7-Eleven franchises who rebelled against the company lost in court

Osaka, Japan — Mitoshi Matsumoto, the man who has waged a David-and-Goliath campaign against Japanese convenience store giant 7-Eleven, stood in front of a room at the company’s franchisees on Thursday, bowed deeply and apologized. .

Matsumoto has spent the past 2 1/2 years in court fighting for control of a 7-Eleven store, which was put out of business after the company refused to operate it 24 hours a day, seven days a week. Their struggle has become a rallying point for thousands of convenience store owners across the country who have fought against the company’s rigid control of their franchisees, in the hope that a victory would help them regain some degree of independence. .

But Thursday afternoon, a judge ordered Matsumoto to immediately hand over his store in the Osaka suburbs, which he opened to the company in 2012, and pay about $845,000 in estimated damages for the lost business.

After the ruling, Matsumoto said he was sorry to disappoint his supporters, but that he intended to fight and appeal the ruling.

“It would have been better if we got a good result, but the push to shorten the hours will continue to grow,” he said.

In a statement, a 7-Eleven spokesperson said the ruling was “justified,” adding that the company will “work even harder to protect customers in the region.”

The final outcome of the case is likely to have a profound impact on the relationship between convenience store companies in Japan and the more than 50,000 outlets they control. 7-Eleven’s locations account for more than 40% of those stores, and for decades the company has been seen as the industry standard.

Matsumoto’s problems began in early 2019, when he decided he would reduce his store’s hours by closing five hours each night, in defiance of company policy. He was exhausted, labor had become increasingly unattainable and decided that the income from being open early did not justify the costs.

It appears to be a small act of rebellion. But standing in for one of the most powerful and ubiquitous corporations in Japan made him a celebrity and exposed the inner workings of an industry long celebrated as a model of efficiency.

Matsumoto’s decision kicked off a year-long — and sometimes surprisingly petty — tussle with the company. In their efforts to get rid of Matsumoto, 7-Eleven hired private investigators to oversee their business. It eventually canceled its franchise, a decision it said was made following several customer complaints and derogatory comments posted by Matsumoto on social media.

After suing to keep his store, the company built another smaller one in the store’s parking lot and threatened to charge him for construction costs.

In 2020, Japan’s Fair Trade Commission released a shocking report On business practices of the convenience store industry. It warned companies not to abuse their power over franchisees and suggested that they may run away from the country’s anti-monopoly laws.

In addition to demands that stores always remain open, the commission cited other fundamental problems with the industry’s business model, including deceptive recruitment practices and forcing store owners to stock more merchandise than they sell. The commission ordered chains to develop a plan to improve the treatment of store owners.

Earlier in 2020, the COVID-19 pandemic and the resulting state of emergency prompted the company that controls the 7-Eleven chain, Seven & I Holdings, to temporarily close some convenience store franchises or limit their hours. to allow.

But it has continued to put obstacles in the way of those who want to keep shorter hours, according to Reiji Kamakura, leader of the convenience store union, a small group of owners that has struggled to thrive in the face of strong opposition. industry.

“The head office hasn’t changed its position that it wants owners to end fewer hours,” he said.

Other problems also remain.

In March, a franchisee in Kagoshima Prefecture filed a complaint against 7-Eleven with the Fair Trade Commission, claiming that company representatives had overstocked their stores without their knowledge, leaving them unsold goods. But money was lost. A portion of the company’s profits comes from selling its branded products to franchisees. That matter is still pending.

Attempts by franchisees to gain greater control over 7-Eleven suffered a setback this month when a judge ruled against a group of owners who sought collective bargaining rights against the company.

Matsumoto, by his own admission, hasn’t been a perfect representative for the owners’ cause.

Private investigators collected evidence against him that was used in court, including grainy video footage that the company said showed him head-banging a customer and sending flying kicks to the side panels of a car. were shown. His lawyers argued that the images were inconclusive.

Shinro Okawa, a member of Matsumoto’s legal team, said that either way, the complaints against Matsumoto were irrelevant to the central issue of 7-Eleven’s relationship with its franchise.

“The owners are gathered here because 24/7 operation is a problem,” Okawa said.

Matsumoto said he was looking forward to the fight ahead.

But, he joked, “If I lose again, I give up and go to America.”

Leave a Comment

This site uses Akismet to reduce spam. Learn how your comment data is processed.

%d bloggers like this: