Watching the ABC last night (yes, we all eventually turn into our own parents), there was a case put forward suggesting the 7-11 business model works in Australia by franchisees underpaying their workers. The case was supported by various personal accounts and observations, predominantly made by current and former 7-11 employees. It is hard to imagine that this practice could be as wide spread as the ABC claimed and only be coming to light now. Unfortunately the 7-11 franchisor response wasn't presented in the report. It will be interesting to see if this report and the subsequent investigations have any sustained impact on the 7-11 brand and reputation. I guess the answer to this lies in whether consumers flocking to 7-11 value convenience above all else?
A joint Fairfax-Four Corners investigation has found up to two-thirds of the company’s stores could be ripping off workers across the country. “My impression, my strong impression, is that the only way a franchisee can make a go of it in most cases is by underpaying workers,” said former chairman of the ACCC, Allan Fels. 7-Eleven will establish an independent panel to receive and examine claims including underpayment of staff by franchisees and franchise agreement terms. “The key factor here is that the panel will receive, review, and process any claim of underpayment, and authorise repayment where this is appropriate,” said 7-Eleven CEO, Warren Wilmot. “What has happened, has happened on our watch, and we are a company with a proud heritage and a strong reputation, we cannot allow the few to taint the achievements of the many” said Wilmot.