Signs of Change in 7-Eleven Franchisee Association

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Signs of Change in 7-Eleven Franchisee Association


DANA POINT, Calif. -- A recent meeting here of the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) resulted in two revelations for the business owners who attended.

CSNews Online reached out to a 7-Eleven franchisee who was present at the Oct. 22-26 meeting and confirmed that fellow franchisee Tariq Khan also attended. Khan announced that he surrendered all five of his 7-Eleven stores on Long Island following an order by the U.S. District Court, Eastern District of New York dated Oct. 10. As a result of this order, the latest action in an ongoing legal battle, Khan vacated his stores three days later on Oct. 13.

According to the document obtained by CSNews Online, Khan was also ordered to preserve all security surveillance images located at the stores, to allow 7-Eleven Inc. to copy all such security images, and to make digital video recordings available to the company for the purposes of conducting a forensic review to attempt to recover any erased surveillance images. In addition, the Court adopted the recommendations of U.S. Magistrate Judge Arlene R. Lindsay, whose Aug. 19 report recommended that 7-Eleven's motion for preliminary injunction be granted and Khan's motion for injunctive relief be denied.

In response to 7-Eleven's allegations of fraud, the Oct. 10 court order stated: "The Court finds that there is more than sufficient evidence of fraud in this case to warrant termination of the franchise agreements without notice or opportunity to cure because the fraud goes directly to 'the essence of the contract.' Southland, 41 F. Supp. 2d 227, 247. At the hearing, 7-Eleven presented substantial evidence of the Khans’ repeated failure to properly record sales over a period of years. "

As CSNews Online previously reported, 7-Eleven's initial complaint filed this summer accused Khan of siphoning hundreds of thousands of dollars from the company for at least four years. 7-Eleven alleges that Khan, his wife, son and others, diverted cash to buy merchandise inventory from suppliers and never reported the invoices to 7-Eleven. The company is seeking $1 million in damages.

"Mr. Khan stated to many of us that he is still going to continue his legal battle to clear his reputation and recover his stores," said the franchisee, who asked to remain anonymous.

Another important development from this meeting was a change in NCASEF's executive leadership. In an upset election, the two-term incumbent NCASEF Chairman Bruce Maples was unseated by Joe Galea, president of the San Francisco/Monterey Bay Franchise Owners Association (FOA).

Galea is a Santa Cruz, Calif-based franchisee who oversees 200 stores in his FOA. He previously served as the executive vice chairman of NCASEF from 2008 to 2011.

Founded in 1973 by six franchisees, NCASEF today consists of 40 FOAs, located in the 30 states where 7-Eleven does business. According to the NCASEF website, each FOA sends two representatives, a president and a vice president, to National Coalition Board of Directors meetings, which take place four times a year.