
The War Inside 7-Eleven - robg
https://www.bloomberg.com/news/features/2018-11-09/7-eleven-is-at-war-with-its-own-franchisees-over-ice-raids
======
rayiner
While there seems like a desire to blame 7-Eleven here, they are completely
right to not want to have their franchisees violating federal immigration
laws. While they are insulated by the contractor-contractee relationship, the
government is humourless about these sorts of things. The violations are easy
to prove (either you have proper employment documentation or you don’t) and
enforcement is politically popular. That’s a bad combination from a corporate
risk management point of view.

~~~
supercanuck
Sounds like immigration is gonna be this generation's "War on Drugs"

~~~
toomuchtodo
Not a lot of good solutions. Can't let everyone in. No one cares for merit
based immigration like other countries (ie Canada) because pro-immigration
supporters want others than the best to have a shot, and no one wants quotas
because it'll clamp down on immigration from countries with large populations
(China and India).

~~~
esotericn
The US was founded on immigration.

> Can't let everyone in.

Why not?

~~~
toomuchtodo
Because it breaks your economy and social fabric (super simplified for the
sake of fitting a decent reply into one short HN comment). We're at the lowest
level of unemployment in decades, and wages are barely moving up. Bringing in
large amounts of unskilled workers (remember, skilled workers get in on merit)
would only delay wages rising (or those unskilled workers are going to be
working under the table in jobs like slaughter houses, dairy farms, and other
hazardous work environments where they will have no recourse when they're
injured or maimed). Some immigrants want to integrate with American society,
but not all (and that is what is expected of you as an immigrant, to share and
hold our values in the same regard citizens do).

Europe has had its fair share of troubles with economic migrants. This isn't
about race, this is about economic systems and the social stability of your
host country. I support an immigration pipeline that gets skilled workers into
the US as fast as possible (most especially in the healthcare field), but
that's not what's on the public policy table.

~~~
esotericn
I feel like a summary of all of that would basically be "nationals matter,
non-nationals don't".

It's not unique to the US at all, I'm in the UK and you know how that's
working out.

If the same barrier existed between the north and south of England, if I
needed a visa to travel/study/work, I wouldn't be on here commenting, and tons
of people would be stuck in crap conditions in the expensive south east
because moving north would be visa-gated.

~~~
vetinari
Citizens do matter, if the country has a social system, like the Europeans do.

You can have either social support system, or open borders, but not both. It
is unfair to those who built the system to open borders and deplete it on
people, who neither built it, nor have intention to continue building it.

~~~
esotericn
This rests on the assumption that immigrants "deplete systems" and that
citizens don't.

They're both just people. If anything, immigrants are generally above-average
in terms of dedication (for one, there's a sampling bias because they've just
travelled across countries to come to yours).

Limiting access to contributory systems (e.g. having a state pension require
contribution) is reasonable, preventing someone from literally setting foot in
a country or trading within a country is not that.

~~~
vetinari
The visa-regime borders are not mutually exclusive with migration either.
Actually, it ensures, that the country gets the well-driven ones.

If you want to see, how to destroy a country fast, have look at the UN Global
Compact for Migration. Social service-wise, it binds the countries to provide
more for immigrants (even those entering illegally) than for their own
citizens!

------
lotsofpulp
Are these claims below true? I was under the impression that a in a franchisor
- franchisee relationship, the franchisee owns the business, and they are
paying the franchisor to use the brand according to whatever standards are
agreed upon. But I've never heard of a franchisor being able to "take over" a
business, or do payroll for a franchisee. I've only ever heard of a a
franchisee having to stop using the franchisor's name and possibly paying some
monetary penalties as defined in the franchising agreement, but what's
described below sounds crazy.

> Store owners found in violation of immigration law could be in breach of
> their franchise agreements. And as they well know, 7-Eleven has the
> contractual right to take back a store from someone who’s violated his or
> her agreement.

>An accumulation of four breaches in two years can give the company cause to
terminate an agreement and take over the store.

>Store owners are required to deposit all sales receipts into a 7-Eleven bank
account. The corporate payroll department in Dallas reviews time sheets for
each employee, deducts taxes, and sends workers their pay, sometimes on debit
cards that don’t require a bank account. Franchisees’ earnings are deposited
in their personal bank accounts.

~~~
tomschlick
Yes this is very common. I know McDonalds and Chick-fil-a both have clauses
that if their operators refuse to comply they can shut down and replace them.
Usually the building/land the stores are located on are owned by HQ as well so
they have options on that end to revoke leases if need be. I wouldn't be
surprised if 7-11 has the same setup.

~~~
lotsofpulp
I always assumed franchised businesses weren't owned by the brand that was
franchising. Sounds like a terrible deal for the franchisee if all they're
doing is renting a license to operate a business and not gaining any equity. I
thought the whole point was so that the could work and gain a bit of equity in
their business while using the marketing and quality assurance of the brand
they franchise.

~~~
bluGill
That should be the idea, but the brand has requirements. When you go to a
McDonalds and order a burger you know what it will taste like. The reason you
know that is McDonald's requires all franchises to do quality control. I don't
know the exact arrangement, but probably the franchise is not allowed to
source their raw materials elsewhere. If a McDonald's burger doesn't taste
right they will take action up to taking away your franchise rights - I've
never heard of this happening, but they have the right to protect their brand
in this way.

When you buy a franchise you get a territory. You know you will not have to
compete with anyone else. If the brand thinks it would be good to have a store
a few blocks from yours they will either offer you the new store first, or
give you a guarantee that your business won't suffer for the competition.

While there is risk, if you buy a franchise and work hard it is a path to a
nice life. You won't become richest person in the world, but you should be
able to get to upper middle class. The first 30 years are mostly paying the
bank though, so be prepared for a long term investment (but after 30 years you
can sell your franchise and get the equity back - enough to retire on).

Note that I started with should. Some franchises are better than others. Some
will try to sell you a bad territory where it is impossible to live on the
earnings. Some will force you to buy (sell) product that your customers don't
want. It can be a good deal, but it can also be a ticket to bankruptcy.

~~~
lotsofpulp
>(but after 30 years you can sell your franchise and get the equity back -
enough to retire on).

If the franchisee doesn't own the land or building, it doesn't sound like they
have any equity. All they have is the licensing agreement with the brand,
which I'm sure has an expiration date, but all the power rests with the brand.
Unless there's a clause in the franchising agreement that forces the brand to
only license to you, the franchisee doesn't seem to be left with anything at
the end of the licensing term.

~~~
bluGill
The devil is in the details. There are thousands (more?) of different things
you can franchise. Each has different terms! Some are outright scams. Some are
great deals. Some are in between where your skill as a business manager is the
largest factor.

Owning the land/building is often a negative for a small business - you want
to focus on managing your business not maintaining your building (an
accountant can explain other reasons why renting is usually better).

------
blakesterz
"The company’s 2017 disclosure documents give the example of a store in
Chicago with $1 million in annual sales. After all the fees and costs and
taking into account that the company’s share of the take rises as revenue
increases, the franchise owner took home $37,000 before taxes. “7-Eleven
always sold its franchises as a gold mine,” says Hashim Syed, a former
7-Eleven franchisee and ex-president of the Chicago franchisee-owners
association. “I say it’s more like a coal mine.”"

That sounds brutal!

~~~
jefftk
$37k to the owner on $1M in revenue would be a profit margin of 3.7%. This
looks higher than the average profit of ~2%. The $1M sales figure doesn't
include the cost of what they're selling, their rent, or wages for their
workers.

[1] [https://retailowner.com/Benchmarks/Food-and-Beverage-
Stores/...](https://retailowner.com/Benchmarks/Food-and-Beverage-
Stores/Convenience-Stores#ixzz3PiMI3QNo)

------
ericfrenkiel
The title is crafted so salaciously as to make victims of the real criminals:
SMB owners deliberately hiring illegal immigrants because they are easily
exploitable. Some of the franchisees were literally stealing money from their
hires. I don’t see why we should be lamenting people who abuse and prey on
others because of their immigration status.

~~~
jnbiche
That's not primarily what the article is investigating. The article is
pointing out 7-Eleven's alleged use of ICE and Homeland Security to target
those franchisees who criticized or filed lawsuits against the corporation.

~~~
lostmsu
Yet, there're no proofs in the article, that raids and criticism are related
in any way.

~~~
camgunz
> One goal was to build cases to terminate franchise agreements, according to
> former employees interviewed by Bloomberg and lawsuits filed across the U.S.
> The tactics could be aggressive. In a 2014 lawsuit, Adnan Khan, a leader of
> 7-Eleven franchisees in California, alleged that a company investigator
> followed him for months in an unmarked car and at one point hit and injured
> him with the vehicle. 7-Eleven settled the suit.

I mean, articles don't have burdens of proof so to speak, but it's not like
they did _no_ research.

------
sinnet11
I think there is a deeper issue here with immigration labor. The only one's
applying to work at 7-11 or a lot of these minimum wage jobs are people who
are not dependable or are immigrants without the proper paper work. So if you
hire the non dependable worker you are going to be going through the hiring
process every 3 months.

Most people you'd like to hire often say "Why would I come work for you when
Uber pays me X?" Uber has made it a lot harder to find dependable workers for
convenience stores because most stores aren't willing to raise the wage so
high that would eat away into their profit of owning a store in the process.
I'm all for fair wage practices but at a certain point you'll be seeing a lot
more 7-11's for sale than people willing to buy them. The economics will stop
making sense to purchase convenience stores or rather start many small
businesses because the wage to pay out will be too high.

~~~
lotsofpulp
>I'm all for fair wage practices but at a certain point you'll be seeing a lot
more 7-11's for sale than people willing to buy them.

If a business wants to sell widgets, and they can't afford to pay for the
materials to make the widgets, then it raises prices for the widgets, or it
finds that consumers don't find enough value in the widgets to justify the
higher price and the business shuts down. Why should it be any different for a
convenient store?

------
lupire
The real story here is that the business of large corporations, from 7-11 to
Uber, is to outsource all their legal, financial, and safety risk, while
keeping the profits. 7-11 regulates every aspect of a franchise business, and
takes a large fee, but if the franchise breaks any law, 7-11 takes no
responsibility. Imagine if every company ran that way, sending rank-and-file
employees to jail, while management and limited-liability owners face no
criminal or civil penalties because they "didn't know" their profits came from
illegal activity. Or they didn't have to pay worker's comp for employees
injured on the job. Or employees had to pay for all their supplies.

------
davidkuhta
For a second I thought frozen water was causing a massive management
disturbance at 7-Eleven... #prettyurlproblems "eleven-is-at-war-with-its-own-
franchisees-over-ice-raids"

I wish that had been the story :/

------
DigitalWheelie
It's not that 7-Eleven franchisees are being investigate for hiring illegal
immigrants, it's that the corporate office might be using this as a way to
intimidate franchise owners it doesn't like.

'Still, franchisees, after years of conflict with the company, went from
suspicious to paranoid when word spread that ICE had shown up at stores run by
men and women who were in legal disputes with 7-Eleven or were prominent
critics of [CEO Joseph ] DePinto.'

------
jnbiche
I know there are folks on here who will roll their eyes, but this kind of
display is emblematic of a fascist government. Fascism is the bonding of state
and corporate power, driven by nationalism, authoritarianism, and a (usually)
charismatic leader.

For the record, I'm not a radical. I'm not even particularly partisan. I'm an
average, middle-class American. But I've read enough history to know which way
the wind is blowing in this country. I only hope we can come to our senses
before it's truly too late.

~~~
msla
> Fascism is the bonding of state and corporate power

... only if you define "corporation" the way Fascists did:

[http://www.sjsu.edu/faculty/watkins/corporatism.htm](http://www.sjsu.edu/faculty/watkins/corporatism.htm)

> In the last half of the 19th century people of the working class in Europe
> were beginning to show interest in the ideas of socialism and syndicalism.
> Some members of the intelligentsia, particularly the Catholic
> intelligentsia, decided to formulate an alternative to socialism which would
> emphasize social justice without the radical solution of the abolition of
> private property. The result was called Corporatism. The name had nothing to
> do with the notion of a business corporation except that both words are
> derived from the Latin word for body, corpus.

> The basic idea of corporatism is that the society and economy of a country
> should be organized into major interest groups (sometimes called
> corporations) and representatives of those interest groups settle any
> problems through negotiation and joint agreement. In contrast to a market
> economy which operates through competition a corporate economic works
> through collective bargaining.

~~~
lupire
It's fascinating that "fascism" today means nothing like what it did
originally, even though the definition hasn't changed -- the definition of the
words in the definition changed!

"Fascism" is a bad word simply because Mussolini came to power when Fascism
was popular in Italy, and Nazism became "Fascist" because Hitler allied with
Mussolini.

~~~
notacoward
No, "fascism" is not unpopular simply because of that association. It's
unpopular because its core principles as stated by its own proponents -
authoritarianism, nationalism, violence as a tool of policy (which the
"fasces" visually represents) - were already in disrepute at its founding. It
was _meant_ to be a bad word to those who believe in democracy, globalism, and
non-violence.

