Iconic franchise 7-Eleven is disenfranchising its franchise owners, according to a civil lawsuit filed yesterday in New Jersey.
The suit, which is seeking class-action status, alleges that the Japanese owner of the ubiquitous stores, known for their Slurpee ice drinks, classifies store operators as franchisees “when they are in fact employees,” in order to boost its profits, a legal filing shows.
The suit alleges that 7-Eleven’s practices help it avoid paying costs like minium and overtime wages as well as medical, pension, and other employment-related benefits.
“[7-Eleven] has taken aggressive actions to abuse contractual rights and diminish franchisees’ value in their own investment,” the suit alleges.
Franchise lawyer Jerry Marks, at Marks and Klein, noted that more than 150 US franchisees formed an association to try to combat 7-Eleven’s practices.
The suit comes as the chain’s parent, Seven & I Holdings, run by Toshifumi Suzuki, has been expanding its international footprint and boasts more than 50,000 stores.
7-Eleven was acquired by Seven & I Holdings out of bankruptcy in 1999 when its former owner, Southland Corp., filed a Chapter 11 bankruptcy.