FIW: The Way We Knew It
Over the last several years, franchisees have been embroiled in a great number of conflicts with SEI over policies, processes and program changes we believe have caused more harm than good to storeowners. The Financial Impact Worksheet (FIW) was one of those processes that caused our relationship with 7-Eleven to get contentious and reach a boiling point. Now that our relationship seems to be on the mend, we are working side-by-side with our franchisor to remedy the FIW conundrum, as well as many other issues. In fact, at our late June meeting with SEI in Dallas, SEI informed us that the FIW process as we knew it is a thing of the past.
SEI created the FIW process more than 10 years ago (it used to be called the HQIA, among other things) to make adjustments when they believed there was something reported incorrectly in the store, whether it was an under-reporting of sales, an over-reporting of write-offs, or a mis-retailed item. The company also used the FIW to detect fraud intentionally committed by a franchisee or a dishonest employee. This is where SEI strayed off course because they went hard after every franchisee with the same zeal, regardless if the indiscretion was small or large or the result of an honest mistake or oversight. Franchisees making honest mistakes ended up feeling like criminals, and SEI compounded the problem by forcing franchisees to pay back the company’s 50 percent of the missing gross profit when employees were to blame. Franchisees clearly believed this was unfair, and it damaged our relationship.
When SEI extended an olive branch to the franchise community with intentions to fix the relationship last year, franchisee leaders told corporate upper management that the FIW was one of the biggest issues impacting the relationship. To their credit, SEI suspended the process once it heard this, and hasn’t issued an FIW since July 2014.
FIWs continued to come up in Coalition officers’ meetings with corporate, and at the CEO Roundtable. The National Coalition asked SEI to include Kathy York (Greater Los Angeles FOA President) and myself as members at large on the NBLC/FIW committee to work with SEI to frame the new FIW process.
During the last NBLC meeting we had a great deal of discussion about FIWs, and CEO Joe DePinto, who was present at that meeting, said fixing this issue must be made a top priority. A committee consisting of seven franchisees and senior-level SEI executives was then created to investigate further.
SEI hired a company called Protiviti Consulting to help reshape and redraft the FIW process. Protiviti conducted a survey of franchisees, and the results revealed four top complaints about the FIW: 1) the process was complex and hard to understand, 2) it wasn’t transparent, 3) it was unfair, and 4) franchisees did not trust the results. Based on this feedback, the NBLC FIW committee went to work.
Our primary concern is to make sure the process is fair so that moving forward franchisees who make a mistake or are victim to employee theft won’t be treated the same as those franchisees who intend to defraud the system. We want to make certain there’s a clear distinction in place.
Our job as leaders of the franchise community is not to worry about or protect storeowners who are committing intentional fraud with a hidden second register or a cigar box. Our job is to protect the franchisees who make an honest mistake that might get compounded with time. A lot of progress was made with SEI on the FIW front.
Today we have the POS Report that we can look at on a weekly basis to detail cash register activity. One of the things franchisees and the National Coalition would like to see is more preventative tools on the other side of the business—cash report detail and inventory—to see problems when they start, instead of waiting a year and going back to the store after a huge problem develops. We want to know immediately when there is an issue with an employee, or a mistake, and we want SEI to come and warn the franchisee that they have an issue and should take immediate action. In short, we want future FIW-process tools to support the franchisee rather than function as a “gotcha.” If the franchisee does not take action (say a stealing employee is not reprimanded), at that point it’s not an employee issue, it’s a franchisee issue. SEI is working very hard to put this whole process in place asap.
The ultimate goal of this NBLC committee has always been to develop a solution that franchisees believe is fair and equitable, and we think SEI feels the same way. If we can create and build a preventive process that keeps a franchisee tuned-in to what might be off in their stores, we can prevent an FIW situation from ever coming up. We could then use Asset Protection to be just that—protection of franchisee assets—not just 7-Eleven’s.
In the past we have advised franchisees with problems not to reach out to Asset Protection because someone would be coming to visit with an FIW based on what they found in the store. Today Asset protection has assured us that franchisees shouldn’t be afraid to call about store issues. They will help solve our problems without the impunity of the FIW.
The overwhelming majority of franchisees are honest storeowners trying to do a good job everyday for our families, our businesses and our franchisor. We are encouraged by SEI’s announcement at our June meeting that FIWs will no longer be used against franchisees, and we hope we are on the road to putting in place a fair process that helps franchisees manage their stores. I will provide an update after our next meeting.