Broede Carmody, 26 October 2015

7-Eleven franchisees are furious the convenience chain’s new franchise model does not give them further concessions and are threatening a class action lawsuit if the updated franchising agreement is not made “sustainable for everyone”.

In a recent email to franchisees seen by SmartCompany, 7-Eleven’s interim chief executive Bob Baily said all the “material components” of the new franchising model had been signed off and all franchisees had supported the updated business model.

“My position has not changed from last Friday and we look forward to our meetings with individual franchisees,” Baily wrote.

However, a group of six franchisees representing 7-Eleven store owners has fired back, saying there has been a “strong misunderstanding” with head office and they were under the impression they would consider the new agreement before consenting to the final business model.

“To be clear, at no stage did we enter that meeting room on the belief that we would be accepting or even rejecting the model on the wholesome [sic] opinion of six people,” the franchisees said.

“Our primary goal was to analyse this proposed model and put forward our contributions.”

In their reply to Baily, the six franchisees argue they brought up a number of issues that head office promised to look into before the finalisation of the contract.

“Now it has got to such a contradictory stage where we had walked out of the meeting with a newly proposed model requiring countless amendments and still un-finalised, but a week later, according to your email we had already accepted the model,” the franchisees wrote.

“This caused great dissatisfaction and lack of trust amongst franchisees as they were led to believe (by you) that we had accepted the model on their behalf. This is not true, and we reinforce again that acceptance of this model will never happen until our terms and conditions are met.”

As previously reported by SmartCompany, 7-Eleven franchisees say the new franchise agreement does not go far enough to fix the convenience chain’s business model.

In particular, franchisees would like more generous fuel commissions as well as for head office to cover additional costs such as garden maintenance.

7-Eleven franchisees say these changes will go a long way in helping store owners break even now as well as pay their employees correctly.

One 7-Eleven franchisee told SmartCompany as many as 90% of store owners do not want to sign the new franchising agreement.

“Most of the people aren’t happy and they are worried they will go bankrupt,” the 7-Eleven franchisee says.

“Franchisees from all the different states are in talks with their lawyers to take class action. We just want them to be fair in what they are offering. We’re asking basic things. If they want us to open on public holidays, there should be a surcharge like Domino’s and a little bit more freedom in opening hours.

“We don’t need to open five to six stores on the one road where no-one is getting more than five or six customers a night.”

7-Eleven district managers will begin discussions with franchisees from today in order to explain how the new franchising model will work.

The company is also asking 7-Eleven franchisees to handover payroll records and CCTV footage so that it can check whether individual stores are paying their employees correctly.

SmartCompany contacted 7-Eleven but did not receive a response prior to publication.

Extracted in full from Smart Company.