Adele Ferguson & Sarah Danckert, 19 October 2015

7-Eleven has dangled a $60 million carrot to its franchisees at the same time as expanding the role of former Grill’d chief executive Braeden Lord to cover the convenience store’s franchise operations.

Mr Lord left Grill’d in May this year ahead of the burger chain running into trouble over its 2007 WorkChoice agreement, which was exposed by Fairfax Media in July. He was appointed chief executive of Grill’d in 2013 and joined 7-Eleven in July just before the wage scandal broke in the convenience store giant.

Speculation is now mounting the former burger boss is a strong contender for the top job at 7-Eleven after former chief executive   Warren Wilmot resigned in the wake of the worker exploitation scandal across 7-Eleven’s network of 620 stores.

In July, Fairfax Media revealed a worker at the Grill’d store in the well-heeled suburb of Camberwell had been dismissed for complaining about the company’s pay agreement that was below award wages and did not include appropriate penalties for certain shifts.

A spokesman for 7-Eleven said Mr Lord had been involved in operations as a part of his role as acquisitions manager, but denied his role had been expanded.

Fairfax Media has seen a letter sent to 7-Eleven franchisees marked “Urgent Information” which outlines a “finalised model” signed by 7-Eleven interim chief executive Bob Baily.

“I am pleased to provide you with the details of the finalised model, which will enable you to run your business effectively, efficiently and sustainably,” Mr Baily says in the letter.

“Having taken on board a range of suggestions we have refined the model so it has the right balance of flexibility to accommodate the different circumstances facing individual stores and the need for improved governance, compliance and oversight,” the letter says.

7-Eleven agreed to alter its business model after Fairfax Media revealed at least 138 franchisees did not earn enough money to pay legal wages due to the profit split, where head office took 57 per cent of gross profit and the franchisee was left with 43 per cent, out of which wages were paid.

Under the revised deal, franchisees will take 50 per cent of the gross profits for the first $500,000 they earn each year, with head office taking the remaining 50 per cent.

Franchisees will also receive 47 per cent of the profits for the next $500,000, while head office will take a 53 per cent cut, while every dollar earned over $1 million for the year will be shared on a 44:56 basis between franchisees and head office.

Head office has also lifted the minimum guaranteed gross profit share to fuel stores of $310,000 and-non fuel stores $340,000. Previously, the guarantee was $120,000, which had not been changed in more than 20 years.

The final offer to franchisees includes an increase in the size of the commission it pays to franchisees for handling fuel sales from 1¢ per litre to 1.5¢ per litre.

It will also see 7-Eleven cover bank and credit card fees and fees associated with the smart safes at each store.

Extracted in full from the Sydney Morning Herald.

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