7-Eleven franchisees in California are bringing their franchisor to court claiming that the popular convenience store holds absolute control over every aspect of how its franchisees operate their locations. The suit, filed in the Central District of California, claims that the company has
“most powers of an employer and all of the harshest, most overreaching rights of a commercial lender, landlord, and personal property lessor.”
Life as a 7-Eleven Franchisee
According to the lawsuit, the corporate office owns franchisee locations and all equipment. It controls the accounting and marketing processes and dictates everything from decorations to temperature control settings. The lawsuit further claims that corporate has “total dominion over every dollar received into or paid out of proceeds generated from every franchise store.”
Is 7-Eleven a Joint Employer?
Franchisor overreach is one of the most common challenges that franchisees face. Over the last decades, we’ve seen this accumulation of power only grow as franchisors issue more and more dictatorial franchise agreements.
In 2015, the National Labor Relations Board issued a stunning ruling in the Browning-Ferris Industries case that expanded the definition of what constitutes a joint-employer relationship. In December 2017, the NLRB reversed that decision and re-adopted its old, laxer stance.
The Franchise Fraud Continues
In his 2008 book, The Franchise Fraud, Robert Purvin discusses how growing franchisor control is a prime motivation and justification for the creation of franchisee associations. These associations, Purvin argues, can provide a check on the tendency for franchisor overreach.
The National Coalition of Associations of 7-Eleven Franchisees represents over 7,000 7-Eleven store owners. The association’s 43 presidents have threatened to boycott the corporation’s annual convention in February to protest corporate’s treatment of its franchisees.
We’ll try to stay on top of this story and provide more details as the case progresses.
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