Foreign Ownership Of A 7eleven Franchise?

[lukey1979]

Does anybody know if a farang can own a franchise of 7eleven in Thailand? And if so what would the average initial cash investment be? Im working in the security industry at the moment, i have good management skills but little experience in the retail industry. When i've raised enough capital i'm thinking about starting up in the franchised retail field in the issan area. Where im moving to near surin there are no 7elevens for a few miles so it maybe a good oppurtunity for me. Pease no flamers replying about my lack of retail experience, Im young ,ambitious and if required i will gain the nessecary qualifictions. Any advice would be appreciated ladies and Gents.

[BEENTHEREDONETHAT]

http://www.thaivisa.com/forum/index.php?showtopic=153749

Try the above for information on different thread.

[Khun Jean]

I thought of it to but decided to not do it.

Major problem is than once you have opened your 7-11 shop on that 'for a few miles' road. A (few) Thai will think 'that is a good idea' and will open one within a 100 meter radius effectively lowering your turnover by 50%. At that moment the Thai will still be satisfied with the minimal profit and you will think 'what the ... just happened' and will recognise that for all the work and risks involved the roi is not sufficient.

A better place would be in a city where all other shophouses are already been used so the problem of opening one very close is somewhat less and the population density can support more than 1 mini-mart.

Then you have 'lotus express'. Gas stations are great places for them. And they beat all the other mini-mart franchises easily, because they have a much wider range of products. So if you have a gas station close, open there before lotus does. BTW Lotus Express is NOT a franchise.

[Chang_paarp]

http://www.thaivisa.com/forum/index.php?showtopic=153749

Try the above for information on different thread.

That thread has a lot of the information you need to know.

Just a couple of observations, Soundman said that the turnover of his minimart went up a LOT when they changed to 7-11 with CP running it, he si happy to leave CP running the show so he does not have to worry about that business.

Khun Jean's comment in this thread about the turnover halving when a second franchise is opened nearby is not entirely correct. The term "clustering" refers to having a number of similar shops in close vicinity to each other. You get shopping districts this way. The buying public is a fickle bunch and if they see a queue at the till they will leave without purchasing anything or not even enter the store. So opening a 7-11 and a Familymart across the road from each other is not as silly as it may seem, as the folk will come knowing they have a choice if one is busy or out of their preferred product.

[Chang_paarp]

The following is an advert from forum sponsor Sunbelt Asia's current newsletter. It would seem foreign ownership is OK for one of the franchise groups. The colour and bold is my editing.

PATTAYA

UPDATE! The asking price has been reduced from 4,200,000 baht to 3,100,000 baht.

Part of a franchise chain, this Pattaya Mini-Mart is only one year old, and is consequently in very good condition. The enterprise is set to earn net profits of around 1,500,000 baht from receipts of roughly 9,500,000 baht in the first year of trade, but the owner must return to his homeland for personal reasons. A lot of time and money has been spent to build up the business, and he is reluctant to sell, but will accommodate a transfer of the business for less than three times earnings. There are three large en-suite rooms to rent out on the upper floors, and one of these has already been rented on a long term contract at a rate of 15,000 baht per month. Additionally, there are two food stands on the forecourt, and further income of 6,000 baht per stand per month is also being generated. On top of this two ATM machines bring in a further 6,000 baht per month each. The franchise company is expanding rapidly all over Thailand and new outlets are opening every week. The seller will show detailed accounts for trade to date, and these figures can be endorsed by the franchise company. The property measures approximately 500 square metres and contains assets worth around 375,000 baht, including a 42" LCD TV and a DVD surround sound system. Monthly rent is payable at a rate of 40,000 baht on a very long lease contract that does not expire until 2016, and there are then a further two three year options to benefit from. (BKK13048)

Total Investment To Own: 3.1 million baht.

[WongKarWai]

that seems to be the situation with every business being sold on any newspaper or internet site. the owner is leaving for personal reasons. that may or not be the case, i have no idea... but its weird that you never see "The owner wants to sell because the business sucks and is losing money or he thinks it will lose money"... instead, every business being sold is an amazing opportunity for you and the owner has personal reasons to move back home....

[WongKarWai]

look you are not going to get rich buying 711 franchises. they are on every block. the moment you hit X baht in sales, they go and open another a block away from you, that is the game. but if you want it as an investment to earn a small amount of money or to impress girls half your age who otherwise wouldnt give you the time of the day (like i try to do) than go for it.

[whatsupdoc]

look you are not going to get rich buying 711 franchises. they are on every block. the moment you hit X baht in sales, they go and open another a block away from you, that is the game. but if you want it as an investment to earn a small amount of money or to impress girls half your age who otherwise wouldnt give you the time of the day (like i try to do) than go for it.

Maybe there are so many mini-marts because you do make good money with them? Doesn't sound very logical to me that people would open yet another one if the prospect of making a healthy profit is not there....

[lukey1979]

look you are not going to get rich buying 711 franchises. they are on every block. the moment you hit X baht in sales, they go and open another a block away from you, that is the game. but if you want it as an investment to earn a small amount of money or to impress girls half your age who otherwise wouldnt give you the time of the day (like i try to do) than go for it.

Im 28 mate, do you think I want to impress girls half my age? if that was the case i would move to cambodia.

[Khun Jean]

look you are not going to get rich buying 711 franchises. they are on every block. the moment you hit X baht in sales, they go and open another a block away from you, that is the game. but if you want it as an investment to earn a small amount of money or to impress girls half your age who otherwise wouldnt give you the time of the day (like i try to do) than go for it.

Maybe there are so many mini-marts because you do make good money with them? Doesn't sound very logical to me that people would open yet another one if the prospect of making a healthy profit is not there....

That comment can only be made when you observe them over a longer period.

With so many shops selling identical products the one with the best location and service wins. Others will close eventually.

Many Thais are also satisfied with a very small profit (or is that called being 'trapped') compared with foreigners that look more to make a living or a roi.

Opening a 7-11 or other franchise should make a decent amount of money, otherwise leaving it on the bank or putting it in some stock/bonds/whatever will be more profitable.

My decision to not do it, is because i can rent out the land for a decent amount and have to do absolutely nothing to make an extra income. Opening a shop would require work, luck, enough turnover, good employees, etc.. For all those factors the profit should be a lot higher than renting out the land. In my calculations it is not worth it.

Others can have a better location and have a higher turnover. If that was the case i probably would do it if and ONLY if i would get an area protection, even a small one like within a radius of 1 Km. Not protection from other brands but from the SAME franchise. If they don't do that, they only think about the franchise fees and will just wait to see who will survive. They couldn't care less.

[WongKarWai]

look you are not going to get rich buying 711 franchises. they are on every block. the moment you hit X baht in sales, they go and open another a block away from you, that is the game. but if you want it as an investment to earn a small amount of money or to impress girls half your age who otherwise wouldnt give you the time of the day (like i try to do) than go for it.

Maybe there are so many mini-marts because you do make good money with them? Doesn't sound very logical to me that people would open yet another one if the prospect of making a healthy profit is not there....

i imagine the profit is better than the keeping it in the bank or the stock market but i mean, its probably much less than people imagine. if there was such a large margin for profit, than the company itself wouldn't bother franchising, they would just open as many locations as they could by themselves. they make their money franchising, so that should tell you something right off the bat. i imagine the returns on a 7/11 is in the 10-15% range. and yeah he is right, location is obviously keep and if you judge it wrong you can lose your money.

there was a farang not too long ago who tried to open his own mini mart at the bottom of Asoke BTS, next to Soi 14. It quickly failed.

Edited December 11, 2007 by WongKarWai

[soundman]

Another 7/11 thread here.

Cheers,

Soundman.

[rchapstick]

I'm pretty sure that 7-11 and Family Mart will NOT allow foreigners to own, or even partly own, franchises in Thailand. Only possible if you have a GF/spouse/partner who would own the franchise, with the OP as a passive observer. Even then, a farang could not perform any work int he shop.

[WongKarWai]

why would you want to do the work when you can hire 2 people to do it for 40 baht/hour?

[percy2]

I'm pretty sure that 7-11 and Family Mart will NOT allow foreigners to own, or even partly own, franchises in Thailand. Only possible if you have a GF/spouse/partner who would own the franchise, with the OP as a passive observer. Even then, a farang could not perform any work int he shop.

How did you come to these assumptions?

Cheers

[rchapstick]

I'm pretty sure that 7-11 and Family Mart will NOT allow foreigners to own, or even partly own, franchises in Thailand. Only possible if you have a GF/spouse/partner who would own the franchise, with the OP as a passive observer. Even then, a farang could not perform any work int he shop.

How did you come to these assumptions?

Cheers

GF works for CP, and has talked with FM about a franchise.

[Khun Jean]

Foreigners aren't allowed to own anything in Thailand except a condo and the Americans that can use the treaty.

It is all 49% foreigner and 51% thai. In this case it would be the same.

[cclub75]

I'm pretty sure that 7-11 and Family Mart will NOT allow foreigners to own, or even partly own, franchises in Thailand. Only possible if you have a GF/spouse/partner who would own the franchise, with the OP as a passive observer. Even then, a farang could not perform any work int he shop.

How did you come to these assumptions?

Assumptions ? Facts.

It's the Foreign Business Act, with the List 3 (text here).

SECTION 8 Foreigners shall be prohibited from operating the businesses prescribed in List Three in which Thai nationals are not ready to compete unless permitted by the Director-General with the approval of the Committee.

LIST 3

The business which Thai nationals are not yet ready to compete with foreigners:

(13) Internal trade connected with native products or produce not yet prohibited by law.

(14) Retailing all categories of goods having the total minimum capital less than 100 million Baht or having the minimum capital of each shop less than 20 million Baht.

(19) Selling food or beverages.

(21) Other categories of service business except that prescribed in the ministerial regulations.

That's at least 4 reasons !

;-)

However... Apparently they could remove some items of this famous List 3, before to vote the final draft of FBA 2 (more info on ThaiCrisis).

So, we can still hope...

[Khun Jean]

49%Foreign/51% Thai is a THAI company and can do any business they want.

That is the whole reason there are so many topics about forming a company.

[rchapstick]

According to the GF, CP and Family Mart will not allow the 51/49 structure. Must be 100% Thai.

Have no reason to doubt her, as she is interested in doing it with 100% of her money. I just asked the question.

Perhaps one could get around it by not telling CP or FM, but I am not sure of the process.

Edited December 13, 2007 by rchapstick

[torrenova]

But a Thai company is 100% Thai, that's the point. Who owns the shares is irrelevant.

[rchapstick]

Again, I do not know the process in full, but my understanding is that FM and CP require their franchisees to set up as limited partnerships, and not corporations. So no non-thai's allowed. And you may be right that while they may prefer a partnership, a Thai corp is OK and thus minority foreign ownership is ok.

GF's english is good, but not that good for me to decifer legalese.

One of these days I'll sit down with her and translate the relevant docs to share here. Seems like there is lots of interest.

Edited December 17, 2007 by rchapstick