Is the 7-Eleven franchise opportunity a blatant employment scam? In an upcoming lawsuit, 7-Eleven franchisees may claim they are really employees being deprived of social security, overtime and other employment benefits.
UnhappyFranchisee.Com has obtained a information about a lawsuit expected to be filed on behalf of a number of 7-Eleven franchisees next week.
The complaint will allegedly name as defendants 7-ELEVEN, INC., a wholly owned subsidiary of SEVEN-ELEVEN JAPAN CO., LTD., which is a wholly owned subsidiary of SEVEN AND I HOLDINGS CO. LTD.
According to our sources, the complaint will allege that while 7-Eleven, Inc. promotes itself as an all-American, true-blue business icon, it is, in reality, a Japanese corporation that mislabels its relation with its store operators as franchise owners when they are, in reality, employees.
The complaint will allege that 7-Eleven, through its multiple Japanese subsidiaries and its corporate parent, fraudulently misrepresents its relationship with store operators in order to collect large upfront franchise fees, while avoiding having to pay store operators minimum and overtime wages, medical, pension, and other employment-related benefits.
The upcoming lawsuit alleges that 7-Eleven has been foisting an employment relationship upon its franchisees for its own benefit for many years, and has during this entire time period, cheated countless franchisees throughout its system out of basic benefits, and ultimately their livelihoods.
While 7-Eleven promotes its franchise opportunity as a way to own one’s own business, the lawsuit alleges that 7-Eleven, Inc. asserts such total domination over store operations that franchisees lack the decision-making control that is the hallmark of a true business owner.
Franchisees’ day-to-day activities are so aggressively micromanaged and controlled by 7-Eleven’s Market Managers and Zone Managers, the suit will allege, that franchisees (irrespective of their success or the number of 7-Eleven locations they “own’) have no actual discretion or independent decision- making authority in running their locations.
Some examples cited of the high level of control exerted by 7- Eleven over its franchisees include:
- Regulation of vendors and product supply;
- Processing franchisees’ payroll through its owner internal payroll system;
- Regulation of product pricing, advertising and promotional materials;
- Intense daily oversight by Market and Zone Managers of franchisee operations;
- Franchisees cannot control the volume on their televisions and, rather, 7-Eleven controls that from their corporate headquarters in Dallas, Texas.;
- Franchisees are unable to change the temperature in their store and, rather, 7- Eleven controls that from their corporate headquarters in Dallas, Texas;
- Bookkeeping and all accounting done by corporate; and
- Franchisees cannot withdraw money without corporate approval.
The suit alleges that 7-Eleven’s neglect of the parties’ true business relationship has deprived 7-Eleven franchisees of employment-related benefits, including, but not limited to:
- Federal Insurance Contributions Act (“FICA”) tax;
- Social Security Withholding;
- Unemployment Withholding;
- Health Insurance (which neglect is soon to be exacerbated by a shift in governmental policy); and
- Workers’ Compensation Insurance.
Other Ways 7-Eleven Allegedly Mistreats Franchisees
The upcoming lawsuit also contains allegations of other unfair and abusive franchise practices by the Japanese owned and controlled 7-Eleven, Inc., including:
- 7-Eleven raised franchise fees so high that franchisees can’t sell their stores
- 7-Eleven bullies and intimidates its franchise owners
- 7-Eleven franchise owners “live and work in fear”
- 7-Eleven targets and harrasses certain franchisees based on race and country of origin
- 7-Eleven has retaliated against franchisees who have spoken out against systemic racial discrimination
- 7-Eleven forces franchisees to purchase inventory at inflated prices
- 7-Eleven forces franchisees to purchase inventory they don’t want or need
- 7-Eleven blames franchisees for I-9 non-compliance but doesn’t provide E-verify capabilities, as do other franchise chains
- 7-Eleven unilaterally terminates franchises without notice or an opportunity to cure defaults
- 7-Eleven enters franchisees’ locations and seizes necessary equipment including lottery machines & security systems
- 7-Eleven cuts off food, supplies, and equipment from vendors, at its discretion
- Franchisees work 60-80 hours per week, yet 7-Eleven neither shows them the respect due business owners, nor pays them overtime as they are required to do for employees
As soon as the lawsuit is filed, UnhappyFranchisee.Com will post the final details, the names of the Plaintiffs and their law firm, and the actual lawsuit document.
Be sure to check back daily for new developments and comments.
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