7-Eleven Store Owners Seek Stronger Government Oversight to Protect their Investment
Our message to Members of Congress is that the playing field is slanted in favor of franchisors because of the heavily one-sided way franchise agreements are written.
Members of the National
Coalition of Associations of 7-Eleven Franchisees (NCASEF) are
pressing lawmakers to strengthen federal oversight of franchising to
ensure independent operators of franchised businesses like convenience
stores and quick service restaurants are not subjected to contractual
terms that are inherently unfair, unconscionable or potentially
predatory.
“Our message to Members of Congress is that the playing field is slanted
in favor of franchisors because of the heavily one-sided way franchise
agreements are written. These franchise agreements reflect the
overwhelming imbalance of contractual and financial power wielded by
franchisors. We believe that the Federal Trade Commission’s Franchise
Rule needs to be strengthened in order to better protect the interests
of men and women who invest in buying a franchised business,” said
NCASEF Chairman Jay Singh, who was joined in Washington last week by
members of his executive board and by franchise owner association
leaders from around the country.
NCASEF is an elected, independent trade association representing more
than 7,000 7-Eleven franchise owners in the U.S. Its leadership met with
senior staff members of the House Education and Labor Committee and with
their home-state congressional delegations. They detailed ways 7-Eleven
Inc. (SEI) treats its franchisees as employees instead of owners, and
asked lawmakers to examine whether the agreements franchisees sign with
SEI more closely represent an employment contract than a franchise
agreement. They also shared concerns of franchisees in Japan, where a
shortage of service labor has created friction over keeping stores open
24/7 because franchisees are being pressed to work over 100 hours a
week, or close overnight and violate their franchise agreement. Many are
concerned the U.S. labor shortage could lead to a similar situation here.
Franchisees also produced a landmark 326 page report from Australia’s
Parliamentary Joint Committee on Corporations and Financial Services,
which detailed instances of franchisor abuse in that country by 7-Eleven
and other major brands. It highlighted that presale disclosure alone had
not been successful in addressing opportunistic behavior by some
franchisors.
“We have many times reached out to our franchisor in an effort to
establish a good faith dialogue based on mutual respect and
transparency, but, unfortunately, we have not seen a positive response,”
Singh said.
“We believe we can make real progress to better balance the franchise
relationship when we go in and explain to Members of Congress and their
staffers how our business works. It is important for them to understand
we are the ones who invest in local communities, provide jobs and pay
local taxes, not the brands themselves,” said NCASEF Vice Chairman
Michael Jorgensen, adding the National Coalition will continue holding
their May board meetings in Washington so they can provide updates to
lawmakers.
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