There has been a dramatic spike in the number of 7-Eleven franchises for sale in the past month, according to 7-Eleven’s franchising website, after serious allegations of employee underpayments and a cover-up by head office were made public.
There were 50 franchising opportunities with 7-Eleven in the same week ABC’s Four Corners program aired, according to 7-Eleven’s franchising website.
In the past four weeks that number has soared to as many as 81 stores nationally, with the biggest leap in Victoria.
In the first week of September, the website was advertising 28 franchising opportunities with 7-Eleven in Victoria – however that number currently sits at 45.
The website also shows there has also been a massive jump in the number of 7-Eleven franchises for sale in New South Wales.
Four weeks ago there were just four 7-Eleven franchises advertised on the website, but today there are 12 franchising opportunities listed in NSW.
Above: franchising opportunities advertised in the first week of September. Below: those advertised today.
However a spokesperson for 7-Eleven told SmartCompany there were a total of 81 franchises available for sale on 1 September, the day after the Four Corners story aired, with 83 franchises for sale the week after.
The figures given to SmartCompany say there were 44 franchises for sale in Victoria on 1 September, with 43 for sale by 23 September.
Meanwhile, 7-Eleven says there were 13 stores in NSW for sale at the start of September and 15 for sale three weeks later.
Consumer advocate Michael Fraser told SmartCompany he is being contacted by franchisees who are “financially devastated” because head office is now cracking down on wage payment.
“I’ve seen a number of financials since the Four Corners report and I’m noticing that now these businesses are having to pay the correct wages, the financials are showing negative income as opposed to prior to that where they were making some money,” Fraser says.
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7-Eleven’s founder and chair Russell Withers earlier this month flagged his intention to make “substantial changes” to 7-Eleven’s business model.
This could mean changes to 7-Eleven’s profit split, which has been labelled “unusual” by franchising experts and the founders of some of Australia’s leading franchises.
Fraser says he expects many more 7-Eleven franchisees to sell their business once 7-Eleven reveals how it will overhaul its financial structure.
“There’s quite a few right now that want to sell, but they haven’t got them for sale because they’re wanting to see what this offer is because head office are telling them it’s a great offer,” Fraser says.
“However Russell Withers is in the Senate saying any franchisee found to be underpaying will be terminated. Well, based on what I’m aware of it sounds like he’s getting ready to terminate almost every franchisee that has a business with 7-Eleven.”
Fraser says franchisees have also been hit particularly hard thanks to consumers turning away from 7-Eleven in the wake of the allegations of widespread underpayments.
“I spoke with a franchisee last week that told me he is already seeing goodwill values dropping to almost half of what they were prior to Four Corners airing,” he says.
“Although I don’t condone the underpayment, I can’t help but feel sorry for the franchisees that say they were sold a dream from 7-Eleven head office, when in reality they bought into a form of modern-day slavery themselves.”
A spokesperson for 7-Eleven told SmartCompany the company receives a “natural peak” of sales for its franchises around the new financial year.
*This story was updated at 3.15pm on Tuesday to include figures given to SmartCompany by a 7-Eleven spokesperson.