QUESTIONS ABOUT how to classify workers have been lingering for years over industries as diverse as ride-hailing and construction. Now, add franchise convenience stores to the list.
The Supreme Judicial Court will hear arguments Wednesday in a case that could upend the way state labor laws apply to franchise business owners.
Franchises are a big part of the economy. In addition to 7-Eleven, many of the biggest chains operating in Massachusetts – Dunkin’ Donuts, McDonald’s, Burger King, and Subway – operate in a franchise model. Individual franchisees own the stores, but pay franchise fees to the company and are required to use its business model and operating procedures.
The core of the case, Dhananjay Patel vs. 7-Eleven, which was filed by five 7-Eleven franchise owners, is whether the Massachusetts law that distinguishes between an independent contractor and an employee applies to franchisees.
The franchise owners say they technically own their businesses, but the franchise agreement with 7-Eleven treats them no differently than an employee. Shannon Liss-Riordan, the attorney representing the franchisees, said her clients give up half the store’s profits to 7-Eleven while the average franchisee in other chains turns over 4 to 7 percent. She said the franchisee also has to pay all of the expenses of the business out of their share of the profits. She said 7-Eleven even controls the store bank account.
“They work long hours, they are paying for the privilege of managing...
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