Two 7-Eleven franchises in New South Wales have had their franchise agreements terminated as a result of short changing employees.
Inside Retail reports stores are being investigated after franchisees were found to have threatened international students with deportation if they exposed their underpayment at work.
“Effective today, 7-Eleven has taken operational control of the stores concerned and existing staff will be offered ongoing employment,” said interim CEO, Bob Baily, on Tuesday.
Previous company chairman Russ Withers, and chief executive, Warren Wilmot, resigned in September after the allegations were publicised. Withers; founder of the 7-Eleven business, remains chairman of the holding company that owns 7-Eleven and Starbucks stores nationwide.
“There are no winners in circumstances where people are underpaid,” said Baily.
“7-Eleven does not condone the underpayment of franchisee employees and is doing everything it can, including working with franchisees, to stamp out the practice.”
This is not the first rip off debacle from a 7-Eleven franchise.
In order to “incentivise” ethical practices, the convenience chain declared that more profits would be given to franchises that did the right thing.
Audits are still being run of stores to ensure franchisees play by the rules. 7-Eleven have set up an independent board to confidentially gather claims of underpayment
7-Eleven is still the focus of a national Investigation by the Fair Work Ombudsman into claims of ingrained underpayments and inaccurate record-keeping practices.
What you need to know about franchise agreement terminations:
Common grounds for termination
The common grounds for franchisee agreement terminations are generally if the franchisee fails to pay money due under the agreement, such as fees/royalties to the franchisor or rental payments to the landlord. However, there is a termination process in the form of a breach notice that must be undertaken first.
The franchisor must send a breach notice to the franchisee which sets out:
- the clauses of the franchise agreement which the franchisee has breached
- the particulars of the alleged breaches
- what the franchisee needs to do in order to remedy the breaches
- the timeframe in which the franchisee must remedy the breaches (a reasonable time that does not exceed 30 days)
- that the franchise agreement will be terminated if the franchisee fails to remedy the breaches within that timeframe
Grounds for immediate termination
An agreement can be terminated if the franchisee:
- voluntarily abandons the franchised business
- becomes bankrupt
- operates the franchised business in a way that endangers public health and safety or is fraudulent in connection with the franchised business
Read more about Franchise agreement terminations – what you need to know