Our Current Relationship Status With SEI
After years of practically zero communications with SEI—during which time the company engaged in heavy-handed tactics, trampled on our independent contractor status, forgot all about servant leadership, almost wiped out Retailer Initiative with BT and other restrictive initiatives, introduced FIWs, Asset Protection, the new DVR security system and the gradual gross profit split, among other offenses against franchisees—I get asked the same question over and over everywhere I go, “Where is our relationship with 7-Eleven today?”
My friend Jas would say we are cautiously optimistic that it may improve. Myself, I am a skeptical person by nature.
So let’s review what has occurred in the last few months, keeping in mind that our relationship with SEI had hit rock bottom early last year. Under intense pressure from franchisees and their lawsuits, SEI eventually decided to reverse course and reestablish dialogue with the franchise community.
Since last Fall, we have met several times with SEI leadership in all sorts of venues, from CEO round tables to NCASEF officers meeting with SEI top executives in Dallas. It is obvious that SEI is trying hard to communicate better with us and understand our concerns and fears. There’s no doubt about that, because their actions are very evident and could be felt across the country.
However, is that enough?
I told our CEO in his office during one of our meetings that talk is cheap. He replied that the statement was fair, especially after years of zero communication and mistrust. We told him we needed to see actions, and we listed several concerns to him and his team: lack of communication, low volume stores, FIWs, credit card fees, gasoline fees, the Gradual Gross Profit Split, the new franchisee contract, the lack of transparency with what is going on between SEI and vendors, the FM Facility Maintenance contract, and the terms and length of the recent contracts that continue siphoning income from franchisees’ pockets.
Joe DePinto and his team responded that they have done the following:
- Established communication via the CEO Round Table that includes NCASEF Chairman Joe Galea, Executive Vice Chair Jivtesh Gill, and myself.
- Held regular meetings between NCASEF executives and SEI executives.
- Developed a low volume incentive that is all-inclusive compared to the old one (although it did not live up to our expectations) and promised to reevaluate it at the end of this year.
- Invited Joe Galea, Bruce Maples and Bob Price to represent franchisee interests during the current SEI negotiation with McLane
- Suspended FIWs until it is completely revamped, easy to understand and fairer. The NBLC committee along with myself and Kathy York are working to revamp the entire process. Joe DePinto was so sincere that he has five top executives on our committee: the heads of Asset Protection, Legal, and Merchandising, as well as the Controller (Accounting) and the CFO. Kathy York and myself have already had a few very fruitful discussions with Asset Protection and I am very hopeful that we will reach a very fair and written policy about FIW. An outside firm called Protiviti has been hired by SEI to help both our franchisor and franchisees to understand and revamp the process.
- Placed the FM Facility Maintenance rate increases on hold. SEI is absorbing the cost until a comprehensive review of FM’s service charges is finished.
- Committed to include franchisee leadership in a comprehensive review (nothing taboo to discuss) of our contract that will encompass gasoline, credit cards, GPPs, terms and length of contract.
Now going back to the original question, where are we in this relationship with SEI? Let me be very frank—the DVR lawsuit is about to be, or will be, settled by time this article is published. Did we get everything we wanted? No. Did we get a fair deal? Probably. I will let the attorneys explain in a future article. The California lawsuit was withdrawn because of procedural issues. Will we refile? That is the million-dollar question on our hands, currently. It’s a tough decision to make, but it’s not completely off the table.
SEI is cooperating for the moment, and there are positive signs all over the place. In my humble opinion, I think we should be patient and wait to see if anything tangible comes out from all of this. That is our cautious optimism. On the other hand, we should stay very alert and make sure that franchisees will be better off (not worse off) after everything is said and done, and that is our skeptical side.
I encourage franchisees to email me their opinions on this.