7-Eleven Franchisees Call for Stronger Regulation in Franchising Industry
San Antonio, TX, October 5, 2020 – The National Coalition of Associations of 7-Eleven Franchisees (NCASEF) is urging the Federal Trade Commission (FTC) to better protect franchise owners by broadening and strengthening regulation within the franchising industry, and is also calling on the International Franchise Association (IFA) to support those efforts.
“We were pleased to see FTC Commissioner Rohit Chopra’s September 16, 2020 comment, which said, ‘Regulators must stop unfair, deceptive, and discriminatory practices that target franchisees and their employees,’” said NCASEF Chairman Jay Singh. “We look forward to providing detailed comments to the FTC as part of its review of the Franchise Rule.”
Over the past several years, NCASEF, 7-Eleven’s independent franchisee association, has publicized a number of unfair and opportunistic practices undertaken by 7-Eleven Inc. (SEI) including issuing Franchise Disclosure Documents that do not fully disclose the risks of investing in a 7-Eleven franchise and stubbornly refusing to recognize the system’s only democratically elected franchisee-representative organization.
SEI’s 2019 franchise agreement gives the corporation a bigger percentage of franchisees’ gross profits while at the same time transferring responsibility to franchisees for many new expenses like insurance. SEI just informed franchisees the cost of their Business Owner Policy could be as much as 24% higher next year.
“7-Eleven has a history of unfair and deceptive acts and practices targeting franchisees,” said Singh. “The FTC needs to take a closer look at what is going on in the 7-Eleven system and in other systems where franchisors are not engaged in fair dealing.”
Following its planned takeover of Speedway, 7-Eleven will have 3,900 new U.S. stores it can make available for franchising. NCASEF believes stronger regulations will not only protect new franchisees entering the system, but also improve the situation for those franchisees that have already invested their life’s savings into the business.
“We are looking to the International Franchise Association to support a careful review of not just of the Franchise Rule covering information brands must put in their disclosure documents, but also a long overdue investigation of the absence of meaningful rules that govern the franchisee/franchisor relationship,” said Michael Jorgensen, Executive Vice Chairman of NCASEF.
Recently, IFA public affairs VP Matt Haller was quoted as saying there are “opportunities to improve” the Franchise Rule “to give the FTC more teeth to go after bad actors.” In its mission statement, the IFA says the association “protects, enhances, and promotes franchising.”
“Inherent in that statement is protecting franchisees – as well as the franchisors whose financial support keeps the association healthy,” said Jorgensen, adding, “IFA has remained silent about SEI’s unfair practices even after they were highlighted in the U.S. media as well as in a Joint Parliamentary Committee investigation in Australia and a Japanese FTC probe.”
“We want to know whether IFA will truly support leveling the playing field for franchisees,” Singh said. “Or if those ‘opportunities’ they mentioned are only a mirage.”