Franchisees Must Be Involved in Decision Making

Rehan Hashmi, Vice Chairman

The goals of 7-Eleven, Inc. have not always been aligned with its franchisees. Over the years 7-Eleven franchise owners have both praised corporate leadership and felt threatened by it.

Franchisees don’t have a strong voice on brand leadership groups, but continue to participate. At the time of their cancellation, the National Business Leadership Council (NBLC) and the CEO Roundtable were vastly underrepresented by FOA presidents and vice presidents, who are the elected representatives of franchise organizations. These folks have a responsibility to their members to be aware, take notes and report back to their organizations as part of their duties as elected FOA representatives.

The National Coalition of Associations of 7-Eleven Franchisees is the umbrella organization that brings all of the regional FOAs together as a way to level the playing field. When NBLC and CEO Roundtable members are chosen instead of elected, franchisees in those roles can give feedback, but don’t have any responsibility to update their fellow franchisees. Individual franchisees when chosen for these roles don’t have the means to poll their fellow franchisees to bring suggestions and comments to company headquarters, have a productive discussion, and then return feedback to the other franchise owners. If they are not communicating with their fellow franchisee colleagues in an FOA group, how can they represent franchisees? As a franchisee on an NBLC Committee, you go to their meetings and the franchisor picks up the hotel room and pays for meals, and things lean their way a little more. When you’re an independent association executive, your franchisee association pays for the hotel rooms and plane tickets and you go in with more credibility and authority.

The recent action SEI took against the National Coalition—suing us for trademark infringement—is now seen by many as a tactic with three primary purposes: 1) Intimidation of the National Coalition in response to our support of a lawsuit on independent contractor status; 2) Distraction to deter us from our greater mission of protecting franchisee rights; and 3) Retaliation against any franchisees who spoke out against the company’s actions and policies.

Over time we can only hope relations with our franchisor may change from being highly problematic and contentious to productive and uplifting. But things could go the other way entirely. If you’re a franchise association member or officer, when things are contentious you don’t want to do things that lose sight of the fact that you need to work with these folks. On the other hand, when things are calm, you don’t want to become too complacent and forget that tomorrow may bring change and prosperity. So there’s this constant tension of balancing both kinds of relationships because you know they’re not permanent.

Some franchisors collaborate with franchisees to elect some of the members of their most important governing committees while they appoint the others, but our franchisor determines the entire makeup of all working committees like the NBLC. Still, franchisees on these councils have the right to advise, but have no power to effect any changes in the system or to veto the franchisor’s decisions.

All future franchisee advisory councils formed should include franchisees elected by their peers to represent them in Zone Leadership Council (ZLC) meetings and the National Business Leadership Council (NBLC) meetings that connect directly to SEI leadership. Many of our best ideas have come from working sideby- side through this process.

An elected (not selected) NBLC should be an essential part of our 7- Eleven franchise system. It would permit constructive two-way communication between the franchisor and franchisees. A positive culture of “mutual respect and working together” could then be fostered where the franchisor and franchisees seek to evolve the brand for the benefit of the common good and the system as a whole. Rather than characterizing franchisee leaders as good citizens or bad citizens, our franchisor must question why the movement among franchisees to support the latest moves by the National Coalition has developed. What are franchisees’ concerns? Are they legitimate? Why did the franchisees choose this path, rather than using an independent NBLC, CEO Roundtable, and Franchisee Advisory Committee? Where did the breakdown in communications between the franchisee community and the franchisor’s management
and staff leadership occur?

Franchisees believe there is a school of hard-liners in the company that believe any concession to a franchisee association— recognition, responding to a demand or suggestion, or whatever—will be viewed as a sign of weakness and only lead to further demands. The more enlightened approach is to think beyond self-interest; more specifically, what action or decision is in the best interests of the system, as opposed to just corporate or franchisees?

We hope our franchisor moves away from positional bargaining and begins to develop a common-interest approach, in which franchisees realize the company is doing “what is right” even when the decisions are extremely difficult. Otherwise, the differences between franchisees and the company will continue in the “we-they” mode.

In large measure, we now believe the framework for the franchisor/franchisee relationship will be established only by franchisee participation in decision-making, as well as the attitudes and leadership of the franchise organization and the franchisee community. Will the parties act out of fear and self-centeredness, crafting tools of destruction? Or will they approach their challenges in a spirit of hope and possibility, building bridges to draw the parties together?

Over the last 10 to 15 years, the relationship between franchisees and franchisors has tended to favor franchisors because of extreme clauses in franchise contracts. Supporting the National Coalition gives franchisees more power and the ability to talk to our franchisor from a position of strength. It’s more meaningful and productive, and when our voices are being heard we believe much of the reason is independence. “Whoever pays the bills has the power.”