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Franchise Owners Claim in Lawsuit 7-Eleven is Exploiting Them

 

Five owners of 7-Eleven franchises feel so controlled by 7-Eleven that they wonder if they are business owners at all, and say they should be paid as employees instead of business owners. The five New Jersey based franchise owners have opened a class-action lawsuit in New Jersey court this week claiming that 7-Eleven controls everything from interior temperature, product pricing, and employee payroll, meanwhile expecting owners to work unpaid overtime – 80 hours a week – and this despite owners putting hundreds of thousands of dollars into their own stories, which corporations won’t let them withdraw without permission.

 

“When a franchisor exercises so much control over a franchisee, the relationship changes from that of franchisee to employee,” Jerry Marks, the plaintiffs’ lawyer, told The Huffington Post. “They work easily 80 hours a week, they do not get overtime, they do not get health benefits, they do not get vacation and they do not get pension benefits.”



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While 7-Eleven has not commented on the pending litigation, the strategy of tightened control may relate to Japanese parent’ company Seven & I Holdings Co.’s aggressive new expansion plan. The company only owns one quarter of its U.S. 7-Eleven stores, the other three-quarters are franchise owned.

 

Sarah Leberstein, a staff attorney at the National Employment Law Project, said “The fundamental question should really be whether or not the franchisees are truly in business for themselves and running their own businesses. In a lot of these cases, the companies are putting the financial burden on the franchisees without giving them a level of independence. [The franchisees are] not really calling the shots and they’re not using their investment to turn a profit.”

 

The tightened control may be an expansion practice that isn’t going to fly in the U.S., and with franchise lawsuits, there could be some balance as to whether franchise business owners are in fact owners.

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Daniel June Posted by on August 2, 2013. Filed under Business News. You can follow any responses to this entry through the RSS 2.0. You can skip to the end and leave a response. Pinging is currently not allowed.
  • FranchiseMarketingSystems

    This is a strange model that 7-11 uses, maybe comparable to Chick-Filet. Almost more of an operator who is paid based on performance than a true owner.