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Irving-based 7-Eleven′s franchisees petition FTC to investigate the company and others

A coalition of franchisees are fed up with what they call ‘one-sided’ franchise agreements.

A national coalition of franchisees and legal advocates is petitioning the Federal Trade Commission to investigate Irving-based 7-Eleven, Dallas-based Dickey’s Barbecue Pit, 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.

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 Dallas-based 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.

In a statement, 7-Eleven said that it will continue to work with the FTC on any requests and that the company “remains committed to supporting franchisees.”

“This year, 7-Eleven Franchisees are experiencing the strongest increases in sales, margin and gross profit performance in over four years. Less than 5% of stores turned over in 2020, which is consistent with our standard turnover rate for the past 10 years. Since the start of the COVID-19 pandemic, we have provided more than $185 million in incremental support for franchisees as they continue to serve their customers and communities,” the company said.

Dickey’s said in a statement that it also plans to cooperate with any FTC reviews.

“Since we began franchising our brand in 1994, the Dickey family — along with our entire leadership and support team — has been dedicated to creating opportunities for our owner-operators to succeed while maintaining the highest standards for our guests,” the company said.

Dickey’s added that over the past two years, the company has waived franchise fees, created new revenue streams, built new technologies and training programs, and abated royalties for 14 weeks.

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 chairwoman 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.

Un avión Boeing 737 de Southwest Airlines y un Bombardier CRJ de American Eagle, la línea regional de American Airlines, en el Mitchell International Airport de Milwaukee.

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7-Eleven is one of the largest franchisors in the U.S. and has regularly experienced 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. In June, 7-Eleven and Marathon reached an agreement with the commission to divest hundreds of stores as part of a settlement.

Dom DiFurio. Dom is a staff writer covering business news and consumer-focused companies in North Texas. His work has also been published in The Washington Post, USA Today, ESPN Magazine and others, and has been recognized by the Society for Advancing Business Editing and Writing, the Texas Associated Press Managing Editors and Columbia University. /domdifurio @DomDiFurio

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