Supreme Court rules on 7-Eleven franchisee termination

The Supreme Court ruled in favour of 7-Eleven’s franchise agreement.

The NSW Supreme Court ruled in 7-Eleven’s favour that its actions of terminating a franchisee were a justified response to underpayments.

7-Eleven had terminated an agreement with a franchisee after it came to light that they were seeking ‘cash-back payments’ from their employees.

Two employees of the terminated franchisee were allegedly underpaid by the cash-back payments which saw the employees paid the correct award wages but then also required them to return part of those wages back to the franchisee.

The court was shown evidence regarding the two employees allegedly underpaid, allowing the court to rule that the franchisee had engaged in fraudulent behaviour, and as a result caused damage to 7-Eleven’s reputation.

The franchisee agreement allowed the franchisor to terminate the agreement on the grounds of fraudulent behaviour in connection with the business.

Under the cash-back scheme, employees were found to have been underpaid effectively below the minimum wage.

The franchisee denied the claims and argued that they had been unlawfully terminated however the court found his evidence inadequate.

According to a Workplace Info report the franchisee was allegedly aggressive in his responses and his answers were evasive.

Despite both employee witnesses having some difficulty in explaining how they paid the money back to their employer, the court noted their issues with the English language and was satisfied that this was cause for the lack of clarity.

The court found the agreement had been lawfully terminated.

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