7-Eleven out to rope in more Malaysians

 

7-Eleven Malaysia Sdn Bhd plans to have 2,000 outlets in the next five years, of which 50 per cent will be franchised

7-Eleven Malaysia Sdn Bhd is embarking on an ambitious franchise programme for local entrepreneurs to become partners in the world's largest convenience store chain.

"We plan to have 2,000 outlets in the next five years, of which 50 per cent will be franchised and 50 per cent managed by 7-Eleven Malaysia Sdn Bhd," said its executive director Ng Su Onn.

There are now 1,050 stores nationwide, and the plan is to add another 90 new stores this year and franchise between 30 and 50 stores.

"Next year, we target to franchise 100 stores while adding another 150 new stores," Ng said in an interview in Kuala Lumpur yesterday.

7-Eleven Malaysia holds the rights to establish and operate 7-Eleven in the country. Tan Sri Vincent Tan Chee Yioun, who helms the Berjaya group, took over the 7-Eleven franchise from Antah Holdings Bhd in 2000.

7-Eleven Malaysia had invested RM50 million in IT infrastructure to properly manage its systems in the last few years.

To participate, potential franchisees need to invest RM250,000, of which RM100,000 is non-refundable initial fee for use of system and brand, and training, while the license fee to operate the store for 10 years (five-year franchise agreement with automatic renewal of five years) is another RM100,000.

After 10 years, franchisees who want to renew their contracts need only pay the license fees, he said.

Ng said 7-Eleven has struck an agreement with Ambank to provide unsecured loans of up to RM200,000 for franchisees. It is also close to concluding a deal with OCBC Bank to provide loans with collateral.

The programme is only open to Malaysians aged between 25 and 60 years old with minimum SPM qualifications.

It is also open to shop owners or "mom and pop" shop operators who want to convert their shop to 7-Eleven stores.

Franchisees will be given existing stores or "matured" stores to operate and will be given training to ensure they are successful.

"From 7-Eleven's international experience, a franchisee usually sees a 30 to 50 per cent increase in sales after two to three years after (being) franchised," Ng said.

The franchise programme is based on profit-sharing where the company will also share gross profit with the franchiseesm including sharing half of the maintenance costs and electricity bills.

"From the share of the gross profit, 7-Eleven is responsible for the expenses such as the licence of real estate, equipment, general insurance, royalties, inventory audit and merchandising services," Ng added.

Therefore, franchisees are spared from high fixed costs like investments in buildings and equipment.

To ensure that franchisees do not struggle and help them focus, everything is set for them including training, marketing plans, supplies and equipment.

Ng said the programme has received good response with 11 applicants already accepted to train and another 60 applicants yet to be assessed.