"Open a convenience store, be your own boss"! This dream of having a place where you can be top dog is no stranger to many.

Wu Wei-li, a former financial reporter with an MA in sociology from National Tsing Hua University, wrote his master's thesis on the operating system (franchising and licensing) used by convenience stores. For his research, he spent two-and-a-half years criss-crossing Taiwan and interviewed 40 persons in the industry, and even worked for a stint in a convenience store. Recently his thesis has been worked into a book and published under the title Convenience Store as Sweat Shop. What's up with that?

Convenience store workers have many tasks to take care of, from ringing up purchases to stocking the shelves to cleaning up the store. Given the unbreakable rule that shops must remain open 24 hours, finding enough people to staff all three shifts is quite a challenge.

Wu Wei-li explains that nearly 90% of Taiwan's more than 9000 convenience stores are run by independent operators. That is to say, except for a relatively small number of directly operated shops for which corporate headquarters pays the bills, the vast majority of outlets have a store operator who is responsible for the bottom line.

What does it take to be "the boss" at a convenience store, and what are the costs? Wu says that Taiwan's major convenience store chains have two main operating models: the franchise model, and the license model (sometimes called the "management contract" model). They differ in terms of how much capital the investor has to provide up front and in the allocation of revenues between the parent company and the store operator. According to the Fair Trade Commission of the Executive Yuan, each of the two models currently accounts for about half of all outlets in Taiwan.

From 1990 to 2000, when there were fewer competitors and consumer demand was high, a franchise owner could expect to recoup his or her initial investment in less than one year, a fact that drew many new investors into the industry. Today, the market has become saturated, and competition is fierce. Not only does it now take two or three years to recover one's original capital, in Taiwan's leading cities where the going is toughest, after subtracting overhead a store operator usually comes away with just NT$30-50,000 per month in net profit, or roughly what an office worker makes.

On the other hand, Wu points out, compared to many small-scale chain enterprises that can go bankrupt with the slightest hiccup, convenience stores are enviable operations to have. For one thing, they have large, stable, and efficient systems of organization and logistics. Moreover, in order to keep investors from having unrealistic expectations, convenience store corporations always frankly state at meetings for prospective store operators that convenience stores are stable sources of income, but are not huge money-spinners.

But what they usually don't tell you at those meetings is that the image most people have of being "the boss" is very different from the reality of being a store operator. This is because the corporate headquarters strictly controls everything-from products, store layout, displays, discounts and promotions to marketing slogans, stocktaking, and financial statements. There is little room for any independent action. It would be closer to the truth to call the store operator a "foreman."

Given the incentive system, in which store operators get a larger percentage of the take as total revenues rise, store operators naturally work hard to improve sales. But when the corporation one day discovers that the returns at a certain outlet have reached a certain level (about NT$79-80,000 in net profit for the operator), they will decide that the area has enough demand for an additional outlet, and plan to open another nearby. Although the original store operator is given first chance at putting up the investment for the new store, and is even offered incentives to do so, sometimes he or she simply doesn't have deep enough pockets or cannot raise the capital in time. With the headquarters incessantly reminding the store operator that "even if we don't open a new store here, one of our competitors will," before long you will see a "brother store" completely identical to your own coming to take a bite out of your pie.

For the company, real strength comes with continually increasing the number of outlets and maintaining market share. Moreover, if store operators choose the franchise method, the headquarters is able to open a new shop virtually without spending a penny, so naturally they don't want to pass up any opportunity, and they are happy to have more store operators making money for the company.

But doesn't the corporation promise "minimum gross profit"? Alas, this usually turns out to be meaningless. For one thing, gross profit is not net profit, but refers only to the difference between the prices paid for products purchased from the store vs. the cost of bringing them into the store. Although the guaranteed gross profit is about NT$2.5 million per annum, which is over NT$200,000 per month, after you deduct rent, utilities, the cost of renting a point-of-sale device, and wages, there is virtually nothing left. Moreover, the guaranteed gross profit is calculated by the year; although the company will subsidize the difference if you come up short this month, if next month you make more money than the guaranteed amount, the company will deduct money as repayment of the subsidy. Many stores close because they are unable to get through the hard times.

In this struggle, "red in tooth and claw," if operators want to increase their profit margins, the most common way is to control personnel costs. In sum: pay as little as possible, get as much work from each worker as possible. Or store operators themselves become workers, putting in more overtime than their employees and taking fewer days off in order to reach profit targets.

Wu Wei-li says that in order to reduce costs, more than 80% of convenience stores employ only part-time workers, usually students. Even the overnight employees and the store manager are not full-timers. Moreover, while the stores managed directly by the corporate headquarters pay the legally required minimum wage of NT$95 per hour, it is an open secret in the industry that most independent outlets do not (part-time workers get about NT$75-85 per hour). With low wages, naturally employee turnover is high, but the corporations are rigorous about requiring stores to stay open 24 hours, so store operators are forced into "self-exploitation," and it is common for them to work long hours.

Take for example Mr. Jin, 34 years old, who was in the convenience-store business for 10 years. Five years ago he left the corporate headquarters to become head of a store opened under the licensing format. Because the outlet was in a prime location, he was pulling in net profits of NT$80,000 per month. Not only was he cited by the corporation several times for outstanding sales of direct-order products, his was one of the top 10 stores in his chain for annual revenues. But behind the numbers, the effort he put in was flabbergasting.

Mr. Jin went to his store every morning at seven, and though his shift ended at 3 p.m. he would stay around to organize products going on sale or stand at the door calling out to attract customers. By the time he finished collating receipts it would be nine at night, amounting to 14 hours of work per day. He lived this way day after day for five years, though, feeling a strong sense of responsibility as "the boss," and given his own expectations of himself he did not consider it egregious.

However, when recently he prepared to sign a new five-year agreement, he received notice from the corporation that his contract would not be renewed due to "low degree of conformance with company policies." Mr. Jin admits that there were two occasions when he was fined for committing minor errors, once in ordering products and once in setting up product displays, but to just get the words "will not extend contract" dumped on his head-when he has a wife and infant daughter to support-was really a bolt out of the blue.

To his frustration, even though Mr. Jin, very familiar with the company's evaluation standards, appealed several times, his appeals were rejected each time. In the end the only thing he could do was yield the store that he had nurtured for so many years to a new store operator.

Wu Wei-li points out that both the US and Japan have laws governing franchising in order to provide a sound basis for protecting both the corporations and store operators. Yet Taiwan, despite the density of chain operations, is still lacking in this area.

While waiting for Taiwan to get its own legal framework for franchising, rights will not just fall from the sky-store operators will have to unite and fight for their interests through collective action. That will be the only way to break through the layers of mist covering the current system. In any case, next time you go into a convenience store, don't forget to give the hard-working employees and store operators an encouraging smile.