Convenience store 7-Eleven is facing a company crisis amid claims the franchise severely underpaid a number of workers, and expected them to work twice as long.
According to reports in SBS and the ABC, 7-Eleven is also being wrung out for its treatment of overseas students. The Aussie retail chain was the subject of a joint investigation by Four Corners and Fairfax, with the full investigation expected to air tonight.
The former chairman of the ACCC (Australian Competition and Consumer Commission) Allan Fels said illegal action was the business model of franchises.
“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,” said Fels, according to the ABC. “I don’t like that kind of model.”
It’s a PR nightmare for the team, so B&T turned to the communication pros in the industry to find out what the franchise should do.
The Short Term
It’s paramount the brand puts a face to its statements, argued Anthony Tregoning, a Fellow at PRIA (Public Relations Institute of Australia).
“The organisation is particularly vulnerable as it has refused to offer media a spokesperson, preferably the CEO, to defend its corporate governance procedures,” he said. “On its website, its media releases are unsigned and unattributed.
“As 7-Eleven is now ‘on its back foot’, it will need to take some radical action to regain the initiative and secure public support.”
The franchise needs to launch a full investigation into the issue to show it’s actually acting on allegations and media coverage, advises many PR pros.
“7-Eleven needs to be seen to be taking immediate action and cancelling agreements with those franchisees proven to be underpaying workers,” said Jackie Crossman, CEO of Crossman Communications.
“It must demonstrate a zero-tolerance strategy if it is to gain any sense of credibility.”
Similalry, director of Agent99 Public Relations, Sharon Zeev Poole, said the brand needs to launch its own investigation, and have a company face and spokesperson to handle the crisis.
“Periodic reports of how this situation has improved shared with media will ensure that 7-Eleven will be seen to be taking the matter seriously and is doing all in its power to eradicate it,” said Zeev Poole.
“Ultimately, it’s about transparency and making sure that staff are being cared for. It can’t just be lip service or a PR spin.”
It would be worth taking some independent expert advice to add further credibility, said James Wright, MD of Red Agency and group chief operating officer for Havas Worldwide Australia.
“They need to look at much more regular and robust processes of how they monitor and check their franchisees,” he advised. “If this is indeed widespread and endemic then the parent company has to be seen to take responsibility for that as ignorance of the problem is no defence.”
The Long Term
7-Eleven in Australia is a privately owned company by the Withers and Barlow family, according to the business’s About Us page, with a licence to operate the chain outside the US-based 7-Eleven franchise.
Crossman suggested the US brand owner of 7-Eleven should step in and “take back ownership of the Australian operation”.
“They will then need to review the franchise agreement to make it sustainable, get rid of stores that aren’t or can’t make a buck, cut loose any that have been rorting workers,” she said.
“The question then is how many stores would be left and is it worth rebuilding.”
Red Agency’s Wright added: “At some point in the near future, they should also look at doing something meaningful in the employment and fair play sector that creates a pathway to a leadership position in the next few years. That may be a way off but as the largest convenience store chain with such a diverse workforce that creates value in our communities, they should be thinking that way.”
The Company response
Clearly recognising it needed to respond, 7-Eleven in Australia released a statement on Saturday saying it was “extremely disappointed” some of its franchises were not abiding by the law. However, the statement is not attributed to anyone in the company.
“We are deeply concerned about the personal impact on affected employees or former employees, and the damage such actions cause to franchisees who are trusted, reliable and responsible small business owners, meeting their obligations as employers,” said the statement.
“Our business does not condone the action of any franchisee who does not meet their employer obligations, and we do not and will not hesitate to take any appropriate action, under law and within the franchise agreement, where a franchisee is found to be in contravention of the law.”