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MUCH DOES IT COST TO OPEN A 7-ELEVEN?

California
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Investment
by Renee Bailey

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The biggest franchise system!by number of units

!isn"t McDonald"s; it"s 7-Eleven. The convenience
store franchise that got its start as part of the
Southland Ice Company in the late 1920s, then
operated under the name #Tote"m Stores$ for a
while, now boasts well over 77,000 locations
worldwide. (The name changed to 7-Eleven
following World War II.)

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First, you should know that there are three types

of 7-Eleven franchises, per the company"s
Franchise Disclosure Document (FDD):

1. A traditional 7-Eleven store where the

franchisor o#ers franchises for a single site
that it owns or leases.

2. The Business Conversion Program (BCP)

franchise, where the franchisee is
responsible for acquiring the land and
building for a store site and pays a di#erent
royalty than traditional franchisees. The
franchisee of a BCP is also subject to a
di#erent disclosure document than the
franchisee of a traditional store.

3. A Micro Market franchise, where the

franchisee owns or leases the site and most
equipment to operate an unmanned 7-
Eleven branded stand-alone retail space or
an unmanned retail space within an o$ce
building, hospital, university or hotel or
similar location and within a limited square
footage. The Micro Market franchise is also
subject to a di#erent disclosure document
than a traditional store franchise.

To become a 7-Eleven franchisee, interested

parties have to satisfy several requirements. They
include, but aren"t limited to:

$ Be at least 21 years old and have U.S.

citizenship or permanent residency

$ Be able to obtain and maintain all licenses

necessary for the store operation

$ Have excellent credit and not have !led for

bankruptcy within the last seven years

$ Have no prior record of felony convictions or

other criminal record that could impact the
ability to operate a store

$ Understand the need to be involved in the

day-to-day operation of the store

$ Retail, operations or management experience

$ Pass the required assessments

And that"s before the !nancial requirements,

which are as follows. The !nancial !gures in the
chart below come from the FDD of 7-Eleven, dated
2019. The estimates are provided by 7-Eleven
based of its years of experience in franchising its
brand.

Name of Fee Low High

Initial Franchise Fee $0 $1,000,000

Training Expenses $0 $9,000

Down Payment for

$20,000 $20,000
Opening Inventory

Additional Opening
$15,100 $44,500
Inventory

Cash Register Fund $500 $1,500

Store Supplies $250 $2,500

Licenses and Permits $8,000 $10,000

Real Estate and Covered in #7-Eleven

Equipment Charge$

Insurance $1,500 $7,500

Grand Opening Fee $8,000 $8,000

Only applicable to
incoming franchisee"s
Goodwill buying a current
franchisee"s interest in
a franchise.

Additional Funds
$0 $60,000
During First 3 Months

ESTIMATED TOTAL $53,600 $1,163,000

As you can see above, the estimated !nancial

range for setting up and operating a new,
traditional 7-Eleven store in the United States
for the !rst three months ranges from $53,600
to $1,163,000.

At the time of signing the franchise agreement,

the franchise fee will be due. The franchise fee is
basically a cover charge for entry into a franchise
system, and for taking advantage of the expertise
the franchisor has acquired. It typically covers the
right to use the franchisor"s system (including
trademarks and operating system), and services
the franchisor provides to franchisees like help
!nding a location, training materials, etc.

In the case of 7-Eleven, according to the FDD, the

exact franchise fee is determined by a number of
factors, which include historical sales at the
location, age of the location, the number of stores
available for franchise in the area and more. In
addition, at the time of signing the franchise
agreement, the following opening costs also must
be paid:

$ The cost of all business licenses, permits and

bonds required by governmental agencies or
the franchisor to operate the store

$ The cash register fund for making change

$ A down payment to the franchisor covering a

portion of the opening inventory for the store

$ A grand opening fee to cover the franchisor"s

expensing in promoting the grand opening of
the store

The most recent estimate for the cost of these

items is between $36,500 and $39,500. The
additional initial investment fees are payable as
they occur.

The franchisor does o#er !nancing for all or a

portion of the franchise fee or down payment if
the applicant meets all of the franchisor"s loan
quali!cations and displays a !nancial need that, in
the franchisor"s sole judgement, would make it
di$cult for an otherwise quali!ed applicant to pay
all of the initial fees. This !nancing may not be
o#ered to all applicants. Further, the franchisor
does discount the franchise fee for honorably
discharged U.S. military veterans.

Also in the table, you will see something unique

to 7-Eleven: the !7-Eleven Charge." A portion of
the 7-Eleven Charge covers the required lease of
the land, building and equipment. In the 7-Eleven
franchise system, the franchisor obtains the land,
building and equipment, as well as does the
leasehold improvements, including !xtures,
furnishings and decorating at its expense. In turn,
as part of the franchise agreement, franchisees
must lease the property from 7-Eleven. The 7-
Eleven Charge is charged once a month as a
variable percentage of the franchise"s gross pro!t.

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As with all franchise purchases, you should review

the !gures you obtain from the franchisor
carefully with a professional business advisor
before making the !nal decision to purchase the
franchise.

For more details on the costs of a 7-Eleven

franchise, please see our 7-Eleven's FDD page. To
explore other related franchise options, browse
our food and grocery retail opportunities page.

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