A group of 7-Eleven franchisees have sued the convenience-store giant, claiming that the chain should be classifying them as employees and owes them benefits and equity in their stores, according to Convenience Store News.
The class-action complaint, filed by five franchisees in U.S. District Court in New Jersey, says 7-Eleven "misrepresents and misclassifies its relation with its store operators as franchisees when they are, in fact, employees," and points to the fact that competitors Wawa and Quick Chek classify their store operators as employees.
Among other things, the franchisees want an order declaring that termination of franchisees without 60 days' notice violates New Jersey's Franchise Practices Act.
The lawsuit comes at what might generously be called a bad time for 7-Eleven. The chain's Japanese owners say they want to triple the number of stores over the next few years, but at the moment 7-Eleven is embroiled in an immigration and human-trafficking scandal involving one group of franchisees, complaints by others that the chain is trying to force them out of business so 7-Eleven can resell their franchises, and a franchisee lawsuit claiming that 7-Eleven just isn't keeping up with competitors.
The complaint also outlines exactly how tight the control is that 7-Eleven exercises over its franchisees. The chain controls pricing, ads and promotional materials, and which vendors and products can be sold, processes franchisees' payroll through its own internal payroll system, handles all store bookkeeping and accounting through 7-Eleven corporate, controls whether franchisees and store managers can withdraw money and even controls store temperatures in many locations from corporate headquarters in Dallas.
Much of that may not really be out of bounds for franchisers. More significant is whether 7-Eleven really should be classing franchise owners as employees—and should be paying overtime, medical and pension benefits, FICA and other state and federal employer taxes.
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