Wed, Jun 08, 2005 - Page 10 News List

President Chain Store eases rules for franchisees

By Jackie Lin  /  STAFF REPORTER

Staff from the President Group re-stock shelves at an RT-Mart hypermarket after stock was targeted in a blackmail scam. The blackmailer, who said he had poisoned beverages produced by President Group, has since been apprehended. President Chain Store, which operates 7-Eleven stores in Taiwan and is part of the President Group, is targeting middle-aged franchisees in a bid to expand.

PHOTO: CHOU MIN-HONG, TAIPEI TIMES

Faced with changes in the job market and an aging population, the nation's largest convenience store chain operator is adjusting its franchise system to embrace more middle-aged people to deliver sustainable growth.

President Chain Store Corp (統一超商), which runs 3,839 7-Eleven stores nationwide, said it also encourages retail business owners from other sectors to join its franchise network. Currently, 84 percent of President Chain's 7-Eleven outlets are franchised.

"The quality of the franchisees is the key to successful operation. We'll grant franchisees better benefits compared with competitors to take care of their families, but we also hope every 7-Eleven outlet can make a profit," said Hsu Chung-jen (徐重仁), president of President Chain, at a press conference yesterday.

Hsu announced that the company is loosening requirements for franchise applicants, including raising the maximum age from 50 to 55, and offering preferential deals to veterans and their relatives.

The measures are aimed at luring those interested in starting a second career, especially as the privatization of state-run companies will see a rising number of middle-aged retirees, he said.

Taiwan has over 8,000 convenience stores from the five major chain operators, giving it the highest store density in the world.

Fierce competition in the sector and concerns over market saturation have made it more difficult for these stores to expand their operating turf and boost sales.

But Hsu denied speculation that the changes are because the company is facing a bottleneck.

President Chain, founded in 1978, expects to expand its number of 7-Eleven stores to 4,000 by the year's end.

"We just think this is the right direction, in line with social changes and a good way to absorb experienced franchisees," he said.

By offering more incentives, the company guarantees franchisees that they would enjoy the highest net profits in the convenience store sector, at NT$2.4 million a year. Those opting to transform their original business -- be it a bookstore, a noodle shop or a clothes shop -- into a 7-Eleven outlet will enjoy a discount of NT$900,000 off the usual average cost of NT$2 million, said Chang Kuo-kwang (張國光), the company's manager for real estate development.

To encourage sustainable development, franchisees renewing contracts will garner higher net profits and pay reduced franchise fees, Chang said.

Monica Chiu (邱文仁), marketing director for the 104 Job Bank (104人力銀行), said President Chain's franchise reform is sensible, as the sector requires a considerable input of time and effort, which most young people tend to avoid.

"This competitive sector needs mature operators to help stabilize business, but those at a younger age are generally not willing to persist with hard work," she said.

In addition, the initial capital requirement of NT$2 million to open a new store is difficult for younger people to meet.

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