Page 6 - Soundwave Magazine
P. 6

 LEGAL
PERSPECTIVE
by Arnold J. Hauptman, ESQ.
(516) 541-7200 ahauptman@aol.com
  A FOND FAREWELL TO SOUNDWAVE
It is with great sadness that I learned that this issue of Soundwave would be the last to be published.
Over the last 30 or so years, I have written innumerable articles for Soundwave with some covering momentous events affecting the lives and fortunes of our franchise community. It is hard to remember them all, but here are ones I do remember and wrote about.
• I will never forget the fight waged by UFOLI, in the 1990’s, led by Dominick Manzo, to lobby the New York legislature to adopt a fair franchise law. While the effort was not successful, it did result in the elimination of the draconian three- day notice to terminate for every alleged breach.
• If you are an old-timer, you will remember the regional manager appearing at a meeting and threatening to cease franchising in New York if a fair franchise law was ever adopted. Turned out to be an
empty threat. Many states have fair franchise laws and 7-Eleven continues to franchise in them, New Jersey and Connecticut among them.
• It was a scary time when 7-Eleven went bankrupt – I wish I could recall the year. No one really knew what effect the bankruptcy would have on the Store Agreement. Fortunately, not much. But it did lead, as I remember, to the owner- ship of the company by Japanese investors which, in turn, led to a new and more difficult and expensive way of operating a store.
• It was not all that long ago when 7-Eleven (then Southland) was in the dark ages and permitted only an individual to franchise a store with the only exception being a spouse. Enlightenment came when corporations, Limited Liability Companies, and unmarried partners could enter into a store agreement.
• There was a time when 7-Eleven (Southland) permitted an individual to franchise only one store. Now – multiple ownership of 4 or 5 stores or more are encouraged by 7-Eleven with many, if not most, franchisees being multiple owners.
• This article would not be complete without mention of the class action lawsuit known as OFFF (Owners for Fair Franchising v. The Southland Corporation). That action, combined with another class action which alleged, among other things, that the Southland Corp. was not crediting franchisees with vendor rebates and discounts and equipment value, resulted in a settlement in or around 1998 which gave all franchisees the option to sign the 2004 version of the store agreement. Then-
president, Tariq Khan negotiated a 50-50 split for those signing up. A split never really, in most cases to be seen again.
• The long-term tenure rebate program was the last and only good will gesture by 7-Eleven (Southland), that I can recall, to say thank you to its franchisees who were in the system as of March 31, 1991. That program gave to those franchisees 50% of the franchise fee paid by the purchaser of a franchise in a good will sale. Many franchisees are still eligible for that rebate to this day.
• There were numerous articles regarding the fight to obtain some sort of territorial protection which, with the exception of the half mile policy option, is still being fought.
• Each time a new version of the Store Agreement was introduced by 7-Eleven, an article was written for Soundwave. Remember these versions:
2004 – 85% approved vendor requirement, 15-year term, 50-50 split.
2006 – variable gross profit split introduced; franchise fees substantially increased.
2010 – term reduced to 10 years, and for the first time a renewal fee was imposed at the rate of 20% of the then-franchise fee for a new franchisee.
2019 – Term increased to 15 years, SEI no longer to provide payroll services or indemnification, a flat renewal fee of $50,000. and a host of other changes – most not good for the franchisee.
So long Soundwave. We will miss you. n
 soundwave - winter 2020
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