Philippine Seven Corp. the listed licensor of 7-Eleven convenience stores has allotted P711 million as a loan to its franchisees to prevent the closure of stores due to mounting losses from the pandemic. The loans are given interest-free and franchisees may borrow as needed and pay when able.
In a statement late Tuesday, the listed firm said it had commenced disbursing funds on June 20 as part of a pandemic support program to franchisees.
“We recognized immediately that the country’s (and the world’s) battle with COVID-19 would be long and painful, so the first thing we did was request our bankers for an increase in our credit lines. Thankfully, they responded quickly and generously, and our next focus became how to deploy this access to capital strategically during the pandemic,” Philippine Seven Corp. President and CEO Jose Victor P. Paterno said in the statement.
“[W]e are in the same boat as our franchisees with regard to profitability challenges—just because you can borrow doesn’t mean you’ll make money, just that you’ll survive for longer until you do,” he added.
The company believes franchisees would not be out of pocket on a monthly basis with the help of the program. They may pay back when their circumstances improve, but if they decide to terminate the franchise, all outstanding balances to the company “will be forgiven.”
Earnings of 7-Eleven stores in the first quarter fell 7% to P103.82 million due to temporary store closures from the pandemic-related lockdown. Because of the crisis, it said 22% of its 2,916 stores were closed as of the end of April, and 11% were closed as of end-May.
Apart from providing loans, Mr. Paterno said 7-Eleven is also calling on landlords to help franchisees in surviving the pandemic by “(sharing) the pain” in rent payments.
“We have a very long list of unprofitable stores right now, and we expect the situation to continue until December at the very least. If and when that happens, expect that space to be vacant for a very long time,” he said.
7-Eleven was planning to open 400 new stores this year but the plan was delayed indefinitely because of the pandemic.
“Most of our 1,000+ franchisees have to pay rent, and we are doing our part to ensure they survive. We are now asking our landlords to do theirs,” Mr. Paterno said. More: PNA ; Bworldonline
Philippine Seven Corporation is listed in the Philippine Stock Exchange as $SEVN and as of July 01, 2020, 03:30:00 PM the last traded price was 128.90 -0.08% lower than its previous close.
-Stockbytes PH, July 1, 2020
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