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Buying and Operating a Convenience Store Franchise

Buying and Operating a Convenience Store Franchise

Explore the pros and cons of buying a convenience store franchise.

Based on the most recent available figures, there are over 155,000 convenience stores in operation in the United States, and the industry has effectively doubled in size over the last 30 years.

Even more telling, American convenience stores serve an estimated 160 million customers every single day — that’s nearly half the American population!

With these facts in mind, it’s easy to see why entrepreneurs view buying and running a convenience store as an excellent vehicle for business and financial success. Of course, success is never guaranteed, and a poorly run convenience store can fail just as quickly and completely as any other new business that’s not managed effectively.

So, it’s vital for entrepreneurs or investors interested in entering the convenience store industry to go about the process strategically, based on well-researched knowledge and, ideally, following the example of successful convenience store owners before them.

That’s where franchising comes in, and why it’s such a popular way to enter this thriving industry with improved chances of success.

Why consider opening a franchise convenience store?

More than 37 percent of the convenience stores operating in this country (over 57,300 locations) are connected to a chain. Most of these are franchise locations, with the top two franchises — 7-Eleven and Circle-K — accounting for more than a quarter of them.

There are many benefits that come with buying into an established franchise as opposed to buying a privately owned convenience store or starting fresh with a brand new brand:

  • While startup costs of buying into a franchise can be equivalent to buying an established store, they are far lower than what you would need to build a brand new store from the ground up.
  • All other things being equal, the owner of an independent store will usually find it takes longer to achieve profitability than does the franchise owner.
  • The franchisor will generally offer significant guidance and support, especially in the early stages of the store’s opening, because their success is directly tied to the franchisee’s success. This can be especially helpful for entrepreneurs with limited or no experience operating a convenience store.
  • The franchise’s established brand and national marketing efforts allow new store owners to hit the ground running with an established customer base and visibility that a brand new store lacks.
  • Ongoing support and guidance from the parent company can help franchisees weather unexpected storms as they arise (and they always will). Private store owners will need to establish their own support systems for these occasions.

What are you giving up by opening a franchise convenience store?

That all being said, there are important tradeoffs that need to be considered as well when franchising:

  • Part of the franchise business model includes upfront as well as ongoing fees paid by the franchisee to the parent company in exchange for the benefits and services the company provides. This can translate to higher monthly operating costs compared to privately owned stores.
  • The franchise agreement is a contract that dictates how the business will be run — often down to the most minute details — including hiring guidelines, promotional requirements, and more. For entrepreneurs who crave complete control of their business, this can feel restrictive.
  • The store’s brand equity and reputation are closely tied to the entire franchise. As a result, bad publicity or financial woes that impact the parent company, or even other individual franchisees, can have a negative impact on your store despite your having no control over the situation.

The franchise agreement is signed… What’s next?

Once the franchise agreement is signed, buying and operating a convenience store franchise is really very much like buying and running a private location (with the exception that many of your day-to-day decisions and procedures will be dictated by the franchise agreement and operating policies).

In other words, as a convenience store franchisee, you’re still responsible for:

  • Staffing your store with qualified individuals who will offer quality customer service and carry out their roles responsibly.
  • Stocking your store strategically to accommodate customer needs while supporting a healthy profit margin and goals established by the parent company.
  • Facilitating the cleaning and upkeep of the building and property, as well as necessary security measures, so employees and customers alike enjoy a safe, clean, and inviting experience.
  • Managing all the day-to-day details of running a retail store — including the inevitable emergencies or unexpected inconveniences — either by personally acting as manager, or by installing an effective management team you can rely on.

The keys to successfully buying and operating a convenience store franchise are the same as any other similar retail business:

  • Hire a team of employees who will delight your customers and maintain profitability, then treat them well.
  • Keep a close eye on the financials and be proactive rather than reactive when problems come to light.
  • Build up a team of professionals to support your business. (While the franchisor may provide access to individuals or information to help with these matters, involving your own professional business broker, accountant, attorney, or real estate agent can be very valuable, especially in reviewing and negotiating the franchise agreement itself).
  • Focus on what's best for the customers

If you’d like to explore the options that exist for both private and franchise convenience stores for sale, visit our Advanced Search page now!



Bruce Hakutizwi

About the author

USA and International BusinessesForSale.com Manager for BusinessesForSale.com, a global online marketplace for buying and selling small medium size businesses. The website has over 60,000 business listings and attracts over 1.5 million buyers to the site every month.

@BizForSaleUS

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