7-Eleven Franchisee Who Rebelled Against Company Loses in Court

OSAKA, Japan — Mitoshi Matsumoto, the person who has waged a David-and-Goliath marketing campaign towards the Japanese comfort retailer big 7-Eleven, stood in entrance of a roomful of the corporate’s franchisees on Thursday, bowed deeply and apologized.

Mr. Matsumoto has spent the final two and a half years preventing in courtroom for management of a 7-Eleven retailer that the corporate pressured out of enterprise after he refused to function it 24 hours a day, seven days per week. His wrestle has grow to be a rallying level for hundreds of comfort retailer house owners throughout the nation who’ve bristled towards the corporate’s inflexible management of their franchises, hoping {that a} victory would assist them win a measure of independence.

However on Thursday afternoon, a choose ordered Mr. Matsumoto to instantly hand his retailer within the Osaka suburbs, which he opened in 2012, over to the corporate and pay round $845,000 in estimated damages for misplaced enterprise.

After the ruling, Mr. Matsumoto mentioned that he was sorry to have let his supporters down, however that he meant to struggle on and enchantment the ruling. “It might have been higher if we’d gotten consequence, however the push to shorten hours goes to maintain shifting ahead,” he mentioned.

In an announcement, a 7-Eleven spokesman mentioned that the ruling was “acceptable,” including that the corporate would “work even more durable for the patronage of shoppers within the area.”

The case’s ultimate consequence is prone to have profound implications for the relationships between Japan’s comfort retailer firms and the greater than 50,000 retailers they management. 7-Eleven’s areas account for greater than 40 % of these shops, and for many years the corporate has been seen because the business normal.

Mr. Matsumoto’s issues started in early 2019, when he determined he would shorten his retailer’s hours, closing 5 hours each evening in defiance of firm coverage. He was exhausted, labor had grow to be more and more unaffordable, and he had determined that the income from staying open into the wee hours didn’t justify the prices.

It was a seemingly small act of rebel. However standing as much as probably the most highly effective and ubiquitous companies in Japan made him a star and uncovered the inside workings of an business that had lengthy been celebrated as a mannequin of effectivity.

Mr. Matsumoto’s resolution set off a yearslong — and typically surprisingly petty — battle of attrition with the corporate. In its efforts to rid itself of Mr. Matsumoto, 7-Eleven employed non-public investigators to maintain tabs on his enterprise. It in the end revoked his franchise, a choice it mentioned it made after quite a few buyer complaints and disparaging remarks posted by Mr. Matsumoto on social media.

After he sued to maintain his retailer, the corporate constructed one other, smaller one within the retailer’s car parking zone and threatened to cost him for the development prices.

In 2020, Japan’s Honest Commerce Fee issued a blistering report on the comfort retailer business’s enterprise practices. It warned firms to not abuse their energy over franchisees and advised that they might have run afoul of the nation’s antimonopoly legal guidelines.

Along with the calls for that shops all the time keep open, the fee cited different basic issues with the business’s enterprise mannequin, together with deceptive recruiting practices and forcing retailer house owners to inventory extra merchandise than they may promote. The fee ordered the chains to develop a plan for enhancing their remedy of retailer house owners.

Earlier in 2020, the Covid-19 pandemic and ensuing state of emergency had prompted the corporate that controls the 7-Eleven chain, Seven & I Holdings, to allow some comfort retailer franchisees to close quickly or to restrict their hours.

However it has continued to place obstacles within the path of those that want to maintain shorter hours, based on Reiji Kamakura, the chief of the Comfort Retailer Union, a small group of homeowners that has struggled to develop within the face of robust opposition from the business.

“The top workplace has not modified its place that it desires house owners to finish shorter hours,” he mentioned.

Different issues have continued as effectively.

In March, a franchisee in Kagoshima Prefecture filed a grievance towards 7-Eleven with the Honest Commerce Fee over claims that the corporate’s representatives had overstocked his retailer with out his information, inflicting him to lose cash on unsold merchandise. A part of the corporate’s income come from promoting its branded merchandise to franchisees. That case continues to be pending.

Efforts by franchisees to wrest a better measure of management from 7-Eleven suffered a setback this month, when a choose dominated towards a gaggle of homeowners who had demanded the fitting to train collective bargaining towards the corporate.

Mr. Matsumoto, by his personal admission, has not been an ideal consultant for the house owners’ trigger.

Non-public investigators had collected proof towards him that was utilized in courtroom, together with grainy video footage that the corporate mentioned confirmed him head-butting a buyer and sending a flying kick right into a automobile’s aspect panel. His legal professionals argued the pictures have been inconclusive.

Both method, the complaints towards Mr. Matsumoto have been irrelevant to the central subject of 7-Eleven’s relationships with its franchisees, mentioned Shinro Okawa, a member of Mr. Matsumoto’s authorized crew. “House owners are gathered right here as a result of 24-7 operation is an issue.”

Mr. Matsumoto mentioned he was wanting ahead to the struggle forward.

However, he joked, “If I lose once more, I’m giving up and shifting to America.”