7-Eleven reviews profit split

Seven Eleven logo. 7

Russ Withers, chairman and founder of 7-Eleven Stores, has reiterated the company’s offer to help franchisees exit the 7-Eleven system.

7-Eleven’s profit model is also being reviewing after it was revealed head office takes 57 per cent of a stores’ profit.

“Allegations against the 7-Eleven franchise model have challenged our business from individual store level to the top of our organisation,” Withers said in a statement.

“As the founder and chairman of 7-Eleven Stores Pty Ltd, this stops with me.”

Withers said 7-Eleven is addressing two key issues: underpayment of staff by franchisees and the 7-Eleven franchise model itself.

The first issue has been referred to an independent panel, led by professor Allan Fels and professor David Cousins, supported by Deloitte’s forensic accounting services.

Withers urged 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, 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,” Withers said.

The second issue concerns the viability of the franchise model, which Withers said must evolve.

“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.

“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 who 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.”

A full review of the profit share model is underway, 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.

“These initiatives require detailed consideration and will take time, but they will be realised and I give a personal commitment that this will happen in weeks not months, providing greater safeguards for franchisees’ staff and for franchisees’ businesses,” Withers said.

“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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