In the latest 7-Eleven franchise lawsuit, 1200+ 7-Eleven franchisees allege that 7-Eleven, Inc. turned their American Dreams into Orwellian nightmares.
(UnhappyFranchisee.Com) A 7-Eleven franchise association (FOAGLA, Inc.) comprising more than 1200 franchisee members, and five individual franchisees, have brought suit in the Eastern District of California against 7-Eleven, Inc. alleging that the Japanese-owned convenience store giant has downgraded the role of its franchisees from independent contractors to that of mistreated employees with no decision-making authority, has subjected them to Big Brother-like video surveillance and monitoring, and has violated their civil rights in an exploitive scheme to drive corporate profits at their expense.
The dramatic allegations in the lawsuit have inspired a viral video critical of 7-Eleven, Inc. & CEO Joe DePinto, entitled 7-ELEVEN Franchise Blues – A Protest Song.
7-Eleven, Inc. Accused of Racial Discrimination & Bullying
7-Eleven franchise owners, many of them of South Asian origin, pay the 7-Eleven franchisor corporation an up-front franchise fee (often in the hundreds of thousands of dollars) in exchange for the right to operate one or more franchised stores as independent contractors, and to share a percentage of the store profits.
The suit alleges that especially after Tokyo-based Seven and I Holdings.Co. acquired 7-Eleven, Inc. and took the company private, it launched a predatory scheme to extract maximum profit at the expense of its South Asian and other franchisees.
According to the FOAGLA, Inc. suit, 7-Eleven systematically stalked, spied on, racially targeted and subjected its franchisees to absurdly rigid daily controls… stripping them even of the right to control the temperature of their stores or the volume of their in-store monitors.
The lawsuit also alleges that 7-Eleven, Inc. launched a predatory initiative wherein it unfairly terminated the agreements of franchisees with successful stores, reacquired the stores at no cost, then resold them to new franchisees at a “windfall profit,” an illegal industry practice known as “churning.”
The FOAGLA lawsuit also alleges that 7-Eleven, Inc. “readily deployed any means necessary to brutally discredit and crush any franchisee who voiced opposition or dared to stand up to its predatory practices.”
7-Eleven, Inc. Accused of Churning Franchise Stores for Profit
FOAGLA’s Complaint, Case No. 5:14-cv-01432 was filed on July 11, 2014 — the annual “7-Eleven Day”. The lawsuit details these various abuses and seeks equitable relief against 7-Eleven to stop its racial discrimination and profiling of South Asian FOAGLA members and franchisees. The suit also addresses 7-Eleven’s malicious retaliation against association leaders, invasion of franchisees’ privacy rights, and a misclassification of franchisees as independent contractors when they are, in fact, employees.
FOAGLA asserts that 7-Eleven must be dealt with head-on and its policies and procedures must be investigated with careful scrutiny the court. FOAGLA member Jas Dhillon, stated on behalf of the association: “This lawsuit was absolutely necessary to address 7-Eleven’s racial bias, its vendetta against vocal franchisees and harassment. As a result of this conduct, all of our businesses have suffered. FOAGLA brings this action in a united front to protect our members’ investments, privacy, livelihoods and, in some cases, their safety.”
FOAGLA’s lead counsel, Gerald A. Marks, Esq. of the Red Bank, New Jersey law firm of Marks & Klein, LLP stresses the importance of the larger civil rights issues at stake: “What needs to be understood is that this not a standard franchise dispute. Rather, this is a case about civil rights violations and affects many innocent and loyal franchisees. This action needed to be brought in order to protect FOAGLA members as well as all affected franchisees, and to restore balance to a franchise system that has spun out of control,” Mr. Marks stated. “We look forward to proving these claims on the merits before the federal court.”
Mr. Marks’ partner, Louis D. Tambaro, Esq. also commented: “As is well known, we at Marks & Klein are staunchly committed to protecting our franchisee clients’ rights and to combat every type of franchisee abuse. As alleged in the lawsuit, 7-Eleven is plagued by such abuse and franchisees are suffering. Such conduct cannot be tolerated, and that is why we are asking the court to impose the appropriate relief.”
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