|
|OTHER COMPREHENSIVE EARNINGS, NET OF TAX|
|Foreign currency translation||($73,701)||$57,421||($11,722)|
|Unrealized loss on available for sale securities (net of tax effect of $31, $56 and $20)||($93)||($92)||($32)|
|Unrealized loss on interest rate swap activities (net of tax effect of $70, $0 and $0)||($212)||($0)||($0)|
|Changes in postretirement benefits:|
|Actuarial gain (loss) for period (net of tax effect of ($631), $1,829 and $2,838||$1,898||($2,954)||($4,582)|
|Amortization of actuarial loss included in net income (net of tax effect of ($654), ($834) and ($522))||$1,968||$1,354||$842|
|Total other comprehensive (loss) gain||($70,140)||$55,729||($15,494)|
7-Eleven is a very profitable business for the franchisor, with retained earnings of $ million in 20. Compared to $ million in 2020, they saw an increase of % from 2020 to 2021. This is a good indication of high growth as a company overall.
7-Eleven franchises and/or licenses more than 13,000 stores in the U.S. and Canada. In addition to 7‑Eleven stores, 7‑11, Inc. operates and franchises Speedway, Stripes, Laredo Taco Company, and Raise the Roost Chicken and Biscuits locations.
According to 7-Eleven’s parent, 7-and-i’s, presentations, the company plans to expand using the following action plan:
The business is looking at expanding into the convenience and grocery store spaces, both locally and internationally, and that is expected to bring greater revenue and profits to the business.
For the North American convenience store business, 7-Eleven wants to:
In Japan, the company intends to achieve strong growth through its food strategy of
A huge focus for the company is also sustainable development:
The parent, 7-and-i holdings, projects a growth of 20% for 7-Eleven’s international holdings (which includes the US business – 7-and-i is a Japanese company).
Currently, 7-and-i’s EBITDA is at 14.9 billion Japanese Yen – this is planned to go up to 47+ billion Japanese Yen by 2026 because of the major restructuring efforts taking place. The EBITDA percentage will also rise from 1.4% to 4.5%+.
7-11 has outperformed the market in both Japan and America. While it is not publicly traded on the US stock market, it is in Japan. In the last two years, Total Shareholder Return (TSR) has been higher for 7-Eleven than it has been for the S&P 500, the TOPIX index, the TOPIX Retail index, and the North America Convenience Store Index. The last two are the industry benchmarks in Japan and the USA, respectively.
The group’s total sales increased by 3,198 billion Japanese Yen YoY between 2021 and 2022. EBITDA grew from 558.8 billion Yen to 751.4 Yen in the same period.
|Group’s total sales||10,278.2||124.3 +22,012.0||3,965.0||142.7 +1,186.3||14,243.2||129.0 +3,198.3||100.0 +17.2|
|Revenues from operations||6,149.4||143.8 +1,872.6||2,600.2||174.5 +,1,11.3||8,749.7||151.7 +2,983.0||100.3 +27.7|
|Operating Income||302.9||106.1 +17.2||84.7||105.0 +4.0||387.6||105.8 +21.3||96.9 (12.3)|
|[Special losses]||39.6||53.1 (35.0)||29.0||84.7 (5.2)||68.7||63.0 (40.2)||– –|
|Net Income attributable to owners of parent||174.8||133.5 +43.8||35.8||74.4 (12.3)||210.7||117.6 +31.5||98.0 (4.2)|
|EBITDA||558.5||116.4 +78.6||192.9||131.2 +45.9||751.4||119.9 +124.6||98.9 (8.1)|
|Domestic CVS operations||304.1||18.2||+1.7|
|Overseas CVS operations||354.4||4.6 – 5.9 (before amortization of goodwill)||+130.5|
In Domestic convenience store operations, 7-11’s operations grew 1.7% – at the same time, EBITDA was 304.1 billion yen. That is outstanding profitability but sluggish growth. Overseas operations fared much better in terms of growth. That sector grew 130.5% YOY from 2021 to 2022. The gross debt from the acquisition of Speedway is decreasing much faster than initially projected.
The company is in a strong financial position and is not only meeting but also exceeding the financial goals it is setting for itself, as we can see in the company’s projections about expected and actual growth in the graphic above.
7-11 is a strong business in the USA with a strong financial presence. They do not disclose franchise-specific financials anymore, so we recommend talking to at least 3-5 7-Eleven store owners in your area to figure out the financials. That is also recommended because the viability of a 7-Eleven also varies from area to area, and median figures might not paint an accurate picture for your location.
While this may be the business for you, make sure also to check out other companies offered on Vetted Biz and in the Retail Goods & Services Industry.