A national coalition of franchisees and legal advocates are petitioning the Federal Trade Commission to investigate 7-Eleven, The UPS Store, Subway, Supercuts and other companies’ franchising practices.
At the helm of the push for an investigation is an association of 7-Eleven’s own franchisees. The National Coalition of Associations of 7-Eleven Franchisees represents 40 associations numbering in the hundreds across 30 states.
7-Eleven and Dickey’s did not immediately return a request for comment Tuesday.
The petition alleges that franchise agreements have evolved to emphasize the rights of the franchisors to the detriment of franchisees, allowing large companies to act in a way that “disregards the legal and financial interests of the franchisee.”
It calls on the FTC to gather 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 outlines more than 100 points of data on each company the commission should collect. Some of the data targeted include franchising companies’ breakdown of ownership, fees charged to franchisees, expenses like labor costs and even the profitability of customer loyalty programs.
The petitioners said they hope that a probe of the companies’ franchising practices will lead to greater regulation in the franchise industry.
“This petition provides the opportunity for the FTC to take 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 release.
“We are requesting the FTC look broadly at the imbalance of power in our industry today.”
The petition comes a week after FTC Chair Lina Khan sent a memo to the commission’s staff outlining its policy priorities under the Biden Administration. In the memo, she said the commission would focus on business contract practices that “constitute unfair methods of competition or unfair or deceptive practices,” singling out franchisees specifically as a vulnerable party.
7-Eleven is one of the largest franchisors in the U.S. and regularly experiences dust ups with franchisees over the terms of its franchise contracts. In 2018, the chairman of NCASEF said that relations between store owners and the corporate office in Irving were “at an absolute low point in the history of 7-Eleven in the United States.”
The company came under fire from the FTC earlier this year when the commission dubbed 7-Eleven’s $21 billion deal to acquire the Speedway chain of convenience stores from Marathon a violation of antitrust law. 7-Eleven said at the time it was working with the FTC on a settlement agreement which could include divesting some stores.
