Who Is Out Of Touch?

 

On November 9, an article titled “Franchisees to Boycott Annual 7-Eleven Trade Show” was published on CSPdailynews.com. The article accurately states, “The presidents of all 43 7-Eleven Franchise Owners Associations, which represent the interests of nearly 7,000 franchised U.S. convenience-store locations, have voted unanimously not to attend 7-Eleven’s annual convention and trade show in 2018.” These 43 presidents make up the Board of Directors of the National Coalition of Associations of 7-Eleven Franchisees, often referred to as the National Coalition or NCASEF. These FOA presidents have been elected by franchisee members as representatives in matters important to our interests as 7-Eleven franchisees.

Originally founded in 1973 by six franchisees, NCASEF today consists of 43 Franchise Owners Associations (FOAs), located in the 31 states where 7-Eleven does business. Each regional FOA represents between 15 and 400 7-Eleven franchisee members who pay dues to their local association, and a portion of these dues supports NCASEF activities. This magazine, Avanti, is published by the NCASEF and is sent to every franchised 7-Eleven store in an effort to support and educate everyone, both members and non-members.

Some of the NCASEF’s major objectives are:

• To seek a balanced, constructive, cooperative, collaborative and mutually respectful relationship with SEI.
• To communicate with SEI and with the various FOAs and coordinate efforts to attain a social economic framework that will enhance the brand, enhance franchising, serve the public, and provide fairness and justice for 7-Eleven convenience store franchisees.
• To articulate and advocate in favor of the needs, economic interests and goals of franchisees of 7-Eleven Inc., its affiliates, subfranchisors, successors and assigns.

In the CSP Daily News article, NCASEF Vice Chairman Rehan Hashmi explained that the group has taken the stand to skip the 7-Eleven Experience in response to SEI cancelling the previously scheduled Franchise Advisory Committee (FAC), CEO Roundtable, National Business Leadership Counsel (NBLC) and the Franchisee Merchandising Forum. 7-Eleven cancelled these meetings partly in response to the misclassification lawsuit filed in United States District Court for the Central District of California Western Division (California Case No.: 2:17-CV-7454) on October 12 by members of NCASEF.

A representative for SEI is quoted as stating, “The National Coalition is clearly out of touch with the quality and volume of communications between 7-Eleven and franchisees. The reality is that 7-Eleven postponed two meetings in October involving less than 80 of the over 4,600 franchisees.” The representative went on to state, “7-Eleven Inc. has a long history of consistent and transparent communication with franchisees. In fact, 7-Eleven has spent nearly $1 million dollars developing a best-in-class app built for franchisees which allows them to easily access communications at their convenience.” This is a reference to the 7-Eleven Stores App, which was launched in 2017.

Although the 7-Eleven Stores App certainly upgrades 7-Eleven’s ability to communicate with franchisees more effectively, and provides the ability for franchisees to receive communication outside of the store’s ISP, it is not a substitute for two-way communication. The meetings that were cancelled were committees created by SEI for the purpose of facilitating effective two-way communication. The first of these committees, the NBLC, was created in 2010 as a replacement for the PLC (Presidents Leadership Counsel), which SEI had disbanded. The PLC was a forum where every FOA president was invited to meet with 7-Eleven’s executives and senior management team, and provided an opportunity to communicate issues and obstacles that needed to be addressed.

The NBLC was established after the PLC was decommissioned. The NBLC’s work started in 2011, but unlike the PLC, where the members were chosen by franchisees, SEI created an application process and determined, at their sole discretion, which franchisees to include. I served on the NBLC for six years, from its inception in 2011 until the end of 2016. The NBLC membership is broken into several different committees, each responsible for different work streams. In these committees franchisee members work with SEI stakeholders to tackle various projects through closure and then are provided a new work stream to tackle. There have been changes in the NBLC format since it’s inception, including the creation of the CEO Roundtable.

The CEO Roundtable was created for the purpose of setting the agenda for the NBLC. The CEO Roundtable consists of 14 franchisee leaders selected by SEI (not necessarily elected franchisee leaders) who periodically meet with the CEO and other key senior executives and identify top priority franchisee issues for which solutions must be expedited.

The Franchisee Merchandising Forum was a separate committee created in response to merchandising concerns voiced by CEO Roundtable members that began working in June 2017.

The Franchise Advisory Committee (FAC) was designed by SEI to gather feedback from franchisees in preparation for the 2019 Franchise Agreement. This important committee consisted of 13 franchisees who met with SEI senior management, including Larry Hughes, Vice President Franchise Systems, and Michael Crist, Director Franchise Agreement Development. NCASEF leadership did have some input into the membership, having nominated half of the committee members. I was one of two members added after the initial few meetings.

The committee was given four objectives for the 2019 Agreement: 1) Balanced Economics, 2) Protect the Brand, 3) Independent Contractor Status, and 4) Marketable Agreement. Each meeting consisted of two parts. Part 1 covered presentation of materials and discussions relating to one of the four FAC objectives, and the second part consisted of a review of any number of 27 points submitted by the NCASEF. The points selected for review would typically be related to the objectives covered in the first part of the meeting, with SEI key stakeholders presenting information and open discussions to get a better understanding of franchisees’ requests and reasons for the requests.

The FAC meetings were hosted in Dallas and the committee met consistently every month. The last meeting was June 28-29 in Dallas, and subsequent meetings were scheduled for the end of August, the end of September and again in November. Committee members were notified on an August 19 conference call that there had been no new developments from our June meeting, and the committee would stand down and would be notified if and when we would reconvene. The change in the FAC’s meeting schedule was made prior to the October 12 filing of the lawsuit.

The FAC members expressed our desire to continue to meet. In fact, the FAC members planned a meeting in Dallas in early September and invited SEI to attend. SEI FAC members, as well as Chris Tanco and Greg Franks, did attend a portion of this meeting. Unfortunately, not all of the franchisee members were able to attend, and I was among those not attending due to Hurricane Irma. The FAC has not had any further meetings.

The invitations franchisees across the country received to attend the Agreement Update Town Hall meetings was the first communication franchisees received regarding 7-Eleven’s intent to present a 2019 New Agreement update. The FAC had no prior knowledge or input into these meetings or the list of items that were presented.

On November 13 Senior VP Larry Hughes sent an email to all franchised stores assuring us, “SEI has every intention of resuming the NBLC,” and “The NBLC has proven to be a powerful mechanism for organizational problem-solving and Franchisee-Franchisor collaboration.” The communication mentions re-launching the NBLC, the CEO Roundtable and the Franchisee Merchandising Forum in early first quarter 2018, but makes no mention of the FAC.

Members of the CEO Roundtable—who are also FOA Presidents, Vice Presidents and some FOA Board members and are therefore part of the NCASEF—were told that they would no longer be participating in the CEO Roundtable. Seven franchisee leaders, half of the CEO Roundtable, will be replaced for the next meeting, which was scheduled for December 14—much sooner than the first quarter 2018 timeline previously communicated. Of the participants removed from the Roundtable, six were also part of the FAC. Two of the replacements selected by SEI for inclusion in the CEO Roundtable were also part of the FAC.

These events and decisions are very troubling. Cancelling the previously scheduled meetings of committees that SEI designed specifically for facilitating communication would appear to fly in the face of their proclaimed “long history of consistent and transparent communication with franchisees.” It should also concern all franchisees that SEI would remove elected franchisee leaders from these committees when they reconvene. Does SEI believe these franchisees are out of touch, as they claim the National Coalition is? Keep in mind that the individuals being removed from these committees were chosen by SEI to serve as franchisee leaders on these committees from a large pool of available franchisee applicants. Some of these franchisees have served on multiple SEI committees and were asked to take on additional responsibilities, such as NBLC Committee Co-Chairs.

Each and every franchisee needs to understand the current situation. It is more important than ever to be an engaged member of your local FOA, and through your FOA, a member of NCASEF. Attend as many meetings as you can to stay informed. Communicate with your FOA leadership and members and share your thoughts. It is more important than ever to make our collective voices heard. If you are a multiple, please register all of your stores and work to identify and recruit franchises in your area who are not members. Offer to have them join you at your next FOA meeting and introduce them to your FOA leadership and other members. Our strength is in our numbers, our UNITY and our SUPPORT of our common good.