A national coalition of franchisees and lawyers has called on the Federal Trade Commission to investigate 7-Eleven, The UPS Store, Subway, Supercuts and the franchising practices of other companies.
Leading the investigation is an association of 7-Eleven’s own franchisees. The National Coalition of 7-Eleven Franchisee Associations represents 40 associations numbering in the hundreds in 30 states.
7-Eleven and Dickey’s did not immediately return a request for comment on Tuesday.
The petition alleges that franchise agreements have evolved to emphasize the rights of franchisors at the expense of franchisees, allowing large corporations to act in a way that “ignores the legal and financial interests of the franchisee.”
He calls on the FTC to collect detailed 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 describes more than 100 data points on each company that the commission is expected to collect. Some of the targeted data includes the distribution of franchise company ownership, fees charged to franchisees, expenses such as labor costs, and even the profitability of customer loyalty programs.
The petitioners have said they hope an investigation into companies’ franchising practices will lead to more regulation in the franchise industry.
“This petition provides the FTC with an opportunity to play a proactive role in assessing the franchise industry,” legal consultant Keith Miller of Franchisee Advocacy Consulting, who also collaborated on the petition, said in a statement.
“We call on the FTC to take a comprehensive look at the imbalance of power in our industry today.”
The petition comes a week after FTC President Lina Khan sent a memo to committee staff outlining her political priorities under the Biden administration. In the note, she said the commission would focus on commercial contractual practices that “constitute unfair competitive methods or unfair or deceptive practices”, specifically designating franchisees as a vulnerable party.
7-Eleven is one of the largest franchisors in the United States and regularly runs into trouble with franchisees over the length of its franchise contracts. In 2018, the president of NCASEF said that the relationship between store owners and Irving Headquarters was “at an absolutely low point in the history of 7-Eleven in the United States.”
The company was criticized by the FTC earlier this year when the commission called 7-Eleven’s $ 21 billion deal to acquire the Speedway convenience store chain from Marathon a violation of antitrust law. 7-Eleven said at the time that it was working with the FTC on a settlement agreement that could include the divestiture of some stores.
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