Franchisee Lawsuit may require Corporate Campaign

Steve’s breakdown: It’s hitting the fan at 7-Eleven. Franchisees representing 7,000 locations are up-in-arms about unfair practices.

And if you think about it, corporate might want to lower the price of advertising fees to the franchisees to help things out. So if you have a cheaper way to buy media, this could be an opportunity as well.

Joe DePinto is the CEO and can be reached at joseph.depinto@7-11.com

Read the details below.

IRVINE, TX: 7-Eleven is in the center of a lawsuit.

The National Coalition of Associations of 7-Eleven Franchisees, which represents the owners of nearly 7,000 franchised locations in the United States, filed a lawsuit against the convenience store giant on Friday. The suit, filed in U.S. District Court for the Central District of California, claims that parent company 7-Eleven has not been treating franchisees as independent contractors and business owners.

According to the group, the brand has been chipping away at franchisees’ profits, increasing their costs, and exercising more control over what is supposed to be an independent operation. The lawsuit challenges certain provisions of the 7-Eleven Franchise Agreement, and seeks monetary damages, attorney’s fees and costs and other relief for claims relating to unpaid overtime wages and unreimbursed expenses.

Specifically, the group said that 7-Eleven is taking away the opportunity for franchisees to possess and/or control revenue generated from franchised stores; forcing them to sell certain goods or service for less than the cost to acquire or selling them, and requiring them to use specific to operate franchise stores. The lawsuit also states that 7-Eleven is imposing a regressive royalty structure that penalizes franchisees for increasing sales; and it has been transferring the responsibility for paying credit card processing fees directly to franchisees.

“Conditions imposed by the franchisor are threatening these businesses, many of which are family operations,” said Coalition executive vice chairman Jay Singh.

“Many of our members have operated 7-Eleven franchises for decades and are gravely concerned not only for their future, but the future of the brand they love and have invested so much in,” said Singh. “We need to hold 7-Eleven accountable. We love this brand and are saddened by the way they have been treating the people who are the very heart and soul of the company.”

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