7 Eleven as New Economy Investment in Indonesia By PutriCindy Dwiliasari Higher School of Foreign anguage !

e"no"rat #utricindydls$yahoo%com

&'stract Indonesia had some typical traits not found in other markets. For one, just hanging out and doing nothing is so deeply embedded in Indonesian culture, the local language has a special word for it: nongkrong. People traditionally gather at street markets and share stories, eat in local markets and roadside food stalls called warung or Western fast food chains such as Mc onalds, unking onuts or coffee shops such as !tarbucks which entered !outheast "sia. #his paper is reflected in de$elopment, and the impacts of franchise toward economic growth in Indonesia and the impact for society. %&'le$en in Indonesia included e$erything local markets and street $endors offered and more. #he store is open () hours, has free parking, offers leisure acti$ities such as concerts, is air&conditioned and, most importantly, has wireless connecti$ity. !i*ty&fi$e per cent of the Indonesian franchise+s customers are less than ,- years old and lo$e social networking. (eyword ) Indonesia* +ar"et* Franchise* Store% Introduction In the early of ./%-, Franchise as a business format known in Indonesia started the pioneer such as 0F1, Pi22a, 1oca&1ola and Mc onald3s entered franchise market in Indonesia, journal of Bank Indonesia 4(--/5. #he concept of franchising recently has become one of the trend of modern economy that ga$e a new color for economic sector especially in Indonesia. !ince foreign franchise entered the market of Indonesia, the concept of franchise itself has been defined as below: Franchise is a method of distributing goods and services to the consumer, which is sold to other parties who are interested. The owner of the methods that are sold is called the "Franchisor", while the bu er the right to use a method called franchisee" 46eshel, (---: .5. Whereas, in .//- franchise market has been dominated by international franchise such as Pi22a, 0F1, !tarbucks and Mc onald3s, etc. %&'le$en that now already known as, and so on. '$ery year international franchise always e*pands from one region to the others in Indonesia. #he significant de$elopment of international franchise can be touched since .//- to (--7 that majority mo$ing on retail business for e*ample %&'le$en. In .//-, international franchises ha$e 8 outlets whereas in (--8 the total of international franchise was about (,- outlets, In (--7 domestic franchise reached 9%.8: with the total about )9- franchise, it increased ,9.): from the pre$ious years. In (--7, total om2et of franchise reaches ;p7.,-, trillion, journal of Bank Indonesia 4(--/: ,5. %&'le$en is known in the <nited !tates as a con$enience store chain where customers can grab snacks, drinks and other e$eryday products on the go. In most parts of the world, it is a no&frills store with little emphasis on decor. 6ut in Indonesia,

%&'le$en has been positioned as a trendy spot where young people spend time, surf the Internet and meet friends. It+s one of the hippest places to hang out in =akarta. "nd it isn+t some trendy new French restaurant in a utch&era heritage building. Instead, thousands of people in the Indonesian capital spend their e$enings sipping coffee or beer on pa$ement tables at their neighborhood. Indonesia+s %&'le$ens are, clearly, a long way from the original concept behind the world+s largest con$enience store chain. "t %&'le$en, our purpose and mission is to make life a little easier for our guests by being where they need us, whene$er they need us and that+s what it has been doing all o$er the world since the first con$enience store was born after a !outhland Ice 1o employee in allas started selling milk, eggs and bread from an ice dock in ./(%. Moreo$er, Indonesia is highly plugged in the country had an estimated (- to ,- million Internet users in (--/, a big chunk of them between the ages of .9 and ./. %&'le$en studied the culture, habits and tastes of the Indonesian population and realised Indonesia lacked places where young people could hang out, eat, drink and follow their new passion: being online. It adopted a uni>ue business model in the country: it blended a small supermarket with ine*pensi$e readymade food and seating to cater to =akarta customers looking for outdoor recreation space in a city where traffic jams often restrict mobility. %&'le$en is one of international franchise that concei$es retail business which its de$elopment of minimarket can be obser$ed per year. "s a retailer business, %& 'le$en gi$es an IP; 4Intellectual Property ;ight5 to its franchisee to use product, ser$ice, brand and trademark so they can run the business smoothly because the >uality of product and trademark has been regarded and trusted by society. #herefore, many in$estors who ha$e no skill in business choose to in$est their money by purchasing this franchise. "ccording to ?dop, when all efforts ha$e to start from 2ero, then we are dealing with the risk of large losses due to go through trial and error that increases the risk of failure. With franchise business system, the risk of in$estment losses can be reduced to about .9 percent, ?dop 4(--8: (-5. !o, by ?dop statment, %&'le$en as a profitable business more intentioned by franchisee, this condition is interesting to be obser$ed. #his paper aims to e*plain and focus to e*plain and discuss about the de$elopment that %&'le$en has reached as a profitable business and also this paper focuses on concept of franchise and its de$elopment, and the impacts of franchise toward economic growth in Indonesia and the impact for society that applied by %& 'le$en Minimart of P#. Modern Putra Indonesia #bk. Discussion %&'le$en, Inc. is the premier name and largest chain in the con$enience retailing industry. 6ased in allas, #e*as, %&'le$en operates franchises or licenses appro*imately %,7-- %&'le$en stores in @orth "merica. Alobally, %&'le$en operates, franchises or licenses close to ,8,--- stores in .9 countries. uring (--7, %&'le$en stores worldwide generated total sales of more than B9,.% billion. Internationally, %& 'le$en licensees and affiliates operate more than (7,.-- %&'le$en and other con$enience stores in countries including =apan, #aiwan, #hailand, !outh 0orea, 1hina, Cong 0ong, Malaysia, !ingapore, "ustralia, Philippines, @orway, !weden and enmark. " new %&'le$en store opens to ser$e our e$er&increasing customer base appro*imately e$ery ) D hours. More than /8 percent of the stores pro$ide ()&hour, % days&a&week con$enience to our customers. %&'le$en is a subsidiary of !e$en&

'le$en =apan 1o., Etd. Its parent company is !e$en F i Coldings 1o., Etd. of #okyo, which owns !e$en&'le$en =apan con$enience stores, general merchandise stores, department stores, supermarkets, food&ser$ices, financial and I# ser$ices. %&'le$en is part of an international chain of con$enience stores. %&'le$en, primarily operating as a franchise, is the world+s largest operator, franchisor, and licensor of con$enience stores with more than 9-,--- outlets. #his number surpassed the pre$ious record&holder, Mc onald+s 1orporation, in (--%, by appro*imately .,--retail stores %&'le$en branded stores under parent company !e$en F I Coldings 1o.. #he stores are located in .8 countries with its largest markets being =apan 4.9,---5, the <nited !tates 47,(--5, #hailand 48,7--5, Indonesia, 1anada, the Philippines, Cong 0ong, #aiwan, and Malaysia. In "pril (--/, %&'le$en announced plans to e*pand its business in Indonesia through a master franchise agreement with Modern Putra Indonesia 4a subsidiary of Modern Aroup, FujiFilm distributor in Indonesia5 of =akarta. Modern Putra Indonesia+s initial plans are to focus on opening stores in =akarta, targeting densely populated commercial and office areas, to offer working Indonesians a con$enient place to shop for lunch, snacks and emergency items. ?ther major cities, such as 6andung, !emarang, and !urabaya, offer future e*pansion opportunities.G(-H #here are .(7 %&'le$en stores in Indonesia as of (-.,. @ow, %&'le$en stores in Indonesia release IIce ;adio Mi*I in cooperation with M@1 ;adio @etworks 4Alobal ";C ;adio, !indo #rijaya FM, J ;adio, and ;adio angdut Indonesia5, which owned by Cary #anoesoedibjo. Cary #anoesoedibjo announced that P# Alobal Mediacom #bk will ac>uired %9: stakes of %&'le$en Indonesia after launching IIce ;adio Mi*I on (-., with M@1 ;adio @etworks. Indonesian go$ernment stated in May (-.- that they will monitor %&'le$en e*pansion since it is licensed as con$enience stores not as mini markets. Indonesian law limits mini market ownership to local companies. %&'le$en Franchising is an alternati$e to start a business with low percentage of risk. "s it has been e*plain in the pre$ious chapter according to ?dop, when all efforts ha$e to start from 2ero, then we are dealing with the risk of large losses due to trial and error that increases the risk of failure. With franchise business system, the risk of in$estment losses can be reduced to about .9 percent, ?dop 4(--8: (-5. #hrough franchising, franchisee will get the transfer of management, assurance market, the promotion, the supply of raw materials, >uality control, the introduction and knowledge of the business locations, de$elopment of human resource capacity, and the most important is that the risk is $ery small, the empirical data show that the risk of a franchise business is less than 7: 4Cerustiati, (---: %5. "ccording to Manal =unaidi 4(--8: %)&%75 there are 8 factors influence the purchasing of %&'le$en franchising: .. "ffinity Factor #he factor means that there is a group of franchisee who buys %&'le$en because inluenced by friend or wants to gain their entrepreunial intention. If the suppliers are clear enough, franchisee not necessarily difficult in communicating with suppliers, the product prices are affordable for franchisee and there are many product $ariations, therefore tha franchisee will strongly be encourage to purchase %&'le$ent stores. (. !ystem and Information Franchise Franchisee interests to buy Franchise if the >uality is good, include smoothly communication access with franchisor and there if a clear !?P 4!tandard ?peration Procedur5, professional management system and the >uality of

franchise that has been tasted by I!? 4International !tandard ?pertion5, therefore franchisee will be interested to buy the franchise, ,. Financial analysis If the in$estment that must be paid more affordable and supported with accessibility fund added by fast P6P 4Pay 6ack Period5 therefore franchise will be encouraged to buy %&'le$en store. ). Image of 1ompany #rusted 1ompany3s background and More branch of %&'le$en store that well& knowm by society will trust Franchise about the image of %&'le$en therefore franchise will be encourage to buy %&'le$en store. 9. #he Image of Product Image of product include brand, ser$ice and appearance. It means more famous a product, the better and tidier the appearance and more friendly the employee therefore will encourage franchisee to buy %&'le$en store. 8. Moti$ation #he greater the franchisee moti$tion to buy the store by the reason to search business e*perience will encourage franchisee to buy the store because it is related to moti$ation that formed in the buyer3s own self. Franchising is a form of collaboration where the franchisor gi$es permission or rights to franchisees to use Intellectual Property ;ights such as names, trademarks, product or ser$ice and its operating system in a certain period. "ccording to Cerustiati at all 4(--(5, there are two parties in$ol$ed in franchise agreement: franchistor that offer business packages and franchisee that buy franchise and use the Intellectual Property ;ight gi$en by franchisor. In franchise agreement the two parties, franchisor and franchisee will cooperate with profit on both sides. "ccording to Cerustiati F !imanungkalit 4(---: /5 profit will be gained by two parties who do franchise agreement as below: .. #he "d$antages for the Franchisee a. Aetting a structured training program of the franchisor b. ?btain an own business with the help of well management from franchisor. c. ?perasioanal benefit from acti$ities under the trade name established in the community. d. ;e>uires small capital. e. 6usiness risk is relati$ely small. f. #he support of research and de$elopment of the franchisor: g. !upport for access to the sources of loan capital. (. #he ad$antages for franchisor a. Aetting faster to e*pand their business because they do not ha$e to prepare the capital, manpower and enormous time to establish a new outlet. b. ?nly re>uires relati$ely less capital to e*pand its business as the outlet was founded and owned by a franchisee with in$estment capital and preoperational costs borne by the franchisee. c. ;elati$ely reduced operational costs because operational costs are the responsibility of franchisee outlets. d. 6argaining position with suppliers and create higher marketing if it has more branches than if only one or two outlets owned.

e. Franchisor will recei$e royalty fees and other fees paid by franchisee, although the number is not too big but if it is associated with the opening of many outlets and the in$estment returns will be high enough. %&'le$en as one of the biggest retailer in Indonesia, especially in =akarta and $ery profitable business progressi$ely preferred by many in$estors and businessman. Progressi$ely intended by franchisee, %&'le$en always e*pand in e$ery year in both the number of stores and the total of net profit. %&ele$en is currently one of the Indonesia leading retailers, ser$ing more than (.. million customers daily, with appro*imately (., stores in Indonesia, specifically in =akarta and supported with more than 8.--- employees. #he e*pansion of %&'le$en stores has influenced the increasing of re$enue in Indonesian go$ernment. #he e$idance that show the role of %&'le$en franchise is pro$en in Ao$ernment3s 6ugget ;eport of the year (-..&(-.(. It reports that tradeK hotels and restaurants grew for about 8.9 percent in (-.(, increase when compared with the growth in (-.. which stood for about 9./ percent. 'conomic growth is primarily dri$en by growth in wholesale and retail trade sub&sector which grows about 7., percent in (-.(, and wholesale and retail trade sub&sector about /.- percent in (-... Increased growth wholesale and retail trade sub&sector is reflected in the rise of modern retailers such as "lfamart, Indomart, and 1ircle&0 to meet consumer demand. In (-.(, Indonesia ;etailers 'ntrepreneur "ssociation 4"P;I@ ?5 estimates that (-.( sales of total Indonesia3s retail business will be ;p ..7 trillion, an increase of .-: compared to (-.. of ;p .-9 trillion. #he minimarket industry has an e$en bigger opportunity for growth. %&'le$en is one of the largest employers in =akarta because e$ery year the number of stores will increase about %--&.-- stores which needs about one thousand employees per year or 7- people each month. in the store consists of .-&.( employees. It means that directly %&'le$en Franchising has help go$ernment in reducing jobless in Indonesia and has pro$ided opportunities and jobs for thousands of people. %&'le$en is essentially a community store, therefore it is important that we acti$ely participate in growing our surrounding community through our 1orporate !ocial ;esponsibility 41!;5 programs that are di$ided into %&'le$en 1are which helps the community through social acti$ities, %&'le$en !mart which support the education, %&'le$en !port which sponsors sport acti$ities, %&'le$en 1lean and Areen to keep a healthy en$ironment, %&'le$en !M's helps the small and medium entrepreneurs in the surrounding areas where %&'le$en stores operate and %&'le$en Jagan2a which acti$ely in$ol$es in arts and entertainment, "nnual ;eport of P#. Modern Putra Indonesia #bk. Conclusion In the end of this analysis the writer conclude that %&'le$en is one of the profitable retailer businesses because it show the significant de$elopment that represent by the increasing number of stores during (--7 until (-.,. #he number of stores in the first >uartal of (-.( has reach more than .-- stores in =akarta. #he increasing of the store also shows that %&'le$en is the profitable business that is highly intentioned by in$estor and many franchisees. #he entrepreneurial intention of the buyer to purchase the franchise is influenced by moti$ation of the buyer, well reputated image of the company, good image of %&'le$en products that ha$e been trusted by the society through the >uality of brand and trademark and also influenced by the clear communication, system and management from the company that make franchisee smoothly success running the business.

#he increasing number of %&'le$en stores also gi$e positi$e influences for economic sector and for the society. #he impact of %&'le$en e*pantion directly has increasing re$enue of Indonesian economy through the ta*es that %&'le$en pay from the net sales per year. #he impact for the society include pro$ides a large jobs field for all society and gi$e the donation for e$ents such as entertainment and art. ,efrences "nnual ;eport P#. !umber "lfaria #rijaya #bk (-... 6ank Indonesia. (--/. !ola !embia aan "saha #ecil "saha Franchise. 6eshel, 6arbara. (---. $n Introduction to Franchising: IF" 'ducational Foundation #he Money Institute. Cerustiati F !imanungkalit, Jictoria. (--(. Bisnis !rospektif Bagi "#%. Eaporan Pemerintah #entang Pelaksanaan "nggaran Pendapatan dan 6elanja @egara !emester Pertama, (-.(. @urikayulian. (-.-. &ejarah Franchise 'i Indonesia. !umber: =awaPos 'd. =anuary 8th.