As 7-Eleven Fights AB-5, Franchisees Claim the Company Treats Them like Store Managers, not Owners
San Antonio, TX, July 6, 2020 – Having falsely claimed that a law intended to protect workers who have been misclassified as independent contractors – like those who drive for Uber – will make “franchising’s future uncertain in California,” the International Franchise Association and 7-Eleven, Inc. (SEI) are pressing to have franchised businesses exempt from the law known as AB 5. Unlike franchise owners in other well-known brands like McDonald’s and Planet Fitness, 7-Eleven operators are not actually independent contractors because 7-Eleven runs the stores; the franchisees own none of their own fixtures or equipment; they are not party to the lease for their location; and they must deposit all sales receipts into SEI’s business bank account.
“They treat us like glorified store managers,” said Jaspreet Dhillon, a Los Angeles area 7-Eleven franchisee and Treasurer of the National Coalition of Associations of 7-Eleven Franchisees (NCASEF), the independently elected body representing the interests of more than 4,000 U.S. franchises. “AB 5 represents a chance for 7-Eleven to change its system so that California’s hundreds of 7-Eleven franchisees could really be running their own businesses, but that is not what SEI wants.” Dhillon said.
California Attorney General Xavier Becerra has sued the ride-sharing companies Uber and Lyft, saying their drivers have been misclassified as independent contractors and should be employees of the company. 7-Eleven claims that its franchisees should not be covered by AB 5 and is attempting to persuade state legislators to grant a carve-out for franchising in the AB 5 law. A similar effort by 7-Eleven to obtain a carve-out In Massachusetts failed.
On its website, the IFA says, “For franchisees, remaining in control of your own business is of paramount concern and could be jeopardized by AB 5.”
7-Eleven franchisees yearn to be in control over their businesses, but are not able given the oppressive nature of SEI’s franchise agreement, which, among other things, dictates that payroll and tax obligations be funneled through SEI. In fact, franchisees are not even allowed to control the thermostats in their stores.
In an email to all California franchisees, SEI’s Chief Franchising Officer Greg Franks wrote, “We are pursuing legislative changes to make clear that AB5 does not apply to franchising.”
The National Coalition opposes SEI’s effort. Eric H. Karp, General Counsel for the National Coalition, called SEI’s campaign “a crass political attempt” to protect 7-Eleven from a major lawsuit that franchisees have brought challenging the company’s detailed and pervasive control over store operations. “The solution is not to change the law, but change the way SEI treats its franchisees,” he said.