7-Eleven Seizes Chicago Stores Over Unauthorized Sunkist

Convenience store giant 7-Eleven has seized at least four Chicago stores following allegations that the franchise owner was selling unapproved merchandise, DNAinfo Chicago reported.

The chain took over stores in the Wicker Park, Lincoln Park, Boystown and Lincoln Square neighborhoods last week. The franchise owner, Jay Rawal, said officials cleared his store's shelves last Friday (Sept. 6) of "the stuff they didn't want me to be selling," including unauthorized Sunkist soft drinks that Rawal stocked at the specific request of customers.

In a statement, 7-Eleven said the franchisee "violated the terms of our franchise agreement." Employees at the stores were all replaced, and by the afternoon of the takeover at least one of the stores was open again. However, the store was unable to sell lottery tickets because the license was in the franchisee's name.

That move by 7-Eleven followed a similar sweep in August, when 7-Eleven stores in the Lakeview, Lincoln Park, Jefferson Park and Portage Park neighborhoods were seized by the chain. Franchisee Frank Fatehali declined to say why 7-Eleven took over his stores, and has hired a lawyer to negotiate with the chain to get them back.

There's no question that 7-Eleven has stepped up pressure on franchisees. The chain has seen a 13 percent sales decline and competition—especially regional competition—is heating up, often by offering products that 7-Eleven store owners can't match because they haven't been approved by corporate headquarters in Dallas. And 7-Eleven has a legitimate concern about store owners stocking items on their own, with allegations that some franchisees don't report the sales to corporate.

But 7-Eleven is also facing legal action from some franchisees who claim the chain is trying to force them out, and from others who say the chain's micromanagement makes it impossible for them to compete.

And while the world's largest convenience store chain wants to get a lot larger in the U.S., a one-inventory-fits-all approach simply isn't likely to work against stepped-up competition. It may be time for 7-Eleven to let franchisees do a little more experimenting at the same time as it increases scrutiny to make sure the chain gets its cut—and early insight into what customers actually want.

For more:

- See this DNAinfo Chicago story

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