Company News

FTC Commissioner Vows to Safeguard 7-Eleven Franchisees' Interests

Addresses Speedway deal, franchise rule, other coalition concerns at national convention; 7-Eleven responds
National Coalition of Associations of 7-Eleven Franchisees (NCASEF)

ORLANDO, Fla. — Two months after chastising 7-Eleven Inc. for moving too quickly on closing its $21 billion acquisition of the Speedway convenience-store chain, Federal Trade Commission (FTC) Commissioner Rohit Chopra promised 7-Eleven franchisees he would “safeguard operators of franchised businesses from abusive practices by franchisors.”

Chopra addressed members of the National Coalition of Associations of 7-Eleven Franchisees (NCASEF) at the group’s 45th annual convention in Orlando, Fla., on Aug. 4.

Under Chopra’s leadership, the FTC has been soliciting comments on the franchise rule that enforces laws prohibiting unfair business practices, said NCASEF. For several years, the group has been voicing its concerns over the way 7-Eleven Inc. exerts control over its franchise owners, it said.

Owners of franchised businesses do not have the right to file private legal action against a franchisor for violation of the franchise rule, which means they must rely on the FTC to protect their interests, according to NCASEF.

“It is refreshing to hear Commissioner Chopra’s commitment not only to enforcing the franchise rule, but also expanding the rule to include the substance of the relationship after we buy in.  Most of the time, bad things happen after franchisees sign their franchise agreement,” said Jay Singh, national chairman of NCASEF, Universal City, Texas, an elected, independent body representing the interests of more than 7,400 7-Eleven franchised locations in the United States.

In a statement provided to CSP Daily News, 7-Eleven Inc. said it “follows all local, state and federal laws including the franchise rule. All 7-Eleven franchisees are independent business owners who are solely responsible for the day-to-day operations of their stores, including exercising complete control over hiring/supervising/firing employees, ordering and product assortment, pricing decisions and more.”

The company added, “7-Eleven Inc. is committed to supporting franchisees going beyond what is included in the franchise agreement. Since the start of COVID-19 pandemic, we have committed more than $185 million in incremental support for franchisees.”

Chopra’s talk was facilitated by Keith Miller, the principal of Franchisee Advocacy Consulting, Portland, Ore., and a Subway franchise owner, who also addressed the convention. He said attendees were pleased to learn Chopra was aware 7-Eleven franchisees are not guaranteed the lowest cost of goods from the franchisor-controlled supply chain because 7-Eleven Inc. accepts money from vendors.

“The message to franchisees was that greater scrutiny will reign in some of 7-Eleven’s practices, whether they make changes on their own or they are forced to do it,” said Miller.

“7-Eleven Inc. is committed to supporting franchisees, including striving to obtain the lowest cost of goods,” the company said in its statement. “As 7-Eleven shares in the gross profits with franchisees, it also shares in the cost of goods sold. Any rebates or other allowances received by 7-Eleven from vendors are shared with franchisees in line with the gross profit split. In fact, an independent group of franchisees has the opportunity to review all vendor contracts. The best way for 7-Eleven to increase profits is to secure the lowest cost of goods for franchisees. We know that everyone wins when franchisees have the lowest cost of goods—customers, Franchisees and 7-Eleven Inc.”

7-Eleven contends that its acquisition of Speedway from Findlay, Ohio-based Marathon Petroleum Corp. was legal, and the companies satisfied all of the required closing conditions. “7-Eleven, Inc. worked closely with members of the FTC staff to develop a plan to enhance consumer protection,” the company said. “This plan included the divestiture of 293 stores. The FTC commissioners unanimously approved the plan including Commissioner Chopra, and we are currently executing the plan to the FTC’s satisfaction.”

The FTC’s consent order allowing 7-Eleven Inc.’s ownership of Speedway required 7-Eleven Inc. to divest 293 of its locations. But Chopra told the National Coalition he remains concerned the deal may still be harmful to consumers.

Chopra also acknowledged to franchisees that the FTC is closely monitoring investigations by other jurisdictions, both in the United States and around the world, into 7-Eleven Inc.’s parent company, Tokyo-based Seven & i Holdings Co. Ltd. “Based on what we heard from Commissioner Chopra, 7-Eleven franchisees should be hopeful the playing field could soon be leveling,” said Singh.

Irving, Texas-based 7-Eleven Inc. operates, franchises or licenses more than 72,800 stores in 17 countries, including more than 13,000 in the United States under the 7-Eleven and Speedway banners.

Members help make our journalism possible. Become a CSP member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Foodservice

Opportunities Abound With Limited-Time Offers

For success, complement existing menu offerings, consider product availability and trends, and more, experts say

Snacks & Candy

How Convenience Stores Can Improve Meat Snack, Jerky Sales

Innovation, creative retailers help spark growth in the snack segment

Technology/Services

C-Stores Headed in the Right Direction With Rewards Programs

Convenience operators are working to catch up to the success of loyalty programs in other industries

Trending

More from our partners