SAN ANTONIO–(BUSINESS WIRE)–7-Eleven franchisees who obtained federal Paycheck Safety Program (PPP) loans are prone to having to repay a fabric portion of these funds as a result of the corporate refuses to share inside data on precise hire funds—a key metric essential to qualify for loan forgiveness. Included within the 7-Eleven Inc. (SEI) franchise settlement is a provision known as “the 7-Eleven Charge,” which refers back to the funds franchisees make for hire, provides and different enterprise prices. SEI deducts the Cost from every retailer’s gross sales receipts. In some circumstances, the Cost can exceed 50 p.c of a retailer’s gross margin.
As a result of SEI has ignored repeated requests to reveal the precise portion that’s charged to hire, franchisees can not enter lease cost quantities within the loan forgiveness software.
“This is another example of how SEI exerts pervasive control over its store operators. Because of the opaque terms in our franchise agreement, 7-Eleven franchisees face the frightening proposition of having to repay PPP loans while other small business owners will be able to have those loans forgiven,” mentioned Jay Singh, Chairman of the Nationwide Coalition of Associations of 7-Eleven Franchisees (NCASEF), an elected, unbiased physique that has been calling for higher transparency in its franchisee/franchisor relationship. NCASEF, together with SEI’s appointed CEO Roundtable, have requested the corporate to supply hire calculations for franchisees, however it has refused.
In a written response to the Nationwide Coalition’s request, an SEI consultant wrote, “7-Eleven does not allocate which portion of the Charge is attributable to the lease or the other items encompassed by the Charge.”
“We know that SEI has this information readily available. but for reasons known only to the company, it continues to keep that data secret, frustrating the Congressional mandate that rent be included in forgivable PPP loan payments,” mentioned NCASEF Basic Counsel Eric Karp.
PPP loans have been designed to cowl eight weeks’ worth of bills for companies with fewer than 500 workers. Congress is negotiating adjustments to this system however, in its present state, loans might be fully forgiven if not less than 75 p.c of the cash is used for payroll, and the rest for hire, utilities and different non-payroll prices. Through the pandemic, franchisees have struggled to retain staff, and a few 24-hour shops have been pressured to cut back their hours. Many franchisees say it’ll be tough to succeed in the 75 p.c threshold and, with out the flexibility to show what they really pay for hire, franchisees might be pressured to repay a portion of their PPP loans.
“SEI has told all franchisees to estimate their rent based on their individual market, but franchisees need the actual value and receipts in order to request loan forgiveness,” mentioned Singh. “The company said it ‘does not intend to undertake the store-by-store analysis that would be needed.’ Given the way they micromanage the business, we find that hard to believe.”
About NCASEF: The Nationwide Coalition is a commerce affiliation for 7-Eleven franchise operators within the U.S. Initially based in 1973, NCASEF is comprised of 41 separate unbiased Franchise Proprietor Associations collectively having greater than 4,400 7-Eleven operators as members.