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Convenience franchise owners up in arms

Date Posted: 1998-04-12

Owners of rapidly expanding 24-hour convenience stores are crying foul claiming that franchise owners have misled them to invest their money into the franchises by exaggerating the earning potential of the stores. They also claim that the companies sell the franchises recklessly thus over saturating the market.

The franchisers lay the blame at the door of the businessmen saying that many of them have entered into the business with little or no retail operating experience. They expected fast and easy money and not realizing that they have to work hard in order to make their business successful.

The operators of the stores say that in many cases the franchisers told the franchisees that the store would enjoy sales in excess of a hundred million yen per month, when the actual figure turned out to be rather in a few million yen range. The disgruntled owners have now banded together nation-wide and are taking their case to the courts. The first cases are scheduled to go to the courts in the middle of this month. In Naha City alone, ten such cases are pending.

The franchisers lay the fault squarely with the operators. They say that it's the responsibility of the franchisees to make adequate business plans in the first place, and then execute them professionally which then results in profits. "We cannot walk customers by hand into the shops, the franchisees must do their part also," a spokesman for a large franchise chain said in a recent interview.

The convenience stores operating 24-hours a day have proven to be popular in Okinawa, because of customer's lifestyles here favor late hours. The sales of such stores have grown 4.3 fold over past ten years. On an average, a franchise of a 24-hour store costs 3 million.

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