Adele Ferguson & Sarah Danckert, 12 October 2015

7-Eleven franchisees have met amid mounting concern about the termination clauses in new store contracts from head office.

The meeting, at the Melbourne Convention Centre, came as Greens MP Adam Bandt introduced a private member’s bill to amend the Fair Work Act to place responsibility on franchisors for underpayment of staff employed by franchisees.

There were few franchisees outside the meeting, with many using alternative entrances to the convention centre while security flanked the escalators leading into the meeting room.

“I can’t speak to you. I speak to you I lose my business,” said one franchisee on the way in.

Fairfax Media understands 7-Eleven’s decision last week to begin terminating franchises for underpayment of workers has sent shockwaves through the chain’s store owners, with many concerned that a single complaint from a staff member regarding wages could result in the termination of the store agreement between head office and the franchisee.

The Melbourne meeting followed ones in Sydney and Brisbane last week.

Several franchisees have expressed concern over proposed changes to the company’s franchise agreement, saying many stores will only be marginally better off.

The changes have been proposed in the wake of revelations of rampant underpayment of workers at 7-Eleven stores and the financial plight of many franchisees struggling to make enough income to pay full wages.

The new business model is no longer a one-size-fits-all profit split of 57 per cent to head office and 43 per cent to franchisees. For those 138 stores that deliver income to franchisees of $300,000 (before wages are paid), the profit split will be 50-50.

A further 360-plus stores that bring in $300,000 to $500,000 a year have been offered 48 per cent while head office takes 52 per cent.

The remaining 100-plus stores will have their gross profit share lowered 1 per cent for every additional $100,000 their store earns.

7-Eleven has also proposed an incremental increase in the commission for fuel sales.

Earlier on Monday, Greens MP Adam Bandt introduced a bill to Parliament that would make head offices accountable for the wages and conditions of their franchisee’s employees, following the worker exploitation scandal at 7-Eleven.

In a speech to the House of Representatives, Mr Bandt said it was time Parliament acted to stop the same sort of exploitation in the future.

Mr Bandt said the bill “will also help stamp out the practice of unfair franchise contracts where franchisors effectively force franchisees to underpay workers if the business is to make a profit. And this is crucial in the context of 7-Eleven, we’ve seen it happen.

“7-Eleven in this instance will lose any incentive to put small business in that kind of difficult situation. This law will make it fairer for the workers and fairer for the small business franchise operator.”

Extracted in full from the Sydney Morning Herald.