63 7-Eleven Franchisees Investigated So Far

Australia’s new Fair Work Ombudsman is flexing its muscle with government inspectors teaming up with the 7-Eleven franchisor to investigate 63 franchisees.

It is reported that 5 franchisees have already reimbursed $112,000 to employees.

It is important these workers know there is a committed regulator they can turn to if they are concerned they are not being treated fairly. Complaints can be made anonymously and confidentially. Michael Campbell, Fair Work Ombudsman Executive Director.

Australia’s Fair Work Bill was introduced in November 2008 and the Rudd government is claiming some much needed kudos on the back of some soft targets within the fragile franchisee sector and this time, specifically the ailing 7-Eleven franchise model.

Reports of abusive employee practices from the 7-Eleven network have been simmering for a number of years and this year the media reports have snowballed where employees suggest;

 that despite the bullying and intimidation the workers were not about to back down.

No one will offer any sympathy to these franchisees as they are destined to feel some apparently much deserved regulatory pain however; the 7-Eleven saga has been a complicated web of associated ‘cause and effect’ issues that again finds the fallout being dropped squarely and only in the lap of franchisees.  The franchisor remains distinctly pure;

To the credit of the franchisor of Victoria’s 7-Eleven stores, it shares our concerns with the issues identified and agreed to assist us in this extensive State-wide campaign,  Campbell said.

The question must be asked; is this behaviour a symptom of a franchise model where the franchisee financial model doesn’t deliver or simply where franchisee selection processes fail?  Here is a brief chronology as the basis for such a question;

• 2001 saw the ACCC force 7-Eleven franchisees to drop retail pricing on 120 plus product lines.
• 2005-6 saw an up swell of 7-Eleven franchisee complaints regarding poor profitability.
• 2006-7 saw the beginning of reports of abusive 7-Eleven employee practices that lead us to today’s events.

While the current investigation focus is on Victoria there have also been Sydney complaints of employee exploitation.

Industry experts would rightfully be confused if the franchisor is suggesting that systemic abuses of employee entitlements have gone unnoticed where the 7-Eleven franchisor professes that;

Store performance analysis, operating expenses, product ranges, visual merchandising, marketing and promotion are just a few of the areas where support is provided.

Of note is the determination of the Fair Work regulator; unlike the efforts of the franchising regulator the ACCC, when franchisees complained that their franchise agreements and operational practices by the franchisor were sending them broke.

This is not the first time or the first franchisor to be taken to task over abusive employee practices. 

Back in 2004-5 Bakers Delight saw new franchisee Deanne De Leeuw confront unacceptable practices she had inherited when she purchased her franchise.  Not only was the Bakers Delight franchisor’s reaction to the unlawful practices of franchisees one of disinterest; when push came to shove the franchisor then targeted the recalcitrant new franchisee for her audacity in ensuring that employees received their lost entitlements.

The lack of effective regulation by the ACCC came to the fore when Bakers Delight, amongst a number of other franchise systems were similarly investigated and all typically were found not to have a case to answer.  It would have been interesting had the new Fair Work Ombudsman been in place back then.