7-Eleven franchisee who rebelled against company loses in court

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OSAKA, Japan — Mitoshi Matsumoto, the man who led a David and Goliath campaign against Japanese convenience store giant 7-Eleven, stood before a roomful of company franchisees on Thursday, bowed deeply and apologized.

Mr Matsumoto has spent the past two and a half years battling in court for control of a 7-Eleven store which the company forced to close after refusing to operate it 24/7 7. His struggle became a rallying point for thousands of convenience store owners across the country who bristled at the company’s rigid control over their franchises, hoping a win would help them gain some independence.

But on Thursday afternoon, a judge ordered Mr Matsumoto to immediately hand over his store in suburban Osaka, which he opened in 2012, to the company and pay around $845,000 in damages for loss of activity.

After the decision, Mr Matsumoto said he was sorry for letting his supporters down, but he intended to fight and appeal the decision. “It would have been better if we had gotten a good result, but the pressure to cut the hours will keep coming,” he said.

In a statement, a 7-Eleven spokesperson said the decision was “appropriate,” adding that the company would “work even harder for the patronage of area customers.”

The final outcome of the case is likely to have profound implications for the relationship between Japan’s convenience store companies and the more than 50,000 outlets they control. 7-Eleven locations account for more than 40% of those stores, and for decades the company was considered the industry standard.

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Mr Matsumoto’s troubles began in early 2019 when he decided to shorten his store’s opening hours, closing for five hours each night in defiance of company policy. He was exhausted, labor had become increasingly unaffordable, and he had decided that the revenue generated by staying open until the early morning hours did not justify the costs.

It was a seemingly minor act of rebellion. But standing up to one of Japan’s most powerful and ubiquitous corporations made him a celebrity and revealed the inner workings of an industry that has long been celebrated as a beacon of efficiency.

Mr. Matsumoto’s decision sparked a year-long – and at times surprisingly petty – battle of attrition with the company. In its effort to get rid of Mr. Matsumoto, 7-Eleven hired private detectives to keep tabs on its business. He eventually revoked his franchise, a decision he reportedly made after numerous customer complaints and derogatory remarks posted by Mr Matsumoto on social media.

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

In addition to requirements 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 goods than they couldn’t sell it. The commission ordered the chains to come up with a plan to improve their treatment of store owners.

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

But it has continued to put obstacles in the way of those who wish to reduce their working hours, according to Reiji Kamakura, the leader of the Convenience Store Union, a small group of owners who have struggled to grow in the face of strong opposition. of the industry.

In March, a franchisee in Kagoshima Prefecture filed a lawsuit against 7-Eleven with the Fair Trade Commission over allegations that company representatives overstocked his store without his knowledge, causing him to lose money. money on unsold items. Part of the company’s profits come from the sale of its branded products to franchisees. This case is still pending.

Efforts by franchisees to wrest greater control from 7-Eleven suffered a setback this month, when a judge ruled against a group of owners who had sought the right to collective bargaining against the company.

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

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

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

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

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

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