7-11, Tesco Lotus Express Franchise

[Khun Jean]

I am starting to study the possibilities of starting a franchise.

The 7-11 seems to be working as many 7-11's are still around after many years.

What i don't really understand is why sometimes there are more than one 7-11 store in a street.

Sometimes even only a few hundred meters.

Don't they have some 'protection' against that?

Especially from a franchise you would expect that.

I have some nice areas i am looking at, but i would not like it one bit if another 'copy' would start very close.

It is just cutting profit it half.

Anyone with experience of opening a 7-11 franchise or another 'supermarket' like 'family mart' or 'Lotus express'?

I have seen very large 7-11's and very small ones.

Is there an optimal size or a formula to make a good estimate? (Depening on the area of course.)

In this case i am looking in several areas that will grow substantially in the next few years. At this moment just a few hundred houses in the vicinity and often quit large numbers of visitors in the weekends.

Only one mom&pop 'supermarket' with only very little number of products in the area.

Any links to these franchises?

Any information about this much appreciated.

[Chang_paarp]

Here is a link to 7-11

http://www.7eleven.co.th/corp/franching_main.php

It is in Thai, if you chose to go that route you will ned a Thai partner. You are looking at minimum invstment of B3Mil. They also have regular "RaRa" meetings all in Thai, that is a good one to delegate.

Look at Family Mart, less investment to get in. A Google search will find the page, again it will be in Thai.

Both will advise you what they think the optimum size is, however neither give exclusive rights to an area. CP Corp (7-11) is knon for selling 4 or more franchises in an area to get the franchise fees and wait o see who survives. The same is true of Family Mart they will open in the same area as a 7 to see who survives.

Good luck.

[soundman]

An interesting franchise I have come across recently is the 108 Shop convenience store concept. If you go with a large version, normal franchise arrangements apply, however they (108 shop) have a membership based arrangement where you pay a member fee, have access to all their buying power & product lines, and get all the shop decals & logos included in the package. Haven't had a look at the fine print or really observed how the 108 business is going, however, from outward appearances, their shops seem to be on a par with family mart & profitability appears to be location based.

Cheers,

Soundman.

[Khun Jean]

Thanks for the replies!

The non exclusive rights to an area bothers me. It seems stupid to allow competition that close, but i understand it from a money making view. It is not that important for them which shops makes money as long as the fees are getting paid.

Only way to 'protect' is to be in an area that is already reasonable full with shops and having the best location (as usual).

I will look into this '108 shop' concept. I did see some of those and they look inviting. They still have a long way to fight with the strength of the 7-11 brand, and even Family mart.

Tesco Lotus Express is not a franchise so that one is of the list.

Still have to study a lot about which franchise offers the best package.

[ThaiPauly]

The Family Mart operation eminates from Japan.

I read an article recently in the biz section in the BK Post which said that they were having a hard time, especially here in LOS, but they wer aiming to turn it around!

I don't think that 7-11 like to open shops close together if they dont think its gonna be profitable for both outlets from what I can understand, if both shopd go broke then they have NO profit at all, and bear in mind that the franchisee must be a complete idiot if he ploughs all his cash into something that is gonna be a White Elephant. I did not realise that they would just open as many as possible and se who makes it and who does not as Chang Paarp indicates, but then he HAS a mini-maert and I don't so he must have done his research

The way I read it, either you go to CP and say you have found a good location and want in...they will then research it and see if its viable. OR you go to CP and say you want to invest and they will look for somewhere for you. They will even give you a trained manager until you get on your feet.

I have never heard of 108...are there any branches in CM.

As an aside Chang Paarp has a mini-mart and I am interested to know why he took the route he did instead of joining with the big boys? There must be a good reason for that.? What did your research tell you? It could be useful to the OP

[tigerbeer]

any idea what kind of money one would be looking at for a 108 shop?

[raro]

As an aside Chang Paarp has a mini-mart and I am interested to know why he took the route he did instead of joining with the big boys? There must be a good reason for that.? What did your research tell you? It could be useful to the OP

Chang Paarp aims at the Farangs living in the area and has products on offer that CP does not provide. The upside of being independent is after all having the liberty to choose which products and services to offer.

The Minimart is in a good location and I could well figure purchasing there the stuff I forgot in town...The quick fix for desaster scenarios like Sunday morning and no coffee...

I for one wish him all the best for his business and once he has also beer on offer I'll be his regular....

[Chang_paarp]

The main reason I went independent was to keep the initial investment to a minimum. I am still in the setup stage as the shop has been open for less than a month.

I did look at the larger franchises very briefly, however at the time I did not have a Thai partner to do the communication. These folk prefer o have a Thai face who has a degree to talk with. This person is also expected to attend the sales meetings. One of the main benefits of 7-11 is their central buying, they source all the product and negotiate with the suppliers to get better pricing. You place one order with the warehouse and it is delivered daily. Companies like Coke Pepsi and Walls will deliver direct, this reduces much of the running around.

As part of my research I talked to the owner of supermarket, he said he dealt with over 150 different suppliers, which meant account applications with each of them, which can take one or two months. Another joy of dealing with these companies is that the agency for products tends to move around, eg Gillette/ Duracell has moved 3 times in the last 2 years. The only way you discover that the agency has changed is when your product does not arrive, then you have to work out if they have no stock or the agency has moved. This happens as often 2-3 times a month. If you deal with central buying it is their problem.

I am not adverse to joining a group, and would like some information on the 108 membership if Soundman can post more. My experience in a different industry showed me the benefit of being a member of a buying group.

[ignis]

Wonder how they make any money?

I live out in the sticks, and until 18months ago the 7km to the main Road was not even tarmac, and many potholes.. Now is tarmac all the way and some developments on both sides…. Most are near the main road, then sort of 2 more groups, with new single story blocks of shops, many are still empty, a few open and then close within a month or 2..

My question is how can the mini Supermarkets make any money?

In this 7 kms there are 6 x 7/11 shops and 2x Tesco Express, 1x Family Mart [now closed down] just opened last week a CP Frozen Food shop.. There are 2 Veg Thai open air markets open 7 days a week + a very big Market which opens 3 days a week.

One of the 7/11 I go into every week when passing as loads of items are VERY cheap, [near end of expire date] they have been open about 8 months + Always have 3 Staff, and only once have I seen another shopper in there at the same time as I was in..

[soundman]

I am not adverse to joining a group, and would like some information on the 108 membership if Soundman can post more. My experience in a different industry showed me the benefit of being a member of a buying group.

Before we installed the 7/11 at our petrol station, we ran an independant mini-mart and ran into many of the problems with dealing with heaps of suppliers that you outlined above. Also included, & easier in a certain sense, were weekly buying runs to Makro. All in all, sourcing product was the single biggest headache, with pilferage running a close second.

The 7/11 is owned and run by their company, with rent payed to us on a percentage of sales. Smaller profits, but far less hassle. We have an option in the contract to buy the 7/11 franchise at any time in the next ten years.

The 108 Convenience store is part of the Saha Group. Tried to find some links this morning, however, there doesn't seem to be much information on the net. Contact Saha Group direct I suppose.

The membership concept was explained to me by the lady who runs one in the local moo bahn. She said she paid a membership fee, which included all the decals etc & enables direct warehouse purchasing & delivery as well as things like bread & fresh product ordering and delivery. With the membership, you are not obliged to order to company build to's. You can actually order, display & sell products that are not of the company line. Further information would be best achieved by contacting Saha Group sales office. Sorry, can't be of more help than this.

Cheers,

Soundman.

[klikster]

I'm not thinking of opening a mini-mart, but I do have a question for those who have experience.

One day I was in a 7-11 in a smallish city at the same time a gaggle of high school kids came in. There were at least a dozen, drinking soft drinks and eating inside the store. How does a 7-11, or any other minimart, control that sort of potential pilferage. And how much pilferage is there?

[Khun Jean]

After doing some 'research', i've decided to just rent out the land instead of using it to start a minimart. The location is not really suited for a 'food' franchise. I travelled to the next village ant there they have in 1 street the following shops. In this order.

7-11, 7-11, family mart, 7-11, 7-11.

This 'street' is about 5 Km's long and where you have both a 7-11 and a minimart is on a junction.

When visiting these shops during the day, evening and night you can count the number of customers on one hand. Not at a given moment but i counted them in a 1 HOUR!! timespan.

Now, in this area there is a rumour of a Lotus express opening. Another shop for the same number of potential customers.

Personnaly i find these Lotus Express shops the best as they offer a large range of products.

The 7-11 are more the snacks and drinks shops.

The main reason is the 'copy' problem i have faced before. If you don't even have some protection of the franchise you want to become a part off, there is in my opinion not one single reason to start it. With the area protection it would be a viable option because with 7-11 you will have a strong brand and in this particular area no remaining shops ara available..

[onlooker]

How does a 7-11, or any other minimart, control that sort of potential pilferage. And how much pilferage is there?

Very little shoplifting. Also all 7-elevens have numerous security cameras. Highly unlikely a Thai schoolkid who visits a shop near their school & home regularly would steal something. Big loss of face if they were caught

[Amethyst]

lol why not start your own brand of convinience stores Its easy and spread it world wide

[torrenova]

My business partner looked at 7/11 from a viewpoint of getting yuor product into their stores. The fees payable were so enormous (way over 100k for a couple of small items) that it begs the question that 7/11 doesn't actually make any money from actually selling the stuff but from franchise fees and fees from new product placement.

[Theyreallrubbish]

My business partner looked at 7/11 from a viewpoint of getting yuor product into their stores. The fees payable were so enormous (way over 100k for a couple of small items) that it begs the question that 7/11 doesn't actually make any money from actually selling the stuff but from franchise fees and fees from new product placement.

That's how retail works. The retailers know they have a valuable asset in their shelf space and charge for placement on the shelves. The big brands are happy with the situation as they have the financial clout to maintain their market dominance.

Its the same in the UK with the supermarkets having finely graded placement fees depening on where you are in the store and whether you're at eye level for adult products or easy grab level for child orientated products with the highest fees for end of aisles in the center aisle and near the checkout