National 7-Eleven Franchisee Coalition Calls for Federal Oversight of Franchising Model

SAN ANTONIO — The members of the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) are turning to Congress in its bid to get better protection for their franchise investment.

The coalition said its members urged federal lawmakers to strengthen federal oversight of franchising to ensure independent operators of franchised businesses like convenience stores and quick-service restaurants are not subjected to contractual terms that are inherently unfair, unconscionable or potentially predatory.

"Our message to members of Congress is that the playing field is slanted in favor of franchisors because of the heavily one-sided way franchise agreements are written. These franchise agreements reflect the overwhelming imbalance of contractual and financial power wielded by franchisors," said NCASEF Chairman Jay Singh.

"We believe that the Federal Trade Commission's Franchise Rule needs to be strengthened in order to better protect the interests of men and women who invest in buying a franchised business," he added.

Singh joined members of NCASEF's executive board and franchise owner association leaders from across the United States in Washington, D.C., to bring their message to Capitol Hill.

NCASEF is an elected, independent trade association representing more than 7,000 7-Eleven franchise owners in the U.S. Its leadership met with senior staff members of the House Education and Labor Committee and with their home-state congressional delegations. They detailed ways 7-Eleven Inc. (SEI) treats its franchisees as employees instead of owners, and asked lawmakers to examine whether the agreements franchisees sign with SEI more closely represent an employment contract than a franchise agreement, according to NCASEF.

The coalition's members also raised concerns of franchisees in Japan, where a shortage of service labor has created friction over keeping stores open 24 hours day, seven days a week because franchisees are being pressed to work more than 100 hours a week, or close overnight and violate their franchise agreement.

Many are concerned the U.S. labor shortage could lead to a similar situation here, the group added.

Franchisees also produced a report from Australia's Parliamentary Joint Committee on Corporations and Financial Services, which detailed alleged instances of franchisor abuse in that country by 7-Eleven and other major brands.

"We have many times reached out to our franchisor in an effort to establish a good faith dialogue based on mutual respect and transparency, but, unfortunately, we have not seen a positive response," Singh said.

NCASEF holding its May board meetings in Washington, D.C., so it can provide updates to lawmakers, added NCASEF Vice Chairman Michael Jorgensen.

"We believe we can make real progress to better balance the franchise relationship when we go in and explain to members of Congress and their staffers how our business works. It is important for them to understand we are the ones who invest in local communities, provide jobs and pay local taxes, not the brands themselves," Jorgensen said.