A franchisee "invests" approximately $150,000 to "have the opportunity to run their own business". Then on top of that, their royalty fee is approximately 50% of their gross margin.
So - in a $1,000,000 store that runs a 35% gross margin, a franchisee's gross income (after paying the royalty) is approximately $175,000 per year.
Out of that come the store payroll/taxes, (est. $135,000/year); as well as various other charges totaling $2,000 - $4,000 per month (taking an avg. of $3,000 per month equals $36,000 additional expense per year). This results in a combined annual estimated expense of $171,000/year.
Based on the above, a franchisee's net income would then be $4,000 per year. This, after having invested $150,000 for the opportunity to run their own business.
Regarding "Running your own business" - while this is not what they preach they mean by this - what they "practice" they mean by this (remember - actions speak louder than words) is "do it our way".
This has long been the case, but has recently gotten worse through the total centralization of company operations in Dallas (eliminating regional offices). Field Consultants continue to visit the stores - but most don't focus on franchisee profitability; instead the focus is 'is the franchisee doing what we want them to do'.
Meanwhile, the company is recording record profits while very little is being invested in store upgrades (7 Elevens responsibility under the contract.
