A major class-action lawsuit against 7-Eleven, Inc. and possibly 7-Eleven’s Japanese parent company Seven and I Holdings Co., could be brewing.
New Jersey-based franchise law firm Marks & Klein is investigating whether the current and former 7-Eleven franchisees who have been operating 5700 convenience store franchises in the U.S. are, in fact, independent business owners or whether they are actually employees who have been intentionally misclassified.
If it’s determined that 7-Eleven franchise owners are actually employees rather than independent contractors, the ramifications could be huge for 7-Eleven, Inc., as the company could then be liable for minimum wage, overtime, wage law and other violations, as well as FICA and income tax withholding for franchisees.
In recent discussions on the franchise issues blog UnhappyFranchisee.Com, 7-Eleven franchisees have angrily complained that since completing its acquisition of 7-Eleven, Inc. in 2007, the Japanese parent company has pushed for a “culture change” and exerted extreme control over every aspect of store operations… from managing payroll to controlling inventory purchasing and every other aspect of financial management.
7-Eleven franchisees even live in fear of being “fired,” some maintain. In recent months 7-Eleven has terminated franchise agreements and demanded that franchisees, who have invested hundreds of thousands of dollars, immediately surrender their stores without prior warning, discussion or chance to appeal.
Are 7-Eleven franchisees really employees?
When 7-Eleven, Inc. abruptly terminated the franchise agreements of 6-store franchisee and president of the Metro New Jersey Franchise Owners Association Karamjeet Sodhi, Mr. Sodhi retained attorney Jerry Marks of Marks & Klein to defend him and, later, to file a countersuit against the company.
The sworn affidavit of Karamjeet Sodhi (and other court documents) calls into question whether 7-Eleven franchisees are given the autonomy to run their own businesses.
Mr. Sodhi testified that the 7-Eleven market manager in his region “repeatedly harassed and intimidated Indian American franchisees by telling them that 7-Eleven owns their businesses and that they ‘work for him.’”
In court documents, another NJ franchisee claimed that his field consultant tells him “I can call the Sheriff’s Department and they will throw you out of the store.”
Yet another 7-Eleven franchisee quotes his marketing manager as frequently stating “I can kick you or any one out from this store in a minute. I pay rent, electric, I own this property…”
According to 7-Eleven franchisees, SEI bullies, harrasses, threatens, and rules with an iron fist… especially since the Tokyo-based Seven and I Holding Co. completed its acquisition and announced aggressive franchise expansion goals.
Does 7-Eleven discriminate against Indian Americans?
Mr. Sodhi claims there has been a culture shift at SEI, and that “Indian American franchisees… began to be treated disrespectfully and with disdain solely because they are Indian American.”
Mr. Sodhi also claims that the 7-Eleven market manager and local managers dictates hiring and employment practices, and “criticize franchisees on the basis that franchisee employees are ‘unable to speak to customers because of their accents” and the franchisees should fire those employees and “hire Americans.”
Sodhi and other franchisees in his region claim 7-Eleven personnel “make derogatory references to Indian American franchisees, frequently referring to them as ‘you people.’”
Franchisee Raj Pathak said the marketing manager always talks to him with an accusatory finger and threatens to call the Sheriff’s department or police department to “throw [him] out from this place.”
According to a complaint by Pathak, the manager tells him “YOU PEOPLE don’t work.”
7-11 Franchisees claim they are treated like employees… or worse
At UnhappyFranchisee.Com, we have received complaints that SEI treats its franchisees like minimum-wage employees – or worse.
7-Eleven franchisees have paid franchise fees of $100,000 to $800,000, and are outraged at not being treated with respect as business owners.
On May 23, 2013, Roger wrote:
I have owned a 7-Eleven for going on 15 years. This is the WORST WORST WORSSST franchise to own. DO NOT even consider franchising a store. 7-Eleven is not your business partner, they are your boss and treat you like dogs. Constant threats for breaches… they treat you like dogs and have absolutely ZERO respect when talking to you. All they know how to do is yell and threaten you. I have talked to so many franchises, NOBODY IS HAPPY!
July 10, 2013, Workinboy48v wrote:
I believe it is time for a class action complaint to the IRS demonstrating why you are employees of 7-Eleven and no longer Independent Contractors. There is sufficient case history and testimony by past 7-Eleven employees to support such a filing.
What do you think? Does 7-Eleven, Inc. treat its franchisees like employees… or worse? Share a comment below.
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