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midreport 7-Eleven...

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FINANCE – 7/11

7-Eleven is a famous franchising, initially started in USA. Its mission is to give convenience customers what they want, when and where they want it," said 7-Eleven President and CEO Joe DePinto. This franchising model works in the following manner: If you want to become a franchisee of 7-Eleven one has to make an initial investment that ranges between 100’000 to 1’000’000 USD. However, the actual fees depend on the store you select, a down payment on the store’s inventory, supplies, business licenses, permits, bonds, and initial cash register funds. People interested in the model can start either a single store or multi-unit traditional franchise programs. Once opened your franchise store, investors are ready to make profits. 7-Eleven model works with items that sell quickly. For example: If you pay $1.00 for an item and sell it for $1.05, you've made 5% profit. But if you sell it 3 days after you've bought it, and spend the $1.00 restocking it, and sell it again in 3 days, and repeat the process, then in a year, your initial $1.00 investment has made more than 500% in profits. The profit margin of a 7-Eleven owner is estimated to be around 5%, however a lot depends on the products that the store is selling. Some items, in fact, have much higher margins, but a very approximate estimate is 5% of store sales so a store doing $1,000,000 in sales would generate about $50,000 for the owner. On the other hand, the model behind 7-Eleven franchise stores, not only makes money from the initial fees paid by people who want to start a 7-Eleven franchise business, but also they use a split gross profits rather than sharing royalties on sales. They have between 48%

to 57% of Total Gross Profit. This means that 7-Eleven is equally invested in each individual stores success as much as the franchisee. In 7-Eleven Financial Report we can see that the sales during 2018 are 244’887’853 NTD and grew by 10.74%, Goss Profit by 14.49% and Operating Profit by 23.15% from the previous year. Gross Profit is usually around 33-35% of total sales and operating margin usually is in between 4.5-5.5%....