7-Eleven franchise owners are suing 7-Eleven, Inc. claiming that they were deceptively sold into a franchise scheme that turned them into unclassified, uncompensated employees rather than business owners, were promised training and support they never received, and were terminated after investing nearly half a million dollars.
(UnhappyFranchisee.Com) August 29, 2013, attorney Jerry Marks, of Red Bank, NJ-based Marks & Klein, filed a lawsuit in the U.S. District Court, Southern District of New York (Foley Square) on behalf of plaintiffs Michael Governara and Stefanie Governara against defendant 7-Eleven, Inc., a wholly owned subsidiary of Seven-Eleven Japan Co., LTD., a wholly owned subsidiary of Seven and I Holdings Co. LTD. and defendant John Does 1-20 (fictitious persons).
The suit claims that 7-Eleven, Inc. is guilty of fraudulent inducement, breach of the implied covenant of good faith and fair dealing, and violation of New York State Labor Law for misclassifying 7-Eleven franchisees as independent contractors rather than employees.
In addition to seeking compensatory, consequential, punitive damages, and other costs for the first two counts, plaintiff Michael Governera also seeks:
a. An Order declaring and adjudging that Michael Governara and all New York franchisees similarly situated are de facto employees as defined under the New York Labor Statute and are afforded protections under the New York Labor Statute;
b. An Order pursuant to New York Business Corporations Law §630 that 7-Eleven’s 10 largest individual shareholders, once identified, are personally liable to Plaintiff and other New York franchisees similarly situated, for damages associated with the labor violations alleged herein;
c. Compensatory Damages;
d. Recoupment of overtime benefits for the three (3) years preceding the filing of the Complaint this matter;
e. Recoupment for all benefits previously withheld from Plaintiff for the three (3) years preceding the filing of the Complaint;
f. Punitive Damages, attorney’s fees and costs;
g. Any other relief this court deems equitable and just.
According to the Governera v. 7-Eleven, Inc. complaint :
1. The instant action involves the fraudulent inducement of Plaintiffs by Defendant 7-Eleven, Inc. (hereinafter “Defendant” or “7-Eleven”) and their agents through the making of material and patently false financial performance representations as to annual gross sales, which were designed to induce Plaintiffs’ substantial monetary investment in a New York, New York 7-Eleven location.
During the time period in which Plaintiff Michael Governara (“Michael” or “Michael Governara”) operated his franchise location, which consistently struggled and performed nowhere near the purported expectations of the franchisor, which were articulated to him numerous times before he signed his franchise agreement and began operating.
2. During this time period Michael was also not provided promised training and support, as his location floundered. Further, like all 7-Eleven “franchisees” Michael was, at all relevant times, an undisclosed employee, and was deprived of minimum wage, FICA and medical benefits and was not afforded benefits under New York law.
The complaint contends that Michael Governera left an $80,000 per year job based on the assurances by a 7-Eleven salesperson Martina Hagler that his location store “should do $2-3M annually but to be conservative use one million, seven hundred thousand dollar to one million, eight hundred thousand dollar ($1.7-1.8M) for purpose of the business plan and budget.”
The 7-Eleven location subsequently had sales of only $1.1M, far less than the $2-3M in sales Martina Hagler allegedly had indicated.
According to the suit, “between January 2012 and December 2012, 7-Eleven representative Meghan Culligan cancelled more than twenty (20) scheduled meetings with Michael with respect to his store performance and the supplemental support from 7-Eleven was dismal…
“In or about August 2013, Michael’s franchise agreement was terminated by 7-Eleven, he was forced to close his location, and he has since lost his entire franchise investment.”
Not only had Michael Governera gone 20 months without a paycheck, investments by his mother Stefanie Governara ($200,000) and Michael’s cousin, Phil D’Antoni ($140,000) were also lost.
Also read:
7-ELEVEN: How the 7-Eleven Franchise Works
7-ELEVEN to Open up to 21,500 New U.S. Stores
7-ELEVEN Downplays Japanese Ownership
7-ELEVEN Franchise Lawsuits 2013
7-ELEVEN’s Japanese Parent Posts Record Profits… Again
7-ELEVEN Franchise Owner Claims Franchisees Are Being Bullied
7-ELEVEN: Is 7-Eleven a Good Franchise to Own?
7-ELEVEN Franchise Owners Complain, Allege Churning
7-ELEVEN Franchises Raided by DOJ, Homeland Security
7-ELEVEN Franchisee Tariq Khan: Villain or Victim?
7-ELEVEN: UnhappyFranchisee.Com Invites Views of 7-11 Franchisee Groups
WHAT DO YOU THINK OF THE 7-ELEVEN FRANCHISE OPPORTUNITY? SHARE A COMMENT BELOW.
TAGS: 7-Eleven, 7-Eleven franchise, 7-Eleven lawsuit, 7-Eleven lawsuits, 7-11 franchise, 7-11 lawsuits, 7-11 complaints, 7-Eleven Michael Governa, Stefanie Governa, Governa v. 7-Eleven, 7-Eleven New York lawsuit, franchisees as employees, 7-Eleven litigation, 7-eleven franchise complaints, Marks & Klein law firm, attorney Jerry Marks, SEI, 7-Eleven Inc., Seven and i Holdings Co
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I don't think this scenario is unusual. In fact it is quite common.
Just heard the great news that the entire Japanese management of Kumon North America, Inc., was terminated by the parent company KIE Japan for financial irregularities. The fired team consisted of Akira Hamanaka (President), Atsushi (KUMA) Nose (EVP), Masaki Katsumata (COO) and Taka Yamauchi (VP - Corporate Communications). This is a great moment for all of us KNA franchisees who have seen our growth rates tumble and are struggling since the arrival of this management team from Kumon Asia in 2011. The team was unpopular among franchisees and staff. Poor communication of policies, shutting down Junior Kumon, new worst advertising agency Dentsu, cutbacks in subsidies and elimination of Cosmic Kumon were some of the wrong policies that hurt franchisees in the U.S. This news thus comes as a welcome surprise by all US, Canadian and Mexican franchisees.
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Finally Japan has woken up to the reality of their Japanese minions in USA. The news of the firing of the termination of the top Japanese management in Kumon is welcome news for franchisees and staff together. Referred to as the "gang of four," in the company grapevine, they were looked upon as disingenuous and incompetent. The "gang" consisting of Akira Hamanaka (President), Atsushi (Kuma) Nose (EVP), Laszlo Katsumata (COO) and Taka Yamaouchi (VP) were hated by staff and franchisees alike, and were being investigated by auditors from Japan for some time for their financial scandals involving award of contracts to third-parties in Philippines and Indonesia, and most recently the U.S. The gang also spearheaded the drive to eliminate IAKF the independently run franchise association headed by its able President, Nicole Smith, whom the "gang" termed as "rogue."
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The entire Japanese management Kumon Learning centers including President Akira Hamanaka and the notorious Atsushi (Kuma) Nose was fired last week for fraud and misuse of funds for personal gains.
No one can imagine the horror and stress that we as staff had to endure under Atsushi (Kuma) Nose. He was the worst manager I've ever seen in a workplace. He violated all the principles, legally and ethically. The Akira Hamanaka was intellectually challenged and probably had an IQ of 70.
There are good people in the company, but they are not in power positions. The board is unethical. The unethical business practices hurt the business and good people. The company is bleeding......
Japanese management at Kumon North America exit - good news for everyone.
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The new President is also "Japanese". Doesn't the company trust the Americans to run the place despite the scam that just unfolded?
If you're reading these reviews as somebody who is contemplating franchise at Kumon, let me try to talk you out of it. I was once in your position. I heard that the company was terrible and the job was stressful. And I thought to myself, the people complaining about that are probably just lazy. I'm smart and work hard, so this won't be a problem for me.
But you really don't understand until you've been in the trenches yourself: becoming a Kumon franchisee is exactly like being in an abusive relationship. The whole time, the company will tell you that you are awful, that you can't keep up because you're not working hard enough or you're too inefficient, and that if you want to leave, it's because you aren't a strong person. And just like in an abusive relationship, you slap yourself whenever you think about leaving, because leaving would be betrayal, would be a sign of ingratitude for everything the company has done for you.
The firing of Akira Hamanaka and Atsushi (Kuma) Nose will surely bring change in a system that has been plagued by nonsense and hate.
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Japanese managed companies are all the same. Worse are non-Japanese thatact like them. I ddon't know much about Kumon but I once worked for a Japanese company and was sick of it as hell. So if you guys think that things are going to change for you with the firing of this Akira Humming-bat or the At Sushi-nose, well God help you guys.
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It would be interesting to know much Kumon franchisee's money was involved by Akira Hamanaka and Atsushi Nose? I am wondering what the CFO Mr. Joe Nativo was doing while all this was going on? While we franchisees suffer due to high costs, the company forever wastes our money on mega events. Doesn't the company have auditors? Why were the auditors not diligent enough?
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