Finding Middle Ground On The DVR Security System


On August 22, the National Coalition filed a revised complaint to SEI’s new Security System and Monitoring Amendment, which allows the company to remotely monitor our stores via the new DVR security surveillance system. The circumstances leading up to this moment began in 2012, when SEI first started rolling out the new security system.

Prior to the new system, all 7-Eleven stores were equipped with a rather antiquated VHS security system, with the camera recording system located in the franchisee’s office. This system did not give SEI the capability to monitor our stores from a remote location, and the security amendment to our franchise agreement only allowed company personnel to enter our stores and review the security camera recordings in cases involving a slip and fall or a crime or casualty or some other accident or law enforcement need. SEI could do this only with the consent of the franchisee, and typically needed to ask to gain access to the recordings.

About two years ago, upon persistent demand by franchisees to upgrade the security system in our stores because the VHS system was so old, SEI spent some $40 million to roll out a new, upgraded, state-of-the-art DVR system to all stores in the country. This new security system features the latest surveillance camera hardware with 24/7 digital audio and video recording capabilities, and all the videos are stored off-site. Additionally, the new system monitors POS data and alerts the Asset Protection folks in Dallas of any nefarious activity. Even more importantly, the new system then makes it possible for SEI to remotely view any store in the country, from Dallas, whenever it wants.

Needless to say, the franchisee community is less than thrilled by this aspect of the new DVR security system. Although SEI still maintains they will use video recorded by the DVR security system only in cases involving crime, casualty, slip and fall, or fraud by a franchisee or his/her employee, we remain concerned about SEI using that information to monitor all aspects of a franchisee’s store: when we come in, when we leave, who has what uniform on, how long the hotdogs have been on the grill, how long the coffee has been out, which vendors are coming into the store, and many other in-store activities. It’s like big brother watching us all the time and they have all that data to mine and potentially hold against us at their will.

After much discussion, the National Coalition Board of Directors agreed that the franchisee agreements we signed didn’t give SEI the right to physically watch us, 24 hours a day, every day of the year. We agreed that unrestricted remote access was not part of our original agreements, and we voted to dispute it through mediation in May 2012. After several meetings and conference calls, the formal mediation session actually took place in December 2012, and we went through some three or four rounds of back and forth offers in an effort to find a middle ground both sides could agree on.

In the first few months of 2013, with all the negative publicity on the East Coast involving several franchisees, illegal immigration and fraud, and ICE, Homeland Security and the IRS, SEI pulled their last offer from the mediation table. They said they would not mediate again until after the East Coast issues were settled. By October 2013, there was no indication that SEI was going to return to the mediation table any time soon. In the meantime we were hearing franchisee-reported incidents wherein the recordings from the DVR security system were used by the Operations team to confront franchisees and say, “We’ve seen you do this,” or “We saw a vendor standing there too long,” or “Your employees managed the grill without gloves.” Even as SEI was insisting they were not fishing for information to use against us, and that they don’t have the physical capacity to watch 8,000 stores, some aggressive Operations team members had looked at the recordings and went into stores to intimidate franchisees.

In October 2013, at our meeting in Dana Point, the NCASEF Board decided to move ahead and file a lawsuit on the basis that remote viewing violated the terms of the Security System and Monitoring Amendment. However, NCASEF had a change in chairman, so the lawsuit did not get filed at the time. At the first meeting of this year in Dallas, the issue was brought up again and the consensus was to continue with the lawsuit. While we were preparing it, SEI cancelled the amendment and issued a notice saying the 2014 amendment that we signed had expired back in June 2013.

Basically, SEI said we had no Security System and Monitoring Amendment for about a year. This seemed like a legal maneuver on their part—to delay progress on the mediation. When we asked to eliminate the monthly fee, which pays for the security system, SEI issued the current amendment.

We requested that the stores be given time to review the new amendment and not be forced to sign it right away. At the same time, we revised the original complaint to reflect that we don’t agree with the new Security System and Monitoring Amendment, and we filed that amended complaint in August.

This is not a personal matter with the company. We are hopeful that both sides can find common ground, but we have agreed to disagree and let legal minds settle the matter. As franchisees we are overjoyed at the prospect of help with theft, accidents and slip and fall, and we understand that intelligent use of new technology inside the store helps our franchised system move forward. SEI maintains on their side that they won’t use the information collected by the DVR security system to abuse or intimidate us, but we have seen some evidence to the contrary.

The thought of big brother looking in on us every day and shaking their finger is disconcerting, but if both sides are sincere in their efforts there is a good possibility that we can come up with an amendment that’s acceptable. The objective of this action is to find a mutual solution. We want to avoid prolonged litigation, for the good of the system, the company, the relationship and franchisee morale.