7-Eleven faces scrutiny in Australia for alleged exploitation of workers by franchisees

Convenience store giant 7-Eleven will establish an independent panel to review damaging allegations that its franchisees doctor payrolls and systematically underpay workers in Australia.

A joint investigation by the Australian Broadcasting Corporation and Fairfax Media uncovered evidence that many of the 620 franchisee stores nationally were involved in exploiting workers.

Allan Fels, the former head of the Australian Competition and Consumer Commission, claimed that under the 7-Eleven model the only way franchisees could make a living was by ripping off their workers.

“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. I don’t like that kind of model,” he told the two media groups.

Under the franchise agreement, the head office takes 57 per cent of gross profit and the franchisee gets the rest, according to the ABC.

Out of its cut, the head office pays the rent - although it owns some stores - and supplies equipment, fittings, and utilities.

From their 43 percent takings, the franchisee pays a raft of other running costs including all staff wages, a big expense for a store open 24-hours, seven days a week.