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7-Eleven COO over Franchisee Relations Leaves amid Turmoil

2013-11-03 16.30.41

DALLAS - With little fanfare, 7-Eleven CEO Joe DePinto issued an internal memo this week announcing that Darren Rebelez, executive vice president and COO was leaving the company to pursue other opportunities.

Announcing no replacement, DePinto said in the interim Rebelez’s staff would report directly to him.

CSPnet.com, a leading news source for convenience stores, reported the departure yesterday stating that Rebelez’s resignation was effective October 13, 2014. DePinto further explained in his memo, “I've known and worked with Darren for many years and appreciate all he has done for our brand. He has been instrumental in leading many significant improvements in our business.”

The COO’s resignation comes on the heels of another 7-Eleven executive jumping ship. Bill Engen, senior vice president of east operations and division vice president, directing operations for more than 4,000 franchised locations, left 7-Eleven on September 12 to become Wingstop Restaurant’s chief operating officer.

Yet another executive, Kurt McCord, 7-Eleven, Inc. investigations supervisor, also left after seven months of being employed in 2013. Testifying for a franchisee in a lawsuit, 7-Eleven, Inc. v. Karamjeet Sodhi, et. al, McCord stated that he left the company because of “unethical and even unlawful missions” being carried out by 7-Eleven, Inc., a North America subsidiary of Seven and I Holdings Co. of Japan, against franchisees. In a  BlueMauMau OpEd last May by Sean Kelly, publisher of Franbest.com and UnhappyFranchisee.com, McCord claimed 7-Eleven’s asset protection program is a “weapon of vengeance” wielded by company executives for “personal vendettas” used to terminate franchisee leaders “they deem pains in the asses.” He also testified that 7-Eleven had a “franchise churning strategy.”

Rebelez joined 7-Eleven in 2007 and took over as EVP and COO in early 2009 while the company was fast becoming fully franchised in the United States. His duties included the franchising of 7-Eleven’s more than 1,000 remaining company-operated stores and managing and enhancing the company’s relationships with its franchisees.

Rebelez previous experience came from big oil companies, where he supervised franchising for ExxonMobil’s On the Run convenience store operations. Rebelez also led that company’s U.S. distributor fuels pricing program and U.S. category management. Other experience included being president of the oil and convenience store bakery division at a Thornton Oil Corp. subsidiary. And he began his c-store career at Colonial Stores Inc. in Atlanta, then Fast Fare Inc./Crown Convenience Stores. His operations experience also included positions with Daka International and PepsiCo restaurants.

7-Eleven’s turbulent 2013

The announcement of Rebelez leaving his position comes a year after the world’s largest convenience store chain was hit by a tsunami of litigation, franchisee disputes, and a federal probe of 7-Eleven store owners and managers who were charged with immigrant exploitation and identity theft. Federal agents swept in on June 16 to arrest nine people in the New York and Virginia areas, seizing equipment, computers and POS systems. The charges, arrests and seizures of assets resulted from an investigation by U.S. Immigration & Customs Enforcement (ICE), Homeland Security Investigations (HSI), the Social Security Administration’s Office of the Inspector General, and the New York State Police and Suffolk County Police.clip_image001

The indictments were the result of one of the largest criminal alien employment investigations ever conducted by the U.S. Department of Justice. Court documents stated that the government moved to forfeit the franchise rights of ten 7-Eleven stores in New York and four in Virginia. The feds also moved to forfeit five houses in New York worth more than $1.3 million. The U.S. Attorney’s Office in Brooklyn stated at the time of the arrests that 7-Eleven corporate was cooperating with the government’s investigation. The company vowed to aggressively audit the employment status of all franchisees’ employees.

At the same time, the Dallas-based company was also engaged in litigation with one of its top franchisees in New York. The franchisor in a civil lawsuit accused Tariq Khan, also a former chairman of the National Coalition of Associations of 7-Eleven Franchisees, of “secretly and successfully siphoning hundreds of thousands of dollars in cash from his five stores. Khan and his family vehemently denied all the accusations.

Another lawsuit was filed by two New Jersey franchisees against the company alleging it had failed to keep up with competition. They stated “7-Eleven has failed to change its stores, products and marketing despite the ever-changing market and the expectations of consumers.”  The franchisees, paying between $100,000 to $150,000 in franchise fees, allege that 7-Eleven is seeking to create conditions so hostile that the store operators will end their relationship with 7-Eleven, which would allow it to re-sell the old franchises as new ones.

7-Eleven Corporate did not respond to Blue MauMau’s questions as to whether a replacement had been named for Rebelez. We also asked the following questions:

  • In light of Rebelez’s position of managing and enhancing the company’s relationships with its franchisees, how difficult will the transition be for 7-Eleven and for franchisees?
  • Also, with Bill Engen’s resignation in September directing operations at more than 4,000 stores in the east, do the two departures signal how difficult a job it is maintaining franchisee relations?
  • Does the company expected more resignations in the area dealing with franchisee relations?
  • How would 7-Eleven describe its overall relationship with franchisees today? 

Blue MauMau also asked Joseph Galea, chairman of the National Coalition of Associations of 7-Eleven Franchisees to respond to similar questions about Darren Rebelez’s resignation, and how they would describe 7-Eleven’s relationship with franchisees today. The coalition responded saying, “We do not comment on the business of the corporate office.”

Despite its turbulent year, 7-Eleven stores generated in 2013 total worldwide sales of nearly $84.5 billion. Globally, it has approximately 53,500 7-Eleven convenience stores, and in North America it operates, licenses and franchises more than 10,300 units.  


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About Janet Sparks

Janet Sparks's picture

Public Profile

Janet Sparks is the former publisher of the Continental Franchise Review, an industry newsletter that covered the franchise community for over 30 years. She has also been a columnist for a leading franchise magazine for the past 13 years. Today she is an independent journalist who engages in investigative reporting, tackling complex issues that impact the franchise industry.

Janet can be reached at jsparks@bluemaumau.org or at 303-799-7398.