Yet Another 7­Eleven Scandal Sends Chills Through Franchisees

According to the newspaper, The Sydney Morning Herald, a new scandal is on the shelf at 7-Eleven and it is sending shockwaves through the entire chain of 7-Eleven stores. It is estimated that up to 50 current 7-Eleven franchises will be terminate within the next three months, because they are now a “drain on the home office finances”.

The tactics being used by the 7-Eleven corporation is frightening franchisees around the globe, many wondering if their 7-Eleven franchise store will be shut down next.

As a result of the recent, and as of yet unresolved, 7-Eleven wage scandal, a new franchise agreement was hurriedly written and implemented that included a profit-sharing agreement. The profit-sharing agreement was intended to help carry stores that were now unprofitable once a franchisee actually complied with local laws and paid their employees proper wages. When the normal, legal wage scales were implemented about 50 stores immediately became unprofitable and rather than honor the profit-sharing agreement, they are being seized and their franchise agreement terminated. This leaves franchisees out of business and out in the cold as the closing of the stores and the subsequent negative publicity erodes any re-sale value from goodwill that the franchisee was expecting to receive when the store was sold.

7-Eleven Strong-Arming Owners Targeted for Closure

Owners are being forced to immediately sign the termination agreement without having the time to consult their attorney. Once targeted for closure, construction workers have been seen immediately constructing wire fencing around the store so that no one can go in or out. Store owners are being bribed with $10,000 by company officials, if they immediately sign the termination agreement and hand back the keys.

All of this, the minimum wage violations, cash kickback scheme, and now violating their own franchise agreement in order to eliminate unprofitable stores, simply underscores the need to consult with a seasoned franchise lawyer, before investing in even the most well-known and seemingly foolproof franchises in the world. Purchasing a 7-Eleven store at one time seemed like a relatively sure thing, but now appears to be an overpriced model, reliant on underpaying employees to be profitable.