Town Hall Meetings And The Dilemma Over The 2019 Agreement
BY JAY SINGH, CHAIRMAN, NCASEF
For 43 years, the National Coalition has intended to be the voice of 7-Eleven franchisees. We have sought to represent the interests of the average franchisee, to be a place for networking, and a source of information for everyone. Now on the eve of signing the largest and most comprehensive revision to the Franchise Agreement since 2004, we are trying to stand up for franchisees and make revisions to a contract that the majority of franchisees are having trouble understanding completely.
Since June, when the contract was rolled out, SEI has been prompting a large number of storeowners to sign the 2019 agreement by the end of this year. The fact is the majority of franchisees are concerned about when to sign, what their choices are, and the pros and cons of this new contract. To help, the NCASEF and its officers, along with general Counsel Eric Karp, arranged two town hall meetings in California in August to provide information and answer questions. The first meeting in San ramon was sponsored by four FOAs, and 300 franchisees attended. The second meeting, a day later in the City of Industry was sponsored by six FOAs, and over 500 franchisees attended.
At each of the packed meetings NCASEF general Counsel Eric Karp provided a thorough analysis of the contract and highlighted close to 50 points of concern for franchisees. We also developed a worksheet for franchisees, no matter which contract you have, that can help determine the impact the new agreement could have on your bottom line. Both of these items are available on the Coalition website, www.NCASEF.com or by emailing the National Office at nationaloffice@ncasef.com.
Franchisee questions at the town hall meetings were about insurance, payroll, extra expenses and why, if a franchisee has to go to court, only Texas law applies. Franchisees questioned the ggPS, the ggPS on steroids, and how much these increases would eat into franchisees’ bottom lines. We all wanted to know about the extra expenses for delivery, for loyalty programs, for digital commerce, and why we can’t be guaranteed the best cost of goods from our supply chain. We wanted to know why Indemnification and Insurance were totally eliminated, and why we now have to contract for our own payroll. On the last page of Eric’s analysis of the new agreement, there are now up to 12
points that if you violate, SEI can take back your store. In the 2004 agreement, there was only one.
The bottom line is that franchisees are genuinely worried about their future because of this agreement. The fact that 800 franchisees gathered together over two days shows the high level of concern franchisees feel about the contract situation. We’re all worried that the more we do increase sales, the less profit we will get out of our gross profit split. As the saying goes, “We don’t know what we don’t know.”
Our town hall meetings revealed just how concerned franchisees are about the 2019 agreement. Some franchisees are being pressured to sign even though they still have several years remaining on their current contracts, and the majority is wondering what precautions they should take, and basically, what they should do. The result is franchisee morale is hurting.
One question that came up repeatedly is why should I sign now if my contract is not up? If this new agreement is so good, why is SEI pushing so hard for franchisees to sign it now? And why are franchisees hesitating? SEI has been holding their own town hall meetings all over the country, and it’s not clear why there is so much push to get franchisees to sign early. Could it have something to do with an appeal related to the franchisee lawsuit filed a year ago? They emailed the FDDs to us, and then they printed and delivered them to every franchisee through the field consultants. Now we are getting emails urging us to sign promptly. SEI is even having signing ceremonies (cakefests) and hyping these events. I have never seen such a huge push from the company. The question remains, if the agreement is so good, why does SEI need to push it so hard?
The NCASEF’s position is that we don’t want anyone to lose their store(s) because they didn’t sign the new contract. We followed SEI’s suggestion (disclaimer) that franchisees have their attorney and CPA look at the contract. Our job is to educate franchisees, which we did through the legal analysis of the agreement and the information we sent through the NCASEF newsletter, Avanti, and the website. We held town hall meetings and provided the information to the FOA presidents and vice presidents.
Ultimately, it is up to every franchisee to decide if it is worthwhile to sign the new agreement. We do advise that you consult your own lawyer and CPA and do a thorough analysis on how the new agreement will impact your store, especially if you are not up for renewal. The NCASEF is here to provide you with any information you may need to achieve this.
I cannot stress enough how important it is for every franchisee to join their local FOA and the NCASEF. There is strength in numbers and unity, which is precisely what we need at this time. If you know unrepresented franchisees, I encourage you to do everything you can to have them join their local FOA and our national organization.