Is the 7-11 franchise out of control. A street in Pattaya has one ever 50m to 100m

[ubonr1971]

I was shocked to see one street in Pattaya (Khopai Rd which is 5min from Soi LK metro area) that has a 7-11 convenience store every 50 to 100m. I laughed at one point when I saw a very small soi separating two  7-11 stores right opposite each other on the same side of the road. I couldn't believe how many there were in that one street alone. Are they all owned individually or by one rich dude? 

 

I assume anyone buying this franchise takes on the risk that the governing body will allow any other business owner to open another store right next door. Why would they do this to their investors. The profitability of each shop will evidently be reduced the more 7-11's there are in the street. I dont understand the business model to be honest.

 

From what I understand the business owner has to pay 35% of profits to the central office. Also each shop has to buy the stock from the central office who can dictate the prices. It seems to be a high risk business to invest in when the governing head office allows one to be opened virtually next door to each other. Very daft business model or am I missing something?....

[digbeth]

there's a threshold that once your shop pass a certain amount of sales per day, you'll be asked to expand/renovate or comeup with the cash to invest in the new shops across the road, if you can't they'll find someone who will or corporate will invest and open it themselves.

 

You're allowed to keep your exclusive territorry as long as you have the capital to pay up and open more shops as corporate dictate

[blackcab]

Moved to the business forum.

[URMySunshine]

CP have been ruthless and efficient operators to become the second richest family in Thailand in just 90 years. There are a lot of busy fools running a franchise who find out the hard way that it is a stacked deck and that the house always wins even if they don't.  

[URMySunshine]

15 minutes ago, digbeth said:

there's a threshold that once your shop pass a certain amount of sales per day, you'll be asked to expand/renovate or comeup with the cash to invest in the new shops across the road, if you can't they'll find someone who will or corporate will invest and open it themselves.

 

You're allowed to keep your exclusive territorry as long as you have the capital to pay up and open more shops as corporate dictate

i.e if you do well then they will steal your thunder after you took the risks and determined the market. 

[KC 71]

I wonder how many ‘bing-bong’ noises are going off at any given time Here.I bet its a fair few!

[jastheace]

10 minutes ago, URMySunshine said:

i.e if you do well then they will steal your thunder after you took the risks and determined the market. 

got it in one

[impulse]

27 minutes ago, URMySunshine said:

i.e if you do well then they will steal your thunder after you took the risks and determined the market. 

 

The theory behind the franchise is that they have proven the market, they've developed the sourcing and distribution and inventory system.  Basically, you're buying a complete system that generates cash.  If you work it, you bought a job.  If you hire someone to work it, you've bought a cash flow- contingent on some smarts on your part.

 

The franchisees all know that going in...  

 

[Kwasaki]

1 hour ago, ubonr1971 said:

I was shocked to see one street in Pattaya (Khopai Rd which is 5min from Soi LK metro area) that has a 7-11 convenience store every 50 to 100m.

So what's your problem ?

[URMySunshine]

26 minutes ago, impulse said:

 

The theory behind the franchise is that they have proven the market, they've developed the sourcing and distribution and inventory system.  Basically, you're buying a complete system that generates cash.  If you work it, you bought a job.  If you hire someone to work it, you've bought a cash flow- contingent on some smarts on your part.

 

The franchisees all know that going in...  

 

I would love to know what the average franchisee gets pa and for what investment. 

[White Christmas13]

2 hours ago, URMySunshine said:

CP have been ruthless and efficient operators to become the second richest family in Thailand in just 90 years. There are a lot of busy fools running a franchise who find out the hard way that it is a stacked deck and that the house always wins even if they don't.  

Yes I would never buy a franchise business Thailand or anywhere  else. You never make a living. It is the same in the western world. Most of them go bankrupt and left with nothing.

 

[thaikahuna]

Look in Jomtien too. There is one every Soi from the Police Box to Soi 9...and all of them are making money.

 

[DannyCarlton]

15 hours ago, URMySunshine said:

I would love to know what the average franchisee gets pa and for what investment. 

One of my near neighbours has 4 7/11 franchises. I don't know what his annual returns are but he doesn't live a lavish lifestyle.

[Berkshire]

14 hours ago, White Christmas13 said:

Yes I would never buy a franchise business Thailand or anywhere  else. You never make a living. It is the same in the western world. Most of them go bankrupt and left with nothing.

 

Not sure why you would say that.  There's a reason franchises are flourishing all over the world.  It's because the model works. 

[Don Mega]

38 minutes ago, thaikahuna said:

Look in Jomtien too. There is one every Soi from the Police Box to Soi 9...and all of them are making money.

 

They open their books for you to view ?

[White Christmas13]

23 minutes ago, Berkshire said:

Not sure why you would say that.  There's a reason franchises are flourishing all over the world.  It's because the model works. 

Does it? Then how come many people getting bankrupt after purchasing a franchise ? 

 

[Enoon]

33 minutes ago, Berkshire said:

Not sure why you would say that.  There's a reason franchises are flourishing all over the world. 

 

Because the "starry eyed" people who bought into them are stuck in them, never having earned enough money to pay off the debts incurred when they borrowed to get into them?

 

They spend their lives paying off interest?

 

I may be wrong, but it would seem to be an obvious reason.

 

Not having read this, I can't really say:

 

Top 4 Reasons to NOT Buy a 7-Eleven Franchise

 

Whatever, there are always plenty more starry eyed individuals "in stock".

 

 

 

Edited January 16, 2020 by Enoon

[MikeN]

I once came across a crossroads somewhere in an innner BKk suburb that had a 7/11 on 3 corners and a Familymart on the other ! It was an older part of town,not a particularly prosperous area, just townhouses no condos, nor was the road too busy to cross, so I don't know why anybody thought that 4 convenience stores were wanted or profitable.

[DannyCarlton]

1 minute ago, MikeN said:

I once came across a crossroads somewhere in an innner BKk suburb that had a 7/11 on 3 corners and a Familymart on the other ! It was an older part of town,not a particularly prosperous area, just townhouses no condos, nor was the road too busy to cross, so I don't know why anybody thought that 4 convenience stores were wanted or profitable.

Not just in Thailand. Just outside Blackpool there's a crossroads with 2 McDonalds on opposite corners.

[Berkshire]

17 minutes ago, White Christmas13 said:

Does it? Then how come many people getting bankrupt after purchasing a franchise ? 

 

Of course franchises are not successful 100% of the time.  Do I really need to point that out?

But the fact that you see 7/11, McD, KFC, etc., all over the place is an indication that it's working most of the time. 

[joskeshake]

do you have chopper for making trip from soi LK Metro to Soi Khopai in 5 min ? or i'm I wrong and is there an Khopai road somewhere ?

[Kerryd]

The Thai business model seems to be this:
If someone is running a successful business, open the exact same kind of business right next to it (or as close as you can get).

If there are 2 exact same shops near each other and they both seem to be doing well, then open a 3rd shop and try to steal business from the other 2. 
Cut, rinse and repeat until none of the businesses are making any money. Then close down (or sell to someone else).

 

I've seen people do that with laundry shops. I've seen people do that with motorcycle shops. I've seen people do that with gold shops.

Friend of mine had a motorcycle shop (sales/service/rentals) in a decent location, but he didn't like to actually put any effort into anything so he didn't do good business (customers would come into the shop, he'd glance at them from the office, decide they weren't going to spend money, then ignore them).

He decided to move to a different location. A soi that already had 3 (or more) motorcycle shops within 100 meters of each other. It seems his thinking was that if they were making a living then he should be successful as well. (Ignoring that the other shops were not actually that successful and were meant more for friends/local clubs than as commercial enterprises).
Needless to say, my friend didn't do very good there either and ended up closing that place down as well.

The 7/11s/Family Marts seem to operate on the same premise as well. Instead of finding locations where there isn't any nearby competition, they try to locate next to the competition and hope to steal business from them by virtue of maybe being 20 meters closer (one direction or the other) to where some of the customers might live.

I've been told that a 7/11 franchise costs about 1 million baht. Not sure what the cost to build the store would be or to stock it initially. Labour will be fairly cheap of course (depending on number of staff and salary of the shift managers/cashiers). Probably spend as much on electricity as salaries with all the fridges and aircons running !

But basically, if you can afford the franchise fee and the cost to build/stock the story, you are probably making a return on your investment within a couple of weeks in most places.
Or until some numpty builds another one right beside you instead of 500 meters away on a different soi that doesn't have a store (yet).
 

[tomazbodner]

18 hours ago, ubonr1971 said:

I was shocked to see one street in Pattaya (Khopai Rd which is 5min from Soi LK metro area) that has a 7-11 convenience store every 50 to 100m.

That few? In some parts of Bangkok we have them one next to the other... there are 12 within 200m from my home. And then there's Family mart, supermarket, etc... Can't say I have nowhere to shop in the middle of the night.

[henry15]

Not only in Pattaya.

[Just Weird]

18 hours ago, ubonr1971 said:

It seems to be a high risk business to invest in when the governing head office allows one to be opened virtually next door to each other. Very daft business model or am I missing something?....

You're missing how much money is being made by CP All and the franchisees, if they weren't making money they wouldn't be investing millions into these franchises, would they?

[Don Mega]

23 minutes ago, joskeshake said:

do you have chopper for making trip from soi LK Metro to Soi Khopai in 5 min ? or i'm I wrong and is there an Khopai road somewhere ?

Yeah hate people that tell lies... Khopai to LK is 2.1km and take 7 minutes according to google maps.

[Just Weird]

18 hours ago, URMySunshine said:

CP have been ruthless and efficient operators to become the second richest family in Thailand in just 90 years. There are a lot of busy fools running a franchise who find out the hard way that it is a stacked deck and that the house always wins even if they don't.  

So you're claiming that all these shops aren't making money for themselves, then?

[Just Weird]

17 hours ago, Kwasaki said:

18 hours ago, ubonr1971 said:

I was shocked to see one street in Pattaya (Khopai Rd which is 5min from Soi LK metro area) that has a 7-11 convenience store every 50 to 100m.

So what's your problem ?

He hasn't got one!  Envy.

[Just Weird]

18 hours ago, URMySunshine said:

CP have been ruthless and efficient operators to become the second richest family in Thailand in just 90 years. There are a lot of busy fools running a franchise who find out the hard way that it is a stacked deck and that the house always wins even if they don't.  

 

18 hours ago, URMySunshine said:

i.e if you do well then they will steal your thunder after you took the risks and determined the market. 

 

17 hours ago, URMySunshine said:

I would love to know what the average franchisee gets pa and for what investment. 

Your first two comments suggested that you already knew that otherwise why would you have made those comments?

[toenail]

My understanding is that the two 7-Eleven franchises are owned  by two different family companies- urban myth?