Small business, labor join together on franchises

It may seem nostalgic to think that small businesses and the people they employ could work together for the strength of our communities, but that old-fashioned idea is making a comeback because giant corporations like 7-Eleven are threatening the survival of both local franchise owners and workers in our communities.

That’s why 7-Eleven store owners are among the hundreds of franchisees who have partnered with the workers of the Service Employees International Union in California to support AB 525 (Holden).  AB 525 would ensure franchise businesses have the basic fairness they need to succeed and keep the one million people employed by the franchise sector on the job in our state. After receiving bi-partisan support in the state Assembly, the bill faces its fate in the State Senate this month.

A survey of 1,100 franchise owners in fast food, convenience stores and other sectors released in April found our experience with 7-Eleven is hardly unique.

7-Eleven owners pour their lives and life savings into building local businesses, only to have that hard work threatened as 7-Eleven increasingly puts the squeeze on franchise store owners, and making it increasingly impossible to invest in workers.

Over the last decade, 7-Eleven’s corporate headquarters has imposed arbitrary new costs and fees on franchise store owners, such as transferring the cost of credit card processing onto franchisees.  Any day they can change franchise agreements, so store owners have no stability on which to build a successful business.  For example, the company unilaterally decided to change the way gas sales are divided, so rather than receiving a share of gross profits, owners now receive a drastically reduced flat rate that doesn’t even provide enough revenue to maintain their facilities.

Some of the corporate mandates feel more like punishment than a business decision.  7-Eleven is imposing a new security system on stores that enables corporate inspectors to see and even listen into stores remotely.  Most upsetting is that the company can take away businesses for small infractions of company policy and retaliate against owners who speak out about problems – or for no reason at all – when contracts are up.  Owners have no guarantee they can keep the businesses they’ve built over their whole lives, or keep the doors open for workers.

A survey of 1,100 franchise owners in fast food, convenience stores and other sectors released in April found our experience with 7-Eleven is hardly unique. Dissatisfaction with franchisors — the parent corporations of franchise businesses – is widespread, and retaliation against franchise owners who speak out about problems is frequent.  More than half of franchisees say they can’t earn a living from their business.  Four in 10 reported threats of having their franchise agreements terminated for taking actions they thought were appropriate for their business, and nearly 20% said their franchisor increased the frequency of inspections after the franchisee raised questions or spoke out about problems.

AB 525 restores some basic fairness to small business owners in the franchise sector.  The bill protects entrepreneurs against losing their businesses during the term of the franchise agreement for minor violations of company policy, and gives them a chance to pass stores onto qualified family members – the American dream of business ownership. AB 525 also prevents 7-Eleven and other franchisors from punishing franchise owners for joining franchise associations.

All small business owners and workers expect is a fair shot to build our businesses and have jobs that support our families. AB 525 simply ensures there is a fair balance between franchisors and the local business owners so this sector can create the jobs communities count on.

Ed’s Note: Jas Dhillon owns 7-Eleven stores in Sylmar, Pacoima, Porter Ranch, Woodland Hills and Calabasas and is Chairman of the California 7-11 Franchisee PAC. Jon Youngdahl is the Executive Director of SEIU California, which represents over 700,000 workers in the state.

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