PROPERTY SEARCH
How to manage the site process.
How does a major franchise network manage
its site selection process?
Braeden Lord, general manager, retail operations at convenience chain 7-Eleven explains how the property division stays ahead of the game.
Q: WHAT'S THE PROPERTY STRATEGY
FOR 7-ELEVEN?
A:
The customer is at the heart of all we do at 7-Eleven, and therefore the changing needs of the convenience customer drives our business strategy including managing our property portfolio.
We have a well-defined network plan, updated annually, led by our development managers based in each of the four main states we operate in (VIC, NSW, QLD, WA).
This plan saw us open around 30 stores in the last financial year, with similar rates of growth projected in the year ahead.
This growth is predominantly in new suburban fuel sites, as well as fuel sites in some key regional areas.
In addition to opening new stores, we are continuing to refresh our current trading portfolio, including a planned transformation of our non-fuel sites based on learnings from a couple of trial store transformations in Melbourne.
Q: WHAT'S THE RATIO OF GREENFIELD AND RESALES IN THE EXPANSION PLAN?
A:
Over the next 12 months, we project that the number of existing stores to resell will be similar to new store openings, providing strong opportunity for growth and renewal across our network.
Q: WHAT GIVES THE COMPANY A COMPETITIVE EDGE IN SITE SELECTION?
A:
The common feedback we receive from developers is that we are agile and decisive. 7-Eleven’s model allows us to play equally well on smaller suburban sites through to highway fuel stops. We have strong customer insights and business analytics to understand what works for us and our business model.
Q: WHAT ARE THE RESPONSIBILITIES OF
THE PROPERTY DIVISION?
A:
We logically break our property division into two areas: development and existing portfolio. We have a talented team who specifically manage these responsibilities, with an overarching objective of ensuring 7-Eleven remains the market leader in petrol and convenience.
Our property team is also there to provide support to franchise partners if they have random queries on their site.
Q: HOW DOES THE PROPERTY DIVISION
SEARCH FOR SITES?
A:
Property, as much as any successful strategy, is about a focused team with clearly defined requirements and outstanding contacts. We value each of the hundreds of relationships we have with developers, landlords and property trusts. We work with consultants to regularly define our strategy, taking into account population growth and land releases.
We also have an engaged network of franchisees who bubble up local market insights, that feed i nto our decision making process.
A: Q: DOES 7-ELEVEN OWN
OR LEASE SITES?
7-Eleven has a large portfolio of owned sites, largely due to historical reasons. More recently, we have tended to lease sites, particularly as we have a long list of developers who are keen to partner with us on greenfield locations.
However, if we need to acquire a site so that we can close a gap in our network plan, then we would definitely consider it.
Q: IF LEASED, ARE FRANCHISE TERMS
MATCHED TO LEASE TERMS?
A:
We back our ability to trade successfully and generally take out lease terms that are equivalent to, and often exceed, the standard 10 year franchise term. Where the terms are lesser, there is ordinarily an option right to renew.
Q: AT WHAT STAGE DOES A POTENTIAL
FRANCHISEE GET INVOLVED AND WHAT'S THE PROCESS FOR THEM TO BE
MATCHED TO A SITE?
A:
In all cases where a franchisee is looking to buy a site, they need to be
fully approved by the support office. Most enquiries come through to our local offices in the states and our franchise development managers walk prospective franchisees through an extensive selection and training process that assists in matching them to a suitable available site.
Q: AT WHAT POINT DOES THE POTENTIAL FRANCHISEE OPT FOR EITHER A
GREENFIELD OR A RESALE?
A: Generally we are opening greenfield sites as corporate stores. The purpose, primarily, is to enable us and any future franchisee to ascertain the true value and potential of the location. Once established, we may then look to sell that site. So our franchise partners generally are buying into existing premises – either a resale or a corporate store - rather than a greenfield opportunity.
Q: CAN A FRANCHISEE REJECT A
GREENFIELD SITE?
A: Our franchisees are entirely free to make their own decisions regarding their potential investment – they are not compelled to buy into any location.
Q: WHAT INFORMATION ARE FRANCHISEES RELYING ON WHEN THEY
PICK A LOCATION?
A: We ensure all relevant details are provided through the matching process of a partner with a site. This includes all financial, lease and trading history.
All intending franchisees are counselled to obtain independent accounting, business and legal advice. Other than in the case of renewals or extensions no franchises are granted unless the applicant (as a minimum requirement) can demonstrate that independent legal advice has been obtained.
Well-informed decision making is the key.
Q: IS THE COST OF THE PROPERTY DIVISION INCLUDED IN THE FRANCHISE
FEE, OR A SEPARATE FEE THAT FRANCHISEES PAY IF THEY ACCESS THE
SERVICE?
A: It is important to note that our franchisees are not responsible for rent or the ongoing obligations of the lease, nor maintenance of their site. 7-Eleven holds the direct relationship with the landlords, and we manage the maintenance and upkeep of their site for them.