7-Eleven Stores Chairman and founder addresses underpayment claims

Chairman and founder of 7-Eleven Stores Russ Withers has released a statement addressing the underpayment of staff by franchisees, saying that the company is addressing these issues and is committed to making things right.

Mr Withers said allegations against the 7-Eleven franchise model have challenged its business from individual store level to the top of the organisation and, as founder and chairman, this stops with him.

“I accept that responsibility and have directed my board and senior executive that we must fix this,” he said in the statement.

“Our franchise business model is based on trust and mutual benefit. I am deeply disappointed and dismayed that some people with whom we are in business have abused that trust.”

The company is urgently addressing two fundamental issues, the first of which is the underpayment of staff by franchisees.

7-Eleven has funded and established an independent panel, led by Professor Allan Fels with Professor David Cousins, supported by Deloitte, who will be providing forensic accounting services.

Anyone who works or has worked for a 7-Eleven franchisee, and has been underpaid or has participated in any activity leading to their underpayment, is urged to contact the panel on 1800 619 802 or online at www.7elevenindependentpanel.deloitte.com.au.

“The panel’s terms of reference are designed to protect confidentiality, to assess claims of underpayment and, where determined, make good on that underpayment,” Mr Withers said.

The second issue is that of the 7-Eleven franchise model. Mr Withers said 7-Eleven operates a franchise system that has evolved over almost 40 years, but that it’s clear that they must take another evolutionary step.

“This week, I have met 7-Eleven franchisees from Victoria, NSW and Queensland to contemplate substantial changes to better reflect our mutual obligations, ensure compliance and incentivise the positive behaviours required under our franchise agreement,” he said.

“I have provided my commitment to fund the development of an enterprise bargaining agreement for interested franchisees, following a specific request to do so from the franchisees themselves. I am fully committed to making further changes that I believe our franchisees will support, in addition to the recently announced increase in the minimum income guarantee.

“I have reaffirmed our commitment to any franchisee that no longer wants to participate in the 7-Eleven system: we will refund the franchise fee and help to sell any store where a goodwill payment has been made.

“Senior franchisees are already collaborating to develop a 7-Eleven franchisee charter, a mandatory commitment beyond the terms of the franchise agreement.

“Further safeguards are in train, including a full review of the profit share model, changes to which will be offered in return for the requirement for all franchisees to utilise the 7-Eleven corporate payroll system, and the introduction of external audit of compliance to meet all obligations under law and the franchise agreement.

“I have said it before, and I will say it again: what has happened, happened on our watch, and it is my commitment as founder and chairman that it will be made good.”

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