7-ELEVEN Upcoming Lawsuit Claims 7-11 Franchise is an Employment Scam

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.

7-Eleven Franchisees Can’t Even Control TV Volume or Store Temperature, Suit Alleges

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.

Also read:

7-Eleven Franchise Complaints

7-ELEVEN: UnhappyFranchisee.Com Invites Views of 7-11 Franchisee Groups

7-ELEVEN Class Action Franchise Lawsuit Brewing?

7-ELEVEN Franchisee Tariq Khan: Villain or Victim?

7-ELEVEN Franchise Owner Claims Franchisees Are Being Bullied

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

7-ELEVEN: How the 7-Eleven Franchise Works

WHAT DO YOU THINK?  ARE YOU FAMILIAR WITH 7-ELEVEN FRANCHISE OWNERS AND THE 7-ELEVEN FRANCHISE OPPORTUNITY?  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, franchisees as employees, 7-Eleven litigation, 7-eleven franchise complaints, National Coalition Of Associations Of 7-Eleven Franchisees, NCASEF, SEI, 7-Eleven Inc., Seven and i Holdings Co

11 thoughts on “7-ELEVEN Upcoming Lawsuit Claims 7-11 Franchise is an Employment Scam

  • July 29, 2013 at 7:42 am
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    A question I have that needs answered is at what point did franchisee’s become employees? Were they always employees? Was it with the 2004 agreement? What about the 2000 amendment? How far back does this go? And folks who left the system, and were coerced into signing “Mutual Termination and Release Documents” and yet are potentially part of this group, can they recover?

  • July 29, 2013 at 12:14 pm
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    If you are having a problem with a franchisor, consider talking with a private attorney about bringing a lawsuit, or taking other action that may help resolve the problem.

    We encourage you to file your complaint with the FTC because consumer complaints help us identify companies and practices that affect a broad segment of the public, and are useful for law enforcement purposes.

    You can file your complaint online using our Complaint Assistant at: https://www.ftccomplaintassistant.gov, or by telephone at 1-866-382-4357.

    We also accept complaints in writing, but please be aware that postal mail to federal agencies is subject to delays for security reasons. Please describe your problem or concern writing. Tell us what you think was misleading or deceptive in the company’s promotional materials, disclosure document or offering circular. If you want your letter kept confidential, please print the words, “Privileged and Confidential,” on the top of each page. Include your name, address, and a daytime telephone number where we can reach you. It will help if you can send us copies of any written claims in promotional materials or elsewhere that you believe are false. Send copies, not originals, of any documents you think we should have.

    Please address your complaint to:

    Consumer Response Center
    Federal Trade Commission – Rm. 130
    600 Pennsylvania Ave., NW
    Washington, D.C. 20580.

  • July 29, 2013 at 5:58 pm
    Permalink

    Admin,
    I see a Discovery Point ad on this page and also see the postings on Discovery Point board are hidden and no one is allowed to post on that franchise. Hope Discovery Point has not bought those comments out. Please open up those comments and discussions. It was heard that another immigrant is trying to get a DP center in North Carolina. That Franchisee should be given an opportunity to make an informed decision.
    Discovery Point does not disclose everything in FDD and operates in the guise of many different business entities. There were multiple closings for the same center so that SBA cannot track them down. Some closing statements were given to the franchisees and some were not. The Lawyers and Bank officers participated in this scheme with big payoffs.

  • July 29, 2013 at 6:11 pm
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    DPfranchisee:

    The Google ads that appear are determined by Google, and are not controlled by UnhappyFranchisee.Com. In fact, Discovery Point ads may only be appearing to you because you have visited the DP website in the past. Google ads appear differently to different visitors and are influenced by your search/web history.

    The comments are open for Discovery Point here: http://www.unhappyfranchisee.com/discovery-point-franchise-complaints/ If you ever don’t see the comment box, click the headline of the post to see the entire post.

    DPFranchisee please email ADMIN at unhappyfranchisee[at]gmail.com as I have a message for you.

  • August 9, 2013 at 2:43 pm
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    IRS or US government should take a look 7-Eleven’s accounting practice. There are a lot of points which I don’t understand their accounting policy as follows.

    1. There are a lot of mistakes on a bill back report. Give credit and give them back frequently. I assume that the computer system is not stable or programming error.

    2. Inventory overage offset: Physical inventory is not growing itself, but there are many possibilities of the overage/shortages as follows:

    – Inventory audit: 2 person finish whole store inventory from 9:30AM to 11:30 AM, therefore there is possibility to miscount. It’s impossible to count them and finish physical inventory within 2 hours. Normally the store has over 3000 products and $100K inventory level.

    – Store inventory report worksheet’s formula is wrong: They ignore the actual sales on the day of the physical inventory. Therefore there is over/short inventory.

    – Inventory overage: This overage should give the FZ back same as 7-Eleven did 2 years ago. Where does this overage offset account link to General Ledger ? It looks smell odd maybe cooking??

    – Scratch lotto: one of headache, 7-Eleven doesn’t know how to count just charge to FZ.

    3. There is NO approval process when 7-11 charges expense to FZ’s store. This is another reason of FZ is not Independence contractor. FZ is their employee. [revised by commenter]

    4. McLane is only the vendor to deliver 7-Eleven products. I don’t understand why 7-Eleven has only Mclane for long time although their price is very expensive and service is bad. some connection???

  • August 9, 2013 at 10:07 pm
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    Falcon
    Scratch Lottery! What a HORROR SHOW by 7-11.
    I wounder how many breeches have been given just because of this.
    Accounting doesn’t know lottery, mistakes have Franchisees to go under EQUITY.
    I have experienced a audit by my state lottery be OK and the next day be $6500. short on my 7-11 audit.
    How could this happen, it took 5 weeks before it got somewhat fixed, only got back $3300. No F C help because he has no clue on this issue.

  • August 10, 2013 at 9:20 am
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    Please accept my apology which I wrote the above sentence 3(missing one word “NO”) by mistake. – There is NO approval process when 7-11 charges expense to FZ’s store. This is another reason of FZ is not Independence contractor. FZ is their employee.

    Scratch lotto is one of example that IRS or related US government organization should take a look 7-11 how they are doing journal entry to the system. There should be same amount between debit and credit in balance sheet and P/L, that’s accounting principle. But I’m doubt whether or not they are doing right way.

  • August 10, 2013 at 9:44 am
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    Falcon:
    I revised your comment, point 3.

  • August 13, 2013 at 10:26 am
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    If we are pure FZ, the store appearance, contents, products and other services should be same anywhere in the nationwide. If you take a look 7-11 store, the stores are all different style. 7-11 is not updating all stores in the same style. This is one of another reason we are employee.

    For example, any McDonald is same style and taste anywhere. They are franchisee.

    If 7-11 deny we are not employee, they are discriminating toFZ. Because they couldn’t keep the same style.

    Are there any legal advice available?

  • August 14, 2013 at 9:43 am
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    When 7-11 restructured their organization, they laid off regional office workers who are doing the clerical job. Those job left to FZ, for example, all invoices should be scanned and send them to 7-11. I spend average 10 minute everyday. Therefore I have to work 60 hours(10 minute x 365 day / 60 minute) more yearly basis. If 7-11 has 6,000 stores nationwide, all FZ spend 360,000 hours(6,000 store x 60 hours) per year. 7-11 save the money at least $3.6Million(360,000 hours x $10) yearly basis.

    This is another reason that we are employee. This is their job, not FZ.

  • April 24, 2014 at 11:08 pm
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    In February of this year, I purchased gasoline from a 7-11 station in Richardson, TX. This station is filthy and rundown. It has concrete beside the tanks 20″ tall (no posts or bollards)…I have studied every station within a mile radius and they all have 40″ plus bollards to protect vehicles.

    The paint is worn off of the very small concrete where MANY vehicles have hit it and damaged their autos. You cannot possibly see this very small concrete from the drivers seat or any seat. After filling my tank, my car also scraped this short piece of concrete tearing up my front bumper. There were no receipts to be had. I immediately went inside of the station and showed the two employees who understood…they gave me a copy of someone else’s receipt. Thank goodness for American Express, I retrieved the correct receipt.

    I met with the franchise owner when he came in 2 days later. I took a witness with me. He was very nice and told us that he had tried repeatedly to get 7-11 to take care of this situation. He said that I had actually done him a favor. He assured me that my car would be repaired!.

    He instructed me to contact their Asset Management Office who in turn put me with their insurance company. The franchise owner told me that he pays high premiums for this insurance but they have never paid a claim. It has taken much of my time away from my business and I was greeted with nothing but rudeness. From the first conversation with the insurance person, she told me that they most likely would not pay any claim for me. Yet, she had me get estimates and then they were not acceptable so I had to go back for them again…she wanted the hours, labor, etc, knowing all along that she would deny it. She also “lost” the video from the station.

    It has been three months and my bumper damage is spreading and rust is setting in. I have photos from day one and photos of every station within miles. This is the ONLY one in this condition. An adjuster was never sent to me nor to the station but my claim was denied…stating, “this station is in excellent condition.”…and the adjuster said that it was “her” decision. WOW, do I have the photos….yes!!

    I now have filed a small claims case and have more good information against them…unfortunately the trial will not be until August and they are using one of their 7-11 attorneys. Dallas is the headquarters. I am anxious to show my information to the court and I have plenty. I am a Realtor and it has taken quite some time away from business for me. Meanwhile, my car remains in this condition. The damage is spreading and rust is setting in.

    The station is the worst I have ever encountered and you can drive for miles and not see one like this with no protection for vehicles. 7-11 will not spend the money. I am sorry for the franchise owner as he admitted to the fault of this station but knew he would be up against it!

    I will gladly deal with their attorney as I have all information. I will never use a 7-11 station again. Two weeks ago, I needed gas(unfortunately) and had no choice but to stop at one of their stations.. I almost hit the ground as the area around the tanks was so slick…I grabbed my car door. I went inside afterwards to let them know and another customer came in right behind me with the same complaint…..there was spilled diesel oil everywhere and no one was doing anything about it!

    I am so sorry for the franchise owners that they have sucked in to their business……the one I met with was more than nice and co-operative but his hands were tied by this corporation! He expected my damage to be taken care of. I would love to continue the story…..!! I will in Court!

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