7-Eleven Legal Issues Cast Shadow on Franchisee Convention
Annual meeting anything but business as usual
LAS VEGAS -- Competition and challenges with tobacco and the economy will take a backseat next week during 7-Eleven franchisees' annual convention and trade show in Las Vegas. Those standard convenience store industry topics will be replaced with talk of siphoning of funds, identity theft and what might come next in a federal probe into the chain's retailers and 7-Eleven's own efforts to clampdown on rogue franchisees.
"This situation is going to overshadow any other discussions that we have," an East Coast franchisee told CSP Daily News on the condition of anonymity.
The store operator refers to two major claims made against 7-Eleven franchisees:
- In a federal sting, nine franchisees were indicted June 17 in what officials call one of the country's largest cases of human trafficking. The arrested franchisees--Farrukh Baig, Bushra Baig, Malik Yousaf, Ramon Nanas, Azhar Zia and Ummar Uppal in Long Island, N.Y., and Zahid Baig, Shannawaz Baig and Tariq Rana in eastern Virginia--face multiple charges of conspiracy to commit wire fraud, concealing and harboring illegal aliens for financial gain, aggravated identity theft.
- Four days later, 7-Eleven Inc. itself filed a civil lawsuit against a well-known, longtime franchisee, also in Long Island, accusing Tariq Khan, his wife, son and employees of "illicit, wide-ranging schemes" to "secretly and successfully siphon hundreds of thousands of dollars in cash" from his five convenience stores. 7-Eleven claims more than $2.43 million was stolen through inventory shortages. Khan vehemently denies all the accusations, calling the lawsuit a "witch hunt" for being a vocal franchisee activist.
That's likely to hit home with attendees of the National Coalition of Associations of 7-Eleven Franchisees' 2013 Convention & Trade Show, which begins Sunday and continues through Thursday, July 18.
"This will be the most prominent topic of conversation amongst franchisees," one operator said. "There are a lot of hard-working franchisees who are in no way, shape or form involved in wrongdoing. The consequences of all this stuff that's going on is damage to the brand, damage to the reputation, and in some extreme cases, such as in Long Island and Virginia, there may be customers who simply choose not to shop at 7-Eleven because they don't want to support a brand that is facing allegations of human trafficking."
Franchisees said they expect the only "official" discussion of the arrests and lawsuit will be in the NCASEF board of directors meeting rather than in a general meeting session. NCASEF chairman Bruce Maples will address the "State of the Coalition" before the board of directors on Sunday and is scheduled to "discuss the 7-Eleven system" on Thursday, according to a schedule produced well before the June arrests. Maples did not respond to requests to discuss the convention by press time.
Two 7-Eleven Inc. vice presidents are scheduled to speak on the subjects of accounting and social media.
Khan is a former chairman of NCASEF, which makes the convention even more significant.
"This is franchisees from all across the U.S. who normally don't get to speak face to face with each other," said a store operator who plans to attend the show at the Venetian Hotel & Casino. "This is going to be the buzz between franchisees at the convention and the trade show."
Added another, "I think it's going to be a big, big issue."