by Sean Kelly Several lawsuits filed by 7-Eleven franchisees claim that 7-Eleven, Inc. exerts such extreme control and dominance over them and their businesses, that 7-Eleven franchisees are really just employees misclassified as independent contractors.
In a recent interview on National Public Radio, 7-Eleven franchisee Hashim Syed stated that 7-Eleven franchisees are just “glorified employees.”
A May 2, 2014 letter (obtained by UnhappyFranchisee.Com) from National Coalition of Associations of 7-Eleven Franchisees Counsel Eric Karp to 7-Eleven attorney Arthur Rubinett asserts that 7-Eleven imposes new, subjective, employer-like rules on franchisees and their employees without seeking their input beforehand, then aggressively and heavy-handedly imposes Letters of Notification (LONs) and Default Notices without adequate justification or investigation.
Karp expresses particular concern that 7-Eleven, Inc. has imposed an onerous and poorly designed Guest Experience Assessment (GEA) with which to evaluate franchisees:
Franchisor recently issued a new GEA Form, without any input, comment or suggestions from the National Coalition or any of its constituent 40 Franchise Owners Associations. As you know. the National Coalition represents more than 4,700 franchisees who own and operate more than 6,000 locations. It is thus a major stakeholder in the system.
The GEA Form is problematic, not only because it is wholly inconsistent with the independent contractor status of the franchisee, but also because it contains numerous subjective, undefined and unquantifiable standards, which makes it subject to inconsistent application and even abuse.
The massive nature of this document is illustrated by the following statistics regarding its content:
- 13 pages
- 67 separate categories of standards
- 448 separate standards
- 6500 words
This GEA Form would be much more appropriate to a fast food restaurant than a convenience store which happens to serve some fresh food. It is the proverbial tail wagging the dog.
Karp notes that while the franchise agreements states that franchisees, as independent contractors, have “complete control and responsibility for all labor relations and conduct of employees, including the day-to-day operation of the store,” 7-Eleven chooses to micro-manage employee conduct through the Guest Experience Assessment, down to requiring them to “share what [the food] tastes like, what their favorite is, and what other guests have said.”
7-Eleven: Vague instructions followed by harsh punishments
We are also concerned about the level of training that has been provided to the persons responsible for completing these GEA Forms, We are already seeing instances of inconsistent and unnecessarily punitive evaluations.
One franchisee that we are aware of received a default notice because he set aside one moldy package of pizza, so that he could discuss with his Market Manager how to obtain credit for it. Another franchisee reports to us that he received a breach notice because of an inexplicable cleanliness score of 55, when his previous score five weeks earlier was 85, and his score two weeks later was 89. We are further advised that on a particular day last week, 25 LONs [Letters of Notification] were delivered in the Seattle market alone. This proliferation of LONs and breach notices, in many cases without any prior discussion with the franchisee, is a marked departure from prior practice and not indicative of good faith and fair dealing.
Separately, we are aware of franchisees receiving LONs and breach notices for de-minimus out of stock items. As you are undoubtedly aware, SEI has unilaterally changed delivery schedules for many franchisees, without giving them an opportunity to adjust. In addition, any particular store can have out of stock items depending on what day of the week or what time of day the store is inspected. We are sure that this is true of company-owned stores as well.
We are not sure if Arthur Rubinett or 7-Eleven, Inc. has responded to Mr. Karp’s letter.
We do know that 7-Eleven, Inc. is fast becoming the poster child for Worst Practices in Franchisee Relations.
It reminds me of the quip: “It’s not that they shoot themselves in the foot that amazes me. It’s how fast they reload.”
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TAGS: 7-Eleven, 7-Eleven franchise, 7-Eleven, 7-Eleven lawsuit, 7-Eleven litigation, 7-eleven franchise complaints, National Coalition of Associations of 7-Eleven Franchisees, Attorney Eric Karp, Attorney Arthur Rubinett