7-Eleven prefers franchising to expand

Date:2011-11-11litingting  Text Size:

CONVENIENCE store chain 7-Eleven Inc plans to launch a franchising business in Shanghai next year to accelerate expansion amid keen market competition.

Entering the Shanghai market in 2009, 7-Eleven aimed to open 300 outlets within five years. The chain now operates 100 stores in Shanghai and the franchising business will allow it develop rapidly to reach the target, said Huang Qianli, general manager of the China division at Taiwan's President Chain Store Corp, the operator of 7-Eleven in Shanghai yesterday.

Huang declined to specify the franchising conditions to run 7-Eleven stores but he revealed that two stores have been operating in Shanghai on a trial franchised basis.

"We'd like to share both profits and risks with our franchisees," he told reporters.

As a late entrant, 7-Eleven has its work cut out as it tries to catch up with Taiwan-based FamilyMart and other local chains such as Alldays in Shanghai, where the market is very competitive as stores face higher rents and more expensive labor.

"The rental cost in Shanghai is twice that in Taipei, making store expansion tough," said Huang. "Therefore, the biggest competition in the future is meeting customer demand."

FamilyMart earlier said it aims to open 1,000 stores nationwide by the end of this year, including 700 in Shanghai.

The 7-Eleven chain uses franchising as a major strategy in Taiwan, where 85 percent of its 4,800 stores are opened by investors. It has 1,700 stores in the Chinese mainland.

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