7-Eleven is a global convenience store chain, offering various products and services, including gas, cigarette, drinks, and snack sales in 20 countries.
To operate 7-Eleven franchises profitably, franchisees must meet specific real estate requirements depending on factors like location. This expert analysis examines the 7-Eleven real estate requirements and lease rates for franchised stores.
Below, we’ll explore the lease rates, how 7-Eleven selects their site, whether it is a good investment and other important lease information. But before we dive in, let’s briefly go through the history of the company.
A Brief Overview and History of 7-Eleven
7-Eleven is a global convenience store chain headquartered in Irving, Texas. With over 71,000 stores in 20 countries, including the US, Canada, and Japan, 7-Eleven has established itself as the world’s biggest convenience store brand.
The first 7-Eleven store opened in Oak Cliff, Texas, in 1927 by Joe C. Thompson Jr, who sold bread, eggs, milk, and other groceries under the name “Tote’m Stores”. In 1946, “Tote’m Stores” changed its name to “7-Eleven”, reflecting its operating hours extension from 7:00 am to 11:00 pm.
The first 7-Eleven store in Japan was opened in 1963, and over the next few years, the convenience store brand expanded to other Asian countries in Thailand, Taiwan, Singapore, and Hong Kong. In 1974, Australia welcomed its first 7-Eleven store, and in 1981, the convenience store brand opened its first store in the United Kingdom to mark its expansion into Europe.
However, a Japanese retail company called Ito-Yokado acquired 7-Eleven in the 1980s, expanding the convenience chain’s presence in Asia (South Korea and China). In 2005, Ito-Yokado’s parent company (Seven & I Holdings) acquired Southland Corporation, a US-based brand that owned 7-Eleven Inc.
As a global retail powerhouse, 7-Eleven has expanded its products and services to include lottery tickets, drinks, snacks, and gas sales. The company also introduced digital strategies like delivery services and mobile payments to meet their customers’ evolving needs.
How 7-Eleven Selects Their Site Location
Like every business, choosing the right location is crucial to 7-Eleven’s success. When selecting a new 7-Eleven franchise location, the company considers factors like store visibility, traffic flow, proximity to public facilities like hospitals and schools, and the area’s demographics.
It also considers store accessibility and parking availability for vehicles and pedestrians. The company relies on market research firms, the US Census Bureau, and their internal data to determine an area’s demographics.
They analyze demographic factors like household income, age distribution, and population density to ensure that franchised stores are located in areas likely to attract customers.
7-Eleven also prioritizes public facilities because they often generate lots of foot traffic, increasing the chance of attracting more customers. Also, operating near public facilities helps establish 7-Eleven as a community hub.
7-Eleven operates a comprehensive site selection process, taking into account various factors. By choosing the right location, the company can easily attract customers worldwide, establishing a successful business.
Average 7-Eleven Lease Rates
The lease rates vary widely depending on many factors, including the store’s age, size, location, and whether it’s a corporate or franchise property.
Generally, 7-Eleven lease lengths are between 10-20 years, with about 10%-15% rent bumps every five years. The average property sale price is $5,400,000, and 7-Eleven Inc guarantees the leases whether it’s a corporate or franchise-owned location.
However, this amount is often higher in some parts, especially in large areas or cities with high commercial real estate demand. Besides the lease rate, franchisees must pay other expenses and fees, including insurance, advertising, and royalty fees. The fee amount varies depending on store location and specific franchise agreement.
7-Eleven doesn’t own all its real estate. Thus, their franchisees lease their stores. Franchisees will need to negotiate the lease terms with the landlord or property owner to reach a favorable term.
Hence, the store lease rates vary widely depending on the negotiations between the property owner and franchisee. 7-Eleven offers a triple-net lease with appreciable value while the company opts for ground leasing for gas station sites.
Additionally, 7-Eleven runs a Zero Franchise Fee for businesses, a special program waiving franchise fees for specific US franchise locations, including Dallas. This waiver helps business owners save about $80,000.
Requirements for Securing a 7-Eleven Lease Agreement
Securing a 7-Eleven lease agreement requires prospective franchisees to meet specific requirements to ensure they can run a 7-Eleven store successfully.
The following are some vital requirements for securing a 7-Eleven lease agreement:
Financial Requirements
Potential franchisees should have at least $50,000 liquid capital and a $150,000 minimum net worth. These financial requirements ensure franchisees have the finance to cover operational costs and the initial total investment fee for running the store.
Experience
7-Eleven prefers franchise owners with previous experience in business management or retail. This requirement ensures franchisees have the knowledge and skills to successfully operate a franchised store.
Background Check
7-Eleven conducts thorough background checks on potential franchisees to ensure a good reputation and a clean criminal record in the community.
Location
Potential franchisees must identify an excellent location for their 7-Eleven store that meets its site selection criteria, including proximity to public facilities, traffic flow, and population density.
Training
7-Eleven requires franchisees to complete their comprehensive training program covering customer service experience, inventory management, and store operations. The training ensures franchisees possess the necessary skills and knowledge to run a successful store.
Also, 7-Eleven franchisees enjoy ongoing support from the brand, and the stores have great earning potential, ensuring a successful business.
Franchise Agreement
Potential franchise owners should review the Franchise Disclosure Document and sign a franchise agreement outlining the conditions and terms of the lease agreement and franchise fees.
7-Eleven offers an internal financing program providing close to 65% financing on the initial franchise fee. Franchisees will pay an initial one-time franchise fee ranging from $50,000 to $750,000. However, the actual cost depends on your preferred store.
Some other requirements for a 7-Eleven franchise include the store’s inventory down payment (approximately $20,000), bonds, permits, supplies, equipment, land and building costs, initial cash register funds, and business licenses.
Meeting these requirements ensures franchisees have the resources and skills to run a successful store.
Is 7-Eleven a Good Investment?
As a wholly and privately-owned Seven-Eleven Japan Co subsidiary, 7-Eleven is renowned for its convenience stores and gasoline facilities, with about 7,800 company-operated retailers and franchises throughout the US.
With over 71,000 7-Eleven stores in about 20 countries, the convenience store brand is a popular choice for investors looking to invest in the grocery and gasoline industry.
A 7-Eleven investment’s primary advantage is its financial stability. The convenience brand recorded a gross profit of $21.59 billion in 2021 and a $54.45 billion gross sale, a major increase from 2020. This strong financial performance indicates 7-Eleven is well-positioned to withstand economic downturns and enjoys a substantial revenue stream.
Another reason to consider 7-Eleven as a good investment is the company’s brand recognition. The brand is recognized globally, and 50% of your store’s gross profit as royalty will ensure your business keeps improving. Additionally, 7-Eleven has adapted to the latest consumer trends by embracing digital technologies and expanding its product offerings.
However, before deciding whether 7-Eleven is a great investment, you also need to consider some potential risks and do your due diligence. For instance, 7-Eleven faces stiff competition from similar enterprises in the industry. Economic conditions and constant changes in consumer behavior also impact the brand.
Still, 7-Eleven’s strong brand recognition and financial performance make it a worthwhile investment with great prospects. However, it’s best to research and evaluate the potential risks before making an investment decision.
Conclusion
With a reputation for stability and consistency in the market, 7-Eleven as a franchisor has specific real estate requirements franchisees must meet.
Factors like visibility, competition, and location determine a property’s lease rate. Therefore, potential landlords must consider these variables carefully.
Franchisees should also consider individual franchisee needs, industry trends, and market conditions to create a mutually beneficial lease agreement. With enough information on 7-Eleven lease rates and real estate requirements, you can easily decide if it’s the right investment for your commercial real estate portfolio.
Become a 7-Eleven Owner With NNN Deal Finder
If you’re considering franchise opportunities, look towards 7-Eleven franchises, as it’s one of the few profitable triple-net investments. However, it’s best to work with a reputable commercial real estate agency like NNN Deal Finder to acquire this leading convenience store brand.
At NNN Deal Finder, our knowledgeable and experienced commercial property brokers will help you find triple-net properties depending on your preferred investment for your portfolio.
Go through our listed 7-Eleven real estate properties for sale to find one that suits your preferred location and budget. If you’re interested in investing in other business interests like Starbucks and Chipotle, we have various franchising options and triple-net properties for sale.
Whether you’re a new entrepreneur looking for franchising opportunities or a seasoned triple-net property investor, you’ll find a commercial real estate property at NNN Deal Finder that suits your preference when you go through our listings.