Situation in Japan Shows Imbalance of Power in 7-Eleven’s Relationship with Franchisees

The need for collaboration and communication is greater than ever

 Mitoshi Matsumoto recently did something many of us who are 7-Eleven franchise owners wish we could do.  He closed his 7-Eleven store on New Year’s Day.  Why? Staffing issues.  In fact, Matsumoto has had to close before because he simply doesn’t have enough workers to keep up with the 24/7 demands that come with owning a 7-Eleven franchise in Japan.

Now he’s facing backlash and retaliation from 7-Eleven. They’ve cut off fresh food deliveries, cancelled his franchise agreement and shut down his ATM.

National Coalition board members visited Japan several months ago as we share many of the same frustrations with our Japanese counterparts. “We see a tremendous imbalance of power within the 7-Eleven franchise system, where the corporation exercises control over its franchisees and retaliates against those that speak out or offer criticism,” said NCASEF Chairman Jay Singh.

Japanese media have been covering Matsumoto’s story for some time now. Recently he was featured in a New York Times article. As his situation unfolded, other Japanese franchisees spoke up about issues that were hurting not just their business, but also their health and well-being. But, now that 7-Eleven has shut him down, franchisees are quiet—afraid of what could happen to them if they make noise.

“We are concerned about the company’s abuse of power and retaliatory measures against franchisees that speak up,” said Executive Vice Chairman Michael Jorgensen, a Florida franchise owner who was among the contingent who visited Japan last year. “By trying to squelch Mr. Matsumoto, 7-Eleven is telling all its franchisees they had better not take a stand.”

The conflict with Matsumoto and his decision to close his store overnight, did prompt 7-Eleven to review the mandate that all stores stay open 24 hours, 365 days a year.  In what many say is suspicious timing, 7-Eleven suddenly announced a number of violations against Matsumoto seemingly unrelated to the New Year’s Eve closing and cancelled his contract on Jan. 1.

The head of Japan’s Convenience Store union, Takanori Sakai, sent a letter to 7-Eleven questioning the company’s culture of open communication. “Is this the way we respond to our business partners who want to be the honest company you advocate?” he wrote.

Days after he was ordered closed, Matsumoto stayed open with empty shelves, but also with a stream of loyal customers.  He has said his store is still a 7-Eleven because the company technically cannot cancel his contract while it is in dispute.

A reporter for Japanese outlet Sora News 24 recently asked Matsumoto what he thought of the future of convenience stores in Japan. 

“There isn’t any,” said Matsumoto. “The system is broken because the companies are taking too much from the people running the stores, and there isn’t enough left to let them run properly. This is the way things are getting nowadays; people in the highest levels are just interested in getting as much for themselves as they can.”

For some time, the National Coalition has pressed 7-Eleven’s leadership to communicate and collaborate with us. With what has happened in Japan, we need to press harder.

“It is a frightening realization for franchisees to see such a blatant abuse of power,” said Singh. “It is time for the leadership to commit to a collaborative relationship that protects store operators’ profits, health and well-being.”