The Federal Trade Commission (FTC) has been petitioned by a national coalition of franchisees and legal advocates to investigate the franchising practices of 7-Eleven, Subway, Supercuts, Dallas-based Dickey’s Barbecue Pit, and other companies. An Irving-based 7-Eleven is among those who petitioned the FTC.
The National Coalition of Associations of 7-Eleven Franchisees, which represents 40 associations across thirty states, is leading the push for the investigation.
According to the petition, prominent companies have acted in ways that disregard the legal and financial interests of the franchisee because the franchise agreements have evolved in a way that put an emphasis on the rights of the franchisors to the detriment of franchisees.
The petitions request that the FTC gathers extensive data on franchise business practices from nine prominent franchisors. The franchisors in question are 7-Eleven, Subway, The UPS Store, Massage Envy, Dallas-based Dickey’s Barbecue Pit, IHG Hotels and Resorts, Choice Hotels, Experimax, and Supercuts.
The petitions highlighted over a hundred points of data on each company that it wants the FTC to collect. Targeted data includes franchising companies’ breakdown of ownership and the fees charged to franchisees.
Following the petition filing, 7-Eleven released a statement saying it will continue to work with the FTC on any request made. The company also said in the statement that it “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,” the company said in the statement. “Less than five percent of stores turned over in 2020, which is consistent with our standard turnover rate for the past ten years. Since the start of the COVID-19 pandemic, we have provided more than $185M in incremental support for Franchisees as they continue to serve their customers and communities.”
Legal consultant Keith Miller of Franchisee Advocacy Consulting said in a release that the petition will provide the FTC the opportunity to “take a proactive role in assessing the franchise industry.” Miller also collaborated on the petition.
“We are requesting the FTC look broadly at the imbalance of power in our industry today,” Miller said.