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7-ELEVEN Class Action Franchise Lawsuit Brewing?

July 12, 2013

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.

Jerry MarksNew 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.

[Read:  7-ELEVEN: How the 7-Eleven Franchise Works]

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.

Also read:

7-Eleven Franchise Complaints

7-ELEVEN Franchisee Tariq Khan: Villain or Victim?

7-ELEVEN: Is 7-Eleven a Good Franchise to Own?

7-ELEVEN Franchise Owners Complain, Allege Churning

7-ELEVEN Franchises Raided by DOJ, Homeland Security

7-ELEVEN Downplays Japanese Ownership

7-ELEVEN Franchise Lawsuits 2013

7-ELEVEN’s Japanese Parent Posts Record Profits… Again

WHAT DO YOU THINK?  ARE YOU FAMILIAR WITH THE 7-ELEVEN FRANCHISE PROGRAM?  SHARE A COMMENT BELOW.

Contact UnhappyFranchisee.com

TAGS: 7-Eleven, 7-Eleven franchise, 7-Eleven lawsuit, 7-Eleven lawsuits, 7-11 franchise, 7-11 lawsuits, 7-11 complaints, Long Island 7-Elevens, Tarik Khan, Tarik Khan lawsuit, Pursharth Kapoor, Kapoor brothers, KARAMJEET SODHI, 7-Eleven litigation, 7-eleven franchise complaints, how 7-Eleven franchise works

DISCLOSURE:  The Marks & Klein law firm mentioned in this post is an advertises on UnhappyFranchisee.com and is listed in our Franchise Attorney Directory.

Comments

15 Responses to “7-ELEVEN Class Action Franchise Lawsuit Brewing?”

  1. Over and Out says:

    Along time ago 7-Eleven pierced the Independent Contractor veil……controlling and defining the product assortment, mandating the who what where when and how of a franchisee’s employee’s in regards to ordering. A store is now a plantation populated by indentured servants….gives new meaning to “servant leadership!”

  2. Xx says:

    We FZ’S are not only employees but we are also 21st century modern paid SLAVES
    That’s why majority of FZ’S are coward
    If they are not then please unite yourself to protect your respect and integrity as well as your business
    Call your your fellow franchisees and ask them to get involve through your association or call the attorney
    Atleast do that to make yourself feel that you are not coward FZ’S
    Tell all of them to call everyone and form unity
    To fight for your rights
    Just yesterday alone franchisees got scare as SEI is planning to take over franchisees store because according to them they can do anything any time to anyone.please do not listen to rumor as this is another tactic they use to scare and threaten FZ’S
    I request all FZ’S ask yourself are you happy or are you sure you are independent contractors or feel SEI controls you like slaves
    Please involve yourself and call your fellow FZ’S to show that we are not cowards and slaves of SEI
    Please ask all FZ’S to share their views through this website

  3. Cc says:

    All 7-11 FZ’S throughout USA be one group as national coalition asso
    Will not at all protects you as they themselves are worried for their future so call your local foa and support the foa that is going to fight for your legal rights
    Or atleast call your local congressman or senators
    Don’t forget you are next as they are targeting individuals
    Be careful with your FC as they are stealing thinks from your office and taking pictures don’t let them speak to your employees or managers anymore
    As it begins from there they are also traitor and will stab on your back
    Don’t let them talk to your employees give them in writing if they need anything they have call only FZ’S employees can be sold over easily as they bribe them and promise them stores or jobs.
    All FZ’S be alert as FC is the middle man and they are also hungry for promotion so they are not your friends but they are spy for upper management
    They said they have no choice as they are afraid of losing their jobs

  4. ADMIN says:

    Xx wrote: “Just yesterday alone franchisees got scare as SEI is planning to take over franchisees store because according to them they can do anything any time to anyone… this is another tactic they use to scare and threaten FZ’S”

    How did they communicate this to franchisees yesterday? You can share internal correspondence confidentially by emailing it to unhappyfranchisee[at]gmail.com.

    Also, commenters, use your real email in the comment form as only ADMIN can see it and it will be kept confidential. I would like to send a message to a couple of you.

  5. Over and Out says:

    Somewhere along the line 7-Eleven thought they could define and control a franchisee similar to how a fast feeder operates. There is a huge difference between a burger joint and the corner convenience store. A fast food outlet has a finite menu REAL proprietary products (there is only one burger patty like a McD’s qtr pounder) and a brand standard that the consumer expects. A can of corn is NOT a proprietary item plus a convenience store has endless SKU possibilities. Even 7-Elevens so called “proprietary” food items vary across the country and most items like the taquito’s are Ruiz items available to anyone……the only thing proprietary is a plastic cup that says “Big Gulp”….their donuts vary in spec across the system and just because the agreement says “it is proprietary if we say it is” doesn’t make it so……a McD’s can dictate cook time, temps and all sorts of things because they sell unique items…..at 7-Eleven there is hardly anything unique about what we sell…..and the onerous order system that generates more cost and lower profit well…..next time

  6. CC says:

    I STILL DONT UNDERSTAND WHY FZ’S ARE NOT GETTING INVOLVED YET
    LOOK AT THE OTHER FRANCHISE COMPLAINTS AND ATLEAST ADD YOUR VIEWS TO THIS SITE SO EVERYONE CAN RELATE OR SAY OR SHARE THEIR PROBLEMS OR ISSUES WITH SEI
    AGAIN PLEASE DON’T SHOW THAT FZ’S ARE COWARD
    PLEASE UTILIZE THIS SITE AS THE TOOLS FOR YOUR PROBLEMS WITH SEI
    CALL ALL YOUR FRIENDS AND FZ’S IN YOUR RESPECTIVE MARKETS AND SHOW THE UNITY ATLEAST. IF YOU DON’T THEN YOU KNOW WE ARE COWARDS

  7. Gg says:

    Customer Review for 7-Eleven, Inc.:

    22 of 24 people found the following review helpful:
    Review:
    September 5, 2011
    Reviewer:
    Frustrated 7-Eleven Mafia Franchisee from NY,MO,CO,TX,CA,WA everywhere.
    Review Title::
    7-Eleven A Very Bad Franchise, A Total MAFIA like Operation!.
    Rating:
    1 Star (or Unacceptable).
    Review:
    Dear Prospective Business Owners !!

    I have been a 7-eleven Franchisee for past 2 years. This is a TOTAL MAFIA operation, please DO NOT fall for them. They mistreat their franchisees on different levels, neither good accounting infastructure nor maintenance infastructure.

    They make various promises as you are signing up for their franchise but the ones who make the promise disappear or make a 360 degree turn on their commitment. Old stores and equipment which keep on breaking and expect you to get fixed and pay and on top of it have the audacity to ask and force you through their different cheap legal business tactics to keep shining their almost dead equipments around the store such as old hotdog grills, sandwich case , bathrooms , floor tiles etc.

    They keep finding ways to charge its franchisees for various things and take their hardworking monies from them. On their mistaken charges it takes months and years to get your money back, their accounting ways and gross profit sharing is completely controlled by them like MAFIA like they have an on off button as to how much money you should make and keep slogging yourself like a modern day slave for their profits with no empathy of ones commitment to their family.

    Their merchandise ordering system is again so slow and frustrating and their stupid FORMULA of ordering F+M-I=O which these idiots swear by and are so wrong about and embarrassed but cant even take it back. 7-Eleven idiots if F or Forcasting is wrong to begin with then nothing in left over formula matters and but these idiots cant even go back on their idiot ways of doing business.

    I challange their President the very idiot Joe De Pinto to manage low profile store and employees on min. wage as a franchisee with no future for your employees and no family life, you will break and run away in 7sec and runaway in the 11sec. but its easy to sit in nice ac office with polished black shoes with your feet on table and allow this degree of disrespect for your current hard working franchisees and for future businessmen and investors who are considering investing their hard earned money with 7-Eleven in any way. SHAME SHAME on 7-Eleven the Mafia Convenience Store Business. Thank God for Heaven but 7-Eleven Mafia Corporate belongs in HELL, God If you are listening punish these idiots for their sins.

    Was this review helpful to you?

    Would you like to?:
    Provide your own customer review for 7-Eleven, Inc.:
    Go to Program Critique Review for 7-Eleven, Inc.:
    Go to 7-Eleven, Inc. Public Reviews:

  8. Gg says:

    Independent Contractor
    Definition: A person hired to do work for another but who is not an employee or agent of that person. Control is subjected to the end result and not as to how the work is performed as opposed to an employee who receives direction on what, when and, to some degree, how to do a job.

    0

    1
    If you need additional personnel for your business but decide your business can’t afford to hire any more full-time employees, you might consider using the services of an independent contractor. With an independent contractor, you may save money because you don’t have to withhold and pay the person’s income, Social Security and Medicare taxes.

    And while independent contractors do translate to lower payroll costs, be advised that the IRS scrutinizes this whole area very carefully. The IRS wants to make sure that your workers are properly classified and paying the government the necessary income and payroll taxes that are due.

    To stay out of hot water with the IRS, be sure the workers you classify as independent contractors meet the IRS definition of an independent contractor. The IRS has a 20-point text its auditors use to determine the proper classification. Here’s a list of the some of the major points:

    Who has control? A worker is an employee if the person for whom he works has the right to direct and control him concerning when and where to do the work. The employer need not actually exercise control; it is sufficient that he has the right to do so.
    Right to fire. An employee can be fired by an employer. An independent contractor cannot be fired so long as he or she produces a result that meets the specifications of the contract.
    Training. An employee may be trained to perform services in a particular manner. However, independent contractors ordinarily use their own methods and receive no training from the employer.
    Set hours of work. Workers for whom you set specific hours of work are more likely to be employees. Independent contractors, on the other hand, usually establish their own work hours.
    To stay on the right side of the IRS, it’s best to document the relationship you have with any independent contractors in a written contract. This can be a simple agreement that spells out the duties of the independent contractor. The agreement should state that the independent contractor, not the employer, is responsible for withholding any necessary taxes. In addition, have the independent contractor submit invoices. Also, be sure you file Form 1099-MISC (Miscellaneous Income) at year-end. By law, you’re required to file and give someone Form 1099 if you pay that person more than $600 a year. The form must be given to the independent contractor by January 31 of the following year. Form 1099 with its transmittal Form 1096 must be filed with the IRS by February 28 of the following year.

    If the IRS finds you’ve misclassified an employee as an independent contractor, you’ll pay a percentage of income taxes that should have been withheld on the employee’s wages and be liable for your share of the FICA and unemployment taxes, plus penalties and interest. Even worse, if the IRS determines your misclassification was “willful,” you could owe the IRS the full amount of income tax that should have been withheld (with an adjustment if the employee has paid or pays part of the tax), the full amount of both the employer’s and employee’s share of FICA taxes (possibly with an offset if the employee paid self-employment taxes), plus interest and penalties.

  9. John says:

    It looks like that SEI already picked up the stores which they want to clean up first. The reason is they picked up the opinion leader’s stores (FOA leader group) targeted.

    My Experience is that they never take any action before a couple of years about the cleanness and date code. Nowadays this is a control point to franchisee who do not listen or obey their direction. Field Consultant visit the store anytime even midnight and take a picture any violation according to their guideline and give franchisee a letter of notification. Be careful.

    My concern is they never checked the cleanliness until 2011. I agree we should clean the store always however before 2012 SEI didnt take any action. Why are they doing nowadays?

    There is no approval process on SEI accounting system when they charge expense to franchisee’s account. They just take money without agreement for example FM charge.

    There are so many mistakes from SEI but they dont care theirs but franchisee only.

    I dont have hot food and remodeled store. But my neighborhood store does. Since my neighborhood store remodeled, my sales dropped. Is this not discriminate?

    What do you think my points?

  10. Krishna says:

    How legal is the following ?
    When we sign a contract, SEi can change the contract any time without letting you know.
    Amend it ..
    WHERE IS THE GOVERNMENT WHO PROTECT THE FRANCHISEE?
    There are 2 states which has a law to protect the franchisee and guess what ?
    7-11 is not in those states.

  11. YZ says:

    7-11 marketing manger, FC and EEC (clearing inspection crew) treats you like S_ _ _ to me it seems power play for “no power.” They use derogatory terms and racial remarks for Franchisees and its totally biased partnership. Absolutely no respect for anyone’s intellect. These people who are barely graduate think they know all and sad part is they can not answer simplest of question. Anything on our side may takes years to resolve or case may not get resolved and all we get is treats. They may be violating all business practices. Our marketing manager is the biggest “idiot” i have seen in my life. I made biggest mistake of buying business from 7-11. Anyone who is planning to buy – not worth it. One may be better-off working for McDonald rather than working with incompetent bunch of idiots i.e. FC’s, Marketing Manager, Cleaning (most biased idiots – will score dirties store 98 and cleanest 70) – seriously.

  12. YZ says:

    I have been hearing and know all the above complaints by FZ’S but is there a solution. FZ’S are responsible for all the problems that are being created and all FZ’S are not united and confident but rather all of them I mean all of them are Greedy Cowardly individuals who not only kiss 7-11 ass but also provide wrong information to 7-11.

    Does anyone know that 7-11 has openly discussed that franchisees are making too much money according to Dallas people? So if you are buying a new store please make sure you do your math and decide if it makes any sense. Your future is all finished and all you can do is think and ask yourself was kissing 7-11 ass was any sweet.

    Guys wake up we don’t have individual issues with local management at all as they are all in same category as we are all they work for 7-11 they have no choice but also kiss their ass. so some mm or FC may be polite or some may try to utilize his power against you because that FC or mm have no choice but be your enemy.

    If you ask them privately they will also agree that their situation is worst than ours. Except they have not invested any money to but their jobs like us.

    Lately some FC are also ignoring that they are just FC not owners.

    Call your local congressman or senator and complain.

    Remember FC and mm and all other 7-11 staff including Maintenance people are all after FZ’S so they will go or do anything against you to get you in trouble.
    Be careful and beware of them.they don’t trust you at all
    New staff are brainwashed that franchisees are all thiefs so be careful
    They do pick and choose and target you

  13. Maa says:

    I am the franchise for 7 years. The worst mistake I made in my life
    Buying a 7- eleven, 7-11 inc will provide you all wrong information
    About the store. They do contracts with all the vendors and
    Maintainence so they can get the huge cuts from them. each and every
    Maintainence company and vendors. They send the pre- books
    Orders every month without asking the franchise whether we need
    This order or not and when mclane brings the pre- book orders
    And we ask mclane drivers to take back as we know what we dont sell in our store
    They refuses and say its national everyone is getting. Reps from
    Cigrettes company visit our store treats us like we work for 711 inc
    And send the cigrettes tobacco without discussion or permission
    And if we say no them they complain to 711-inc and they come up
    With a breach of contract. Fc from 711 inc treats like we work
    For them always try to order you instead of request as a Independent
    Owner we need some freedom that why we pay huge amount of
    Franchise fee and goodwill so we can have a better life or else
    We can work for dunkin donut wawa McDonald or anywhere where
    We don’t have this much stress. We even don’t go for our religious
    Prayer once a year bcos we cannot close the store they don’t have
    Any respect for franchise all they want us to work for them like a
    Animal. No upgrades for store notin only they want money.all I can
    It’ is a bad investment company. Never thought work like this
    For them. I will stop here bcos they are so many loop holes if I start
    Never ends. I request please don’t buy this 711 franchise.
    all you doing buying your job by paying huge franchise fee.i pray to
    My god this 711 inc should be finish.7 1 1 IS A BAD COMPANY.

  14. Ducky says:

    I just found this site.
    SEI needs to understand that every store -to a degree- is unique and may have special needs that need to be addressed.
    e.g.: When a store has a high theft rate and they make you remove your mirrors “Because it sends the wrong message to our customers”. Notice that SEI does not care about YOUR losses.
    The auto ship crap that is sent whether the FZ wants it or not. Some things may sell well at one store, and rot on the shelves in others. Oh! And guess what? The FZ “eats” this when the product doesn’t sell, coarse SEI, again, doesn’t care as they have already made money on the contract before the product even hits your store. The rest is gravy for them.
    Cleanliness. I too believe that a store should be clean. When this first came about, the store got rather high marks. They quickly changed to another group that had been given orders to give lower marks. Sometimes we come close to failing the inspections. NOTHING HAS CHANGED!!! It is not uncommon to have guests come in and state that “this is the cleanest 7-11 I have ever been in”. I think so too so what gives?
    On the other hand I try to stop in other stores when I pass one. I have walked out of some of them feeling the need for a shower they are so filthy. And by the way, I exercise my right to NOT return.
    As you know, if they don’t think that your store is clean enough, you will only have so much time to resolve the infraction. If you don’t comply, they can send in a team to clean the store…….AT YOUR EXPENSE!!!!!
    With that in mind, WHY BUST MY BALLS? If a store is that filthy, send a team in and charge the FZ. Just be realistic as to inspections.
    Contracts!!!!! They came around and shoved new contracts down our throats.
    WHERE IS MY COPY. WHY IS IT THAT AN FZ CANNOT GET A COPY. IS IT NOT LAW THAT, ONCE EXECUTED BY BOTH PARTIES, EACH PARTY IS TO GET A COPY.
    Are we expected to just assume that, if we are told we are in violation of said contract, we are?
    Assume = ASS-U-ME.
    Maint contracts: These are also shoved down your throat, but try and get something repaired. Ex: I had a machine that was basically down for 2 1/2 years – and told at that time that it needed to be replaced. Never the less, for that 2 1/2 years, I kept getting a band aid fix. The machine was finally replaced but, for that period of time, it only ran MAYBE 1% of the time. Now, you would think that these money grubbing whores would have replaced the machine as it produced our signature product. Instead, I got nothing but flak from, understandably, irate customers. And guess what? WE ALL LOST MONEY!!!!!!!
    On the other hand, there is always the chance that your ancient machine, once dead, will be taken out AND NOT REPLACED!!!! Subsequently sales go down in that category and you’re GRILLED AS TO WHY. HELLO!!!!!!!
    Priority 1. For crying out loud, a priority 1 is just that. Contract states that there in a 4 (FOUR) hour window for maintenance person to arrive……Yeah right! It better not be a weekend or heaven forbid, a holiday weekend. It’s not going to happen.
    ………Hmmm. So does that not put them in breach of contract? Do I get any resolve when SEI is in breach? Oh that’s right, I DON’T KNOW. I CAN’T GET A COPY OF MY CONTRACT!!!!!!!

    Had enough for now. I WILL return.
    Thanks for viewing my thoughts. Got some concerns of your own? Let’s hear it!
    Ducky

  15. Ben Dare says:

    Ducky….in the immortal words of FC’s and MM’s everywhere…..”you are the only one having this problem!”

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