7-Eleven responds to employee underpayment claims
7-Eleven Australia has responded to claims franchisees have been underpaying workers saying an independent panel will be set up to investigate.
The convenience store chain is organising the panel after a joint investigation between ABC”s Four Corners program and Fairfax featured an anonymous source alleging some franchised stores were underpaying workers in order to keep their businesses afloat.
The source claimed that the 7-Eleven head office knew about the situation for years but did little to nothing about it.
The franchise has a unusual franchise style with similarities to a joint venture.
The inside source also said that once 7-Eleven head office found out about the joint investigation by the ABC and Fairfax it went into “panic mode”. It is alleged that store audits were increased and that internal documents reveal some stores as not paying employees correctly.
In response to the investigation 7-Eleven CEO Warren Wilmot said an “eminent and qualified Australian” will chair the independent panel which will investigate underpayment claims, authorising payment when wrong-doing has occurred.
“The viability of the 7-Eleven system is in no way, never has been and never will be, dependent on franchisees underpaying their staff,” Wilmot said.
“This doesn’t let off the hook any franchisees doing the wrong thing, because we will pursue them to repay any money owed to former or present staff,” Wilmot continued.
7-Eleven said it was seeking co-operation from the Fair Work Ombudsman. It also said even though its stores can make viable profits through following the law, it will refund the franchise fee to anyone who wishes to no longer run a shop. 7-Eleven will also help sell the store.
“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.
Smart Company reported 7-Eleven’s franchise model as more unusual than most, with 57 per cent of gross profits going to the franchisor in exchange for covering costs including rent. Smart Company revealed that in many other models franchisors take less money but do not cover as many costs like rent.
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