Franchisees petition the FTC to investigate 7-Eleven and other companies | Business

A national coalition of franchisees and lawyers is asking the Federal Trade Commission, 7-Eleven, The UPS Store, Subway, Supercuts, and other companies’ franchising practices to investigate.

At the head of the investigation is an association of 7-Eleven’s own franchisees. The National Coalition of Associations of 7-Eleven Franchisees represents 40 associations with hundreds in 30 states.

7-Eleven and Dickey’s didn’t immediately return a request for comment on Tuesday.

The petition claims that franchise agreements evolved to emphasize the rights of franchisors to the detriment of franchisees and to enable large corporations to act in ways that “disregard the legal and financial interests of the franchisee”.

She calls on the FTC to collect extensive data on franchise business practices from nine major franchisors, including 7-Eleven, Subway, The UPS Store, IHG Hotels and Resorts, Choice Hotels, Experimax, Supercuts, Massage Envy, and Dickey’s Barbecue Pit.

The petition lists more than 100 data points on each company that the Commission should collect. Some of the targeted data includes the breakdown of ownership by franchisees, fees billed to franchisees, expenses such as labor costs, and even the profitability of loyalty programs.

The petitioners said they hope that an investigation into companies’ franchising practices will lead to increased regulation in the franchise industry.

“This petition gives the FTC an opportunity to take a proactive role in evaluating the franchise industry,” said Keith Miller, legal advisor of Franchisee Advocacy Consulting, who also contributed to the petition, in a press release.

“We urge the FTC to fully investigate the power imbalance in our industry today.”

The petition comes a week after FTC chairman Lina Khan sent a memo to commission staff outlining her political priorities under the Biden administration. In the memo, she said the commission will focus on business contract practices that “constitute unfair competitive practices or unfair or misleading practices” and specifically identify franchisees as a vulnerable party.

7-Eleven is one of the largest franchisors in the United States and regularly experiences disputes with franchisees over the terms of their franchise agreements. In 2018, the chairman of NCASEF said the relationship between the shopkeepers and the company’s Irving headquarters was “at an all time low in the history of 7-Eleven in the United States.”

The company came under fire from the FTC earlier this year when the commission denounced 7-Eleven’s $ 21 billion deal to acquire the speedway chain of convenience stores from Marathon as an antitrust violation. 7-Eleven said at the time that it was working on a settlement agreement with the FTC that could include the divestment of some businesses.

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