Adele Ferguson and Sarah Danckert, 09 September 2015
Hundreds of 7-Eleven franchisees have attended town hall-style meetings in Melbourne, Sydney and Brisbane as preparations for a class action against head office ramp up.
The meetings follow revelations of widespread wage abuse across the 620 network and claims that the business model is flawed and pushes franchises to underpay staff.
The scandal-ridden 7-Eleven convenience store chain has tried to appease angry franchisees as many threatened to sell their businesses and stop opening the stores 24 hours a day.
Franchisees have begun drawing up a list of demands including a change in the profit split between head office and franchisees. Currently the split is 57 per cent of profit flows to head office and 43 per cent ends up in the pocket of the franchisee, who then pays payroll.
7-Eleven franchisees with petrol stations attached to the stores are believed to be calling for an increase in the size of the commission paid for handling fuel from 1¢ per litre to 2¢ or 3¢ per litre.
Under the franchise agreement franchisees receive 1¢ per litre commission for handling fuel and do not receive any other payment for fuel sales or receive a share of the profit.
Some franchisees who operate in locations with little foot traffic at night are calling for reduced opening hours.
In an attempt to take control of the situation, 7-Eleven head office last week offered to almost triple income support to any stores that earn $310,000 or less a year in gross income.
7-Eleven head office has also offered to help any franchisees who want to exit the network by paying back franchise fees, which could cost them millions of dollars if enough franchisees bail.
But the offers to date have not been enough.
Sources have told Fairfax Media that many franchisees are reluctant to sell up because of concerns the value of the goodwill in their stores will have fallen considerably in the wake of 7-Eleven’s wages scandal.
A spokesman for 7-Eleven declined to confirm whether the company would consider the franchisees’ suggestions.
“We are, as always available to meet with, and hear from, 7-Eleven franchisees whenever they would like to meet with us,” the 7-Eleven spokesman said.
A series of explosive internal documents shows 138 7-Eleven stores earned $300,000 or less in the year to June 30, 2015, which now makes them eligible for some form of financial leg-up.
Based on 7-Eleven’s own numbers that payroll costs average $230,000 a store, assuming only one staff member is rostered each shift, many stores would struggle to make a profit if they paid proper wages. The worst store in the country is in Sydney’s north-west. It is estimated to lose $27,000 for the franchisee.
7-Eleven has offered to refund the franchisee fee for disgruntled store owners.
On Saturday meetings were held in Granville in Sydney, in Thomastown in Melbourne’s outer northern suburbs and a phone hook up in Queensland. A week earlier at lest 50 franchisees met in Riverdale park in the Brisbane suburb of Logan.
The franchisee meetings come as Levitt Robinson Solicitors principal Stewart Levitt is preparing an information night for franchisees interested in joining a class action against 7-Eleven head office in Australia.
The information night will take place on Thursday evening at 6.30pm on the ground floor of Mediation Central on Goulburn Street, Sydney East.
It comes as the Minister for Employment Eric Abetz squashed calls for an amnesty for students on visas to approach an independent panel funded by 7-Eleven to review claims of underpayment.
He told the senate: “The department is currently examining its options, including the use of discretion in decision making rather than the use of an amnesty,” he said.
“The individual circumstances of visa applicants who are 7-Eleven employees will be taken into account in any considerations undertaken by the department. Each case will be used particularly in compassionate and compelling circumstances and where clients are in vulnerable situations.”
This is likely to deter many workers from coming forward for fear of being deported as many were forced to breach their visa conditions by working more than 20 hours a week.
Extracted in full from the Sydney Morning Herald.