7-Eleven under pressure in Australia over wage fraud claims

Convenience store giant 7-Eleven will establish an independent panel to review damaging allegations that its franchisees doctor payrolls and systematically underpay workers in Australia. A joint investigation by the Australian Broadcasting Corporation and Fairfax Media uncovered evidence that many of the 620 franchisee stores nationally were involved in exploiting workers. Allan Fels, the former head of the Australian Competition and Consumer Commission, claimed that under the 7-Eleven model the only way franchisees could make a living was by ripping off their workers.

My impression, my strong impression, is that the only way a franchisee can make a go of it in most cases is by underpaying workers, by illegal behaviour. I don’t like that kind of model.

ACCC former head Allan Fels.

Under the franchise agreement, the head office takes 57 percent of gross profit and the franchisee gets the rest, according to the ABC. Out of its cut, the head office pays the rent – although it owns some stores – and supplies equipment, fittings, and utilities. From their 43 percent takings, the franchisee pays a raft of other running costs including all staff wages, a big expense for a store open 24-hours, seven days a week. In a statement late Monday, 7-Eleven Stores Ltd said it would set up independent panel, chaired by a yet to be named eminent Australian, to examine underpayment claims and franchise agreement terms.

The key factor here is that the panel will receive, review, and process any claim of underpayment, and authorise repayment where this is appropriate.

7-Eleven chief executive Warren Wilmot.

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