7 Eleven
Date of Incorporation: 1927
Franchising Since: 1964
Headquarters: Dallas, Texas
Country: U.S.
Business Description: 7-Eleven stores are extended-hour retail convenience stores that emphasize convenience to the customer and provide fresh take-out foods, groceries, beverages, candy, gasoline (at more than 2,400 locations), dairy products, non-food merchandise, specialty items, certain financial services, lottery tickets and incidental services. 7-Eleven stores generally operate 24 hours a day every day of the year (except, at the franchisee's option, Christmas Day) unless a local law requires the store to close during certain hours.
Franchise Offer: The 7-Eleven franchise is a business system that includes: a license to use the service mark "7-Eleven"; training; continuing advice and assistance on operating a store; bookkeeping services; store inventory auditing; financing; merchandising assistance; advertising; and other services as described in the disclosure document. There are two types of franchises offered:
- A Traditional Individual 7-Eleven Store: The franchisor (7-Eleven) acquires the land, building and equipment for the store, and 7-Eleven or an affiliate leases the franchisee a fully equipped and stocked 7-Eleven store that is ready to operate. The granting of a franchise to a franchisee does not give the franchisee the right to operate any additional units. In the 7-Eleven franchise program for traditional individual 7-Eleven stores, only single unit franchises are offered.
- Business Conversion Program ("BCP") franchise: The franchisee is responsible for acquiring the land and building for a store site and pays a different royalty than traditional franchisees. The franchisee of a BCP is also subject to a different disclosure document than the franchisee of a traditional store.
Financial Assistance: 7-Eleven offers financing for all or a portion of the franchise fee or down payment in very limited situations when a qualified applicant displays a financial hardship that, in the sole opinion of the franchisor, makes it difficult for the qualified applicant to pay all of the initial fees. This financing is offered on a very limited basis. If any part of the franchise fee is financed, the franchisee must repay the fee starting from the first month after the opening of the store and continuing for 60 consecutive months. The franchisee must sign a promissory note and pay the annual interest rate on the financed amount.
Training and Assistance: 7-Eleven will provide their training program to the franchisee (and 1 other person the franchisee designates who is acceptable to 7-Eleven if only one individual signs the franchise agreement). After a franchisee signs the franchise agreement, 7-Eleven will provide approximately four weeks of training in a 7-Eleven Training store and two weeks of training support in the franchised store after the franchisee takes possession of the store. This training will include 7-Eleven's Retailer Initiative concept, basic store operations, and computer based training that is provided to new sales associates. The initial franchise fee includes the cost of the Training Program. Franchisees will not be receiving any additional money from 7-Eleven for transportation, lodging (unless 7-Eleven requires the franchisee to travel for training) and food expenses during training or for any other living expenses during the Training Program. 7-Eleven may offer additional training that they deem necessary based on changes in the 7-Eleven System.
Territory: The franchisee will not receive an exclusive territory with the franchise. 7-Eleven has no obligation to grant the franchisee additional franchises. The franchise agreement covers a single 7-Eleven store location designating the specific store and street address.
Term of Agreement and Renewal: The franchise term ends at the earlier of 15 years after the effective date of the franchise agreement, or 30 days before the end of the lease of the real estate for the franchised store. A renewal option is available for a term equal to the number of years of the initial term in the then-current franchise agreement.
Obligations and Restrictions: The franchisee agrees under the franchise agreement to devote his or her best efforts to the store and to actively and substantially participate in the actual operation of the franchise. Franchisees further agree to work full time in their store and supervise day-to-day operations, and make themselves available to meet with the franchisor at reasonable times, at the franchisor’s request, but in any event franchisees agree to meet with the franchisor at least once a week at their store during reasonable business hours. If a franchisee is temporarily out of town or otherwise temporarily unavailable to meet with the franchisor at any time, the franchisee agrees that the franchisor can meet with the franchisee’s employees to discuss the franchisee store's business and take any action contemplated or allowed under your franchise agreement.
Total Number of Units: 40,000 units.
Investment Tables:
Initial Franchise fee:
IIf the gross profit for the last 12 months for the store that is being franchised is $200,000 or less, the franchise fee is $10,000. If the store’s gross profit for the last 12 months is more than $200,000 the franchise fee is a percentage of the gross profits according to the following table:
| Gross Profit in Dollars | % of Gross Profit |
|---|---|
| $200,001 to $250,000 | 5% |
| $250,001 to $350,000 | 15% |
| $350,001 to $450,000 | 20% |
| $450,001 to $800,000 | 25% |
| More then $800,000 | 30% |
Initial Investment:
| Expenditures | Low | High |
|---|---|---|
| Initial franchise | $0 | $272,400 |
| Initial Gas Fee | $0 | $40,000 |
| Training expenses | $0 | $3,400 |
| Opening inventory | $33,200 | $68,100 |
| Cash register | $400 | $7,000 |
| Store supplies | $250 | $2,000 |
| Licenses and permits | $350 | $20,000 |
| Real estate and equipment | Land, building and equipment are leased from the franchisor. Covered by part of the 7-Eleven charge. | Land, building and equipment are leased from the franchisor. Covered by part of the 7-Eleven charge |
| Goodwill | If the franchisee buys a current franchisee's interest in a franchise, a "goodwill" payment will be paid to the selling franchisee. This is negotiated between the two parties without the franchisors involvement. |
If the franchisee buys a current franchisee's interest in a franchise, a "goodwill" payment will be paid to the selling franchisee. This is negotiated between the two parties without the franchisors involvement. |
| Additional funds - 3 months | $0 | $30,000 |
| Total | $34,200 | $442,900 |
Ongoing Fees:
| Name of Fee | Amount |
|---|---|
| 7-Eleven Charge | Variable percentage of Gross Profit |
| Advertising Fee |
Gross Profit of the store for the immediately preceding 12 months (Base Period Gross Profit “BPGP”):
|
| Audits | Varies |
| Interest expense | Varies depending on amount financed by framchisor. The annual percentage rate is currently 5.25% |
| Indemnification | Varies, depending on loss |
| Foodservice operations | Varies, depending on cure costs |
| Maintenance | Varies, according to particular store and equipment. |
| Premiums | Varies, depending on premium received |
| Training | Varies, depending on type of training offered and location |
| Inspection and Testing | Cost of inspection, if applicable, and cost of test. |
| Early Termination Fee | $2,500 |
| Service Fees | Varies, depending on service provided |
| Close Out Fee | $200 |
Date of FDD: 2009
The above information has been compiled from the FDD of 7 Eleven along with online sources.
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