Convenience giant 7-Eleven is accused of forcing and then blocking the sale of one of its franchises, leaving the owners to walk away with nothing after they invested more than $1 million into the business.
The petrol and fast-food store in Kensington, in Sydney's eastern suburbs, has returned to the hands of head office, which will run the business as part of its corporate network.
A legal expert says what happened to Jotika and Sunny Sharma is unfair, but not illegal. ( ABC News: Adelaide Miller )
Jotika and Sunny Sharma purchased the franchise in 2015, taking out an ANZ loan of more than $1 million to pay the up-front goodwill fee and franchising fees.
They have received no payment from 7-Eleven for the store, despite the goodwill and customer base built up over the decade they ran the business.
"I asked them, how is it possible that I walk out of my investment? I took a hefty loan," Ms Sharma said.
After a number of attempts by the couple to renew their lease, 7-Eleven declined.
The Sharmas were forced to hand over the keys to their store last Wednesday and walk away with nothing.
"I was devastated … I didn't know they were going to exploit me like this," Ms Sharma said.
UNSW emeritus professor Jenny Buchan, who specialises in franchise law, says the practice is not fair, but it is legal.
"The problem is that terms come to an end, so the franchisor's really got the upper hand, because they have got the right to do what they've done, which is take the site back," she said.
In response to a request for comment from the ABC, 7-Eleven said: "We don't comment on individual franchise matters."
"7-Eleven Australia works closely with its franchise network and takes its responsibilities seriously. We approach all franchisee matters in a fair and considered way," it said in a statement.
Sale denied without a reason
Across the country, hundreds of 7-Eleven stores operate through a franchise network model, in which individual operators buy the rights to operate a store under the popular brand and its guidelines.
Sunny and Jotika Sharma were forced to cease operations this month. ( ABC News: Adelaide Miller )
7-Eleven head office takes more than 50 per cent of gross profit from the franchisee, and covers the store rent.
In 2015, Jotika and Sunny Sharma entered into a 10-year lease agreement with the 7-Eleven head office for their Kensington store.
It was the third 7-Eleven franchise they had purchased over almost two decades. They successfully sold their other stores in 2013 and 2020.
Ahead of the expiration date of the Kensington shop, the couple were notified that the lease would not be renewed due to "the operational performance of the store", and that they had two options: find a buyer or walk away.
They were granted two extensions to find a buyer, up until June this year.
Deepti Pundir applied to buy the Kensington 7-Eleven more than once. ( ABC News: Adelaide Miller )
But when Sydney woman Deepti Pundir formally applied to buy the franchise, she was denied by 7-Eleven without a reason.
"Three months, we were preparing ourselves, doing everything … I was like, how can they reject it on the basis of knowing nothing about us?" she said.
Ms Pundir has worked as a duty store manager at Aldi for five years, has the capital to invest in the business after selling an investment property in January, and has had pre-approval for a bank loan.
7-Eleven's email did not explain why Deepti Pundir's application was rejected. ( Supplied: Deepti Pundir )
She said she was rejected the day after her first application was submitted to 7-Eleven and proceeded to apply again.
She was then offered a virtual interview, but was again denied without a reason.
"I do work with customers every day. I've managed a team for the last five years … I know I have got all the skills. I told them I'm ready. I'm ready and I have support," Ms Pundir said.
The Oil Code, under which 7-Eleven stores fall as retailers of fuel, regulates conduct and ensures fair competition, transparency and dealings between fuel companies and franchisees.
The code says the supplier — in this case, head office — cannot prevent the sale of a business by unreasonably withholding consent to the transfer.
7-Eleven did not answer questions from the ABC about Ms Pundir's application.
Because the head office denied Ms Pundir's application, Mr and Ms Sharma were forced out of their store last week.
They say the situation is taking a toll on their health.
Sunny and Jotika Sharma have been forced to walk away from their franchise with no compensation. ( ABC News: Adelaide Miller )
"I'm strictly on medication because my migraine is not stopping from thinking," Ms Sharma said.
"How do I pay for my next [mortgage] repayment, which is in two weeks' time? I have no idea."
Ms Sharma said she had spoken to other 7-Eleven franchisees across the country who alleged they were in a similar position.
"There's more than 20 other families who got destroyed just like this," she said.
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