If Hollywood films are America's most successful commercial and cultural export, franchising may well be its most significant gift to business. Beginning with the Singer sewing machine company's innovation in granting agents the right to sell and repair its machines in 1850 and refined by Ray Kroc – whose strategies propelled McDonald's to world-wide dominance in the fast food market – franchising has generated wealth as well as employment. But as a joint investigation of the 7-Eleven franchise model by Fairfax Media and Four Corners has revealed, the franchise model is not all broad, sun-lit uplands where franchisees become millionaires while providing young people with new career opportunities and their first taste of financial independence.
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The investigation showed widespread underpayment of 7-Eleven employees with payroll records and work rosters altered to hide evidence of this and to cover up the fact that some franchisees were failing to meet their employer obligations.
Employment at 7-Eleven convenience stores is popular with foreign students, and the investigation found that many had been warned that if they complained about their wages and working conditions they would be reported to authorities for breaching their student visas. The investigation also revealed that far from being on easy street as a result of this exploitation, many franchisees are themselves struggling to earn a reasonable income under an agreement in which 57 per cent of gross profits is repatriated to the franchisor.
The Australian franchise for 7-Eleven is owned by businessman Russell Withers and his sister, Beverley Barlow, and to their credit, they've said they will set up an independent panel to review allegations of underpayment and to address complaints from unhappy franchisees. Indeed, it has been reported that they'll buy back franchises from any dissatisfied franchisee.
Aside from demonstrating again that franchise agreements ought never to be entered into lightly, the 7-Eleven episode has underlined the growing pervasiveness of worker exploitation in Australia, particularly among holders of student and temporary work visas. Originally introduced to address temporary skills shortages the 457 visa has been extensively embraced by employers who bemoan the unwillingness of young Australians to work the long and hot hours that are routine in the restaurant and hospitality industries and in primary industry. But the attraction of 457 visas as a backdoor way of obtaining Australian residency has also allowed unscrupulous employers to keep their workers in thrall, a process enabled by language barriers and the slow decline of union activism. The student visa scheme, while underpinning a valuable education export sector, has been similarly exploited.
Industry and employer groups champion work and student visas as an indispensable aid to wealth and job creation, enabling them to fill vacancies that once went begging. But as the 7-Eleven expose demonstrates, many employers view foreign workers as a way of depressing labour costs and fattening profits.
The mining boom made importing foreign workers largely a non-issue. Rising youth unemployment is changing public perceptions, however, and the union movement is gaining traction with its campaign against the foreign labour provisions of the Australia-China free trade agreement. The 7-Eleven saga suggests their concerns are not without foundation.
