THE listed licensor of 7-Eleven convenience stores, Philippine Seven Corp. (PSC), has allocated P711 million as loan to its franchisees to prevent the closure of stores due to mounting losses from the coronavirus disease 2019 (COVID-19) pandemic.
In a statement late Tuesday, the listed firm said it had started disbursing funds on June 20 as part of a pandemic support program to 7-Eleven franchisees.
The loans are offered interest-free and franchisees may borrow as needed and pay when able.
“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,” PSC 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.
Through the loan program, PSC believes franchisees would not be out of pocket on a monthly basis. They may pay back when their situation improves, but if they decide to discontinue the franchise, all outstanding balances to PSC “will be forgiven.”
Earnings of PSC 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 end April, and 11% were closed as of end May.
Aside from providing loans, Mr. Paterno said PSC 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.
He added PSC was planning to open 400 new stores this year but such plan was suspended 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.
PSC shares at the stock exchange shed 10 centavos or 0.08% to P128.90 each on Wednesday. — Denise A. Valdez