7-Eleven rejects bribery allegations

7-Eleven was caught in the headlights last week over alleged witness bullying prior to the parliamentary inquiry hearing on 14 September.

The convenience chain’s chairman Michael Smith, CEO Angus McKay and Braeden Lord, GM of retail operations, appeared before the Senate committee investigating the effectiveness of the Franchising Code of Conduct.

7-Eleven vigorously rejected allegations that franchisees due to appear as witnesses in previous hearing sessions had withdrawn because of undue influence from the franchisor.

“I emphatically reject the allegation. It is utterly false and without foundation. It is a gross insult to the integrity of my team and the franchisees concerned,” said CEO Angus McKay.

Franchisee Paresh Davatia had previously claimed at a June public hearing of the inquiry that the convenience chain had, just days before, bought back stores from witnesses to secure their silence.

However McKay said store buy-back negotiations had proceeded as normal and while the timing of two out of four buy-backs was regrettable the pace had been “determined by the franchisee and their particular circumstances.”

He also questioned the motives of Davaria, who is the lead plaintiff in a class action against the chain.

“It is this same person who came before the inquiry back in June and alleged that 7-Eleven bought the silence of the Association’s leaders that has now also approached us twice in the last month to buy-back his own stores. As such, we question the motivation and credibility behind his claims.

“Not a shred of evidence has been provided to substantiate the claim. Reports of a statutory declaration containing nothing more than hearsay or ‘shop gossip’ on a chat app defy credibility,” he said.

The statement outlined that it is normal business practice for 7-Eleven to buy-back franchised stores, with about 20 similar transactions since mid-2015.

7-Eleven used the Senate hearing to reiterate its proposed reforms to improve regulations including:

  • A modification to the termination provisions in the Franchising Code of Conduct and the Oil Code to provide franchisors with a right to immediately terminate a franchise agreement in the case of serious non-compliance with Commonwealth Workplace Laws or Fair Work Instruments, as defined in the Fair Work Act
  • A harmonisation of the relevant termination provisions of the two Codes
  • Greater disclosure requirements

McKay also backed Professor Andrew Terry’s call for a franchise industry ombudsman.