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Comment by vkou | Hacker News Reader

The irony is, of course, that the chain is named "Seven-Eleven" because it was originally open from 7 am to 11 pm.

> One Monday night in late March, only 10 customers came to the man’s store in the three hours before dawn, and the sales during that time were a little more than ¥6,000. The store will be in the red if he hired someone for night shifts.

Smart management would close the store during those hours. Of course, the franchise doesn't care for smart management - when the operator eats the loss.

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> Smart management would close the store during those hours.

It's mentioned in the article actually, in the later section on Mitoshi Matsumoto; he closed early and made more $$$.

So he said.

I think what they're getting at is that if you want to operate a 7-Eleven, you ought to be absolutely reliably open at the expected hours. The intended alternative is to shut down the store. This man made a terrible business decision and is now stuck between a sunk cost and probably not a lot of alternatives for work.

That’s the problem with a lot of franchise agreements. So many things are set and specified for you that you have no room to optimize your business as an operator.

In a way, you’re almost just like an employee of the franchisor, but without any of the benefits and a lot more liability. But it’s a great relationship for the person selling the franchise.

Depending on the tax system, being able to structure yourself as a « business owner » can mean more money in your pocket than being a salaried manager.

I have a feeling that 'expected hours' would suddenly and magically stop including 1am-6am, if the parent company were on the hook for the operating losses the franchises are suffering.

But as long as they can make other people pay for their business decisions, that will, of course, not happen.

That would entirely defeat the purpose of franchising agreements.

The point is to diffuse risk, standardize the brand, and allow local owners to decide the things which don't affect the brand, in the service of their own interests (including whether or not to continue operating the location).

A franchise where the owner bears a small minority of the risk might as well just be centrally owned.

and where the franchise parent bears basically no risk at all is a pretty crappy deal for franchisees, who basically take what seems to be most of the risk (described in the article) for... 30% of the gross profit? maybe?

eventually, 7-11 will be known as a place where you're likely to encounter sick children lying on chairs at 10pm because the franchisee's family is living in the store. eventually that might actually damage the brand enough that they'd remove some of the stipulations.

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