Home FinanceBusiness 7-Eleven franchisee who rebelled against the company loses in court

7-Eleven franchisee who rebelled against the company loses in court

by YAR

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 full of the company’s franchisees on Thursday, took a deep bow and He apologized.

Mr. Matsumoto has spent the past two and a half years fighting in court for control of a 7-Eleven store that the company forced to close after he refused to operate it 24/7. week. His fight has become a rallying point for thousands of convenience store owners across the country who have raged against the company’s tight grip on their franchisees, hoping a victory would help them win. a bit of independence.

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

After the ruling, Mr. Matsumoto said that he was sorry he had let his supporters down, but that he intended to fight and appeal the ruling. “It would have been better if we had gotten a good result, but the momentum to reduce hours will keep going,” he said.

In a statement, a 7-Eleven spokesman said the ruling was “appropriate” and added that the company “would work even harder for customer patronage in the region.”

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

Mr. Matsumoto’s troubles began in early 2019, when he decided to shorten his store’s hours, closing five hours every night in defiance of company policy. He was exhausted, labor had become increasingly unaffordable, and he had decided that the revenue from staying open late into the night was not worth the costs.

It was a seemingly small act of rebellion. But taking on one of Japan’s most powerful and ubiquitous corporations made him a celebrity and exposed the inner workings of an industry that had long been celebrated as a paragon of efficiency.

Mr. Matsumoto’s decision triggered a years-long and at times surprisingly petty attrition battle with the company. In their efforts to get rid of Mr. Matsumoto, 7-Eleven hired private investigators to monitor his business. He eventually revoked his franchise, a decision he said he made after numerous customer complaints and disparaging comments posted by Matsumoto on social media.

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

In 2020, the Japan Fair Trade Commission issued a dizzying report on the business practices of the convenience store industry. He warned companies not to abuse their power over franchisees and suggested they might have broken the country’s antitrust laws.

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

In early 2020, the Covid-19 pandemic and resulting state of emergency had prompted the company that controls the 7-Eleven chain, Seven & I Holdings, to allow some convenience store franchisees to temporarily close or limit their hours. .

But it has continued to put obstacles in the way of those who want to work fewer hours, according to Reiji Kamakura, leader of the Convenience Stores Union, a small group of owners that has struggled to grow in the face of strong opposition from the industry.

“Head office hasn’t changed their position that they want owners to end up with shorter hours,” he said.

Other problems have persisted as well.

In March, a franchisee in Kagoshima prefecture filed a complaint against 7-Eleven with the Fair Trade Commission over claims that company representatives had overstocked his store without his knowledge, causing him to lose money for the merchandise. not sold. Part of the company’s profits come from the sale of its branded products to franchisees. That case is still pending.

Franchisees’ efforts to gain a greater measure of control over 7-Eleven suffered a setback this month, when a judge ruled against a group of owners who had demanded the right to engage in collective bargaining against the company.

Mr. Matsumoto, by his own admission, has not been a perfect representative of the owners’ cause.

Private investigators had collected evidence against him that was used in court, including grainy video footage the company said showed him headbutting a customer and sending a flying kick into the side panel of a car. His lawyers argued that the images were inconclusive.

Either way, the complaints against Mr. Matsumoto were irrelevant to the core issue of 7-Eleven’s relationships with its franchisees, said Shinro Okawa, a member of Mr. Matsumoto’s legal team. “The owners are gathered here because the 24/7 operation is a problem.”

Mr. Matsumoto said that he was looking forward to the upcoming fight.

But, he joked, “if I lose again, I’ll give up and move to America.”

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