Incoming 7-Eleven chairman admits to ‘strangling franchisees’

by Chloe Taylor02 Oct 2015
7-Eleven’s newly appointed chairman has admitted that the company and its franchisees failed “vulnerable” people with their recently unveiled widespread exploitation.

Michael Smith was appointed to the role on Wednesday following the resignation of predecessor Russell Withers, who stepped down alongside CEO Warren Wilmot and general manager of operations Natalie Dalbo.

The resignations came after an investigation by Four Corners and Fairfax Media exposed systemic underpayments and worker exploitation at what could be hundreds of 7-Eleven franchises.

Since his appointment, Smith has said that the company would be changing its business model to ensure workers are treated fairly.

“In the end I don't think there’ll be any fair judgment on us until we fix it and it's been seen to be fixed in a way that's looked after the many people that [have] been hurt by this and that it's sustainable so that it doesn't happen again,” he told an ABC Radio program on Wednesday.

“There is no question that we should’ve known. There’s nobody ducking this.”

Smith added that 7-Eleven corporate had assumed it was running “a very professional company” prior to the exposé.

“We have never had any message from our shareholders or owners, or we as a board have never had any appetite to run a financially aggressive company,” he said.

“It’s never been in our mind and that’s probably one of the reasons this has got away from us. It just hasn’t been in our psyche that we're pushing a system hard, where we’re strangling franchisees financially.”

Wilmot’s resignation was announced via a statement from 7-Eleven on Wednesday, which said that his decision came as a result of the realisation of the extent to which franchisees had underpaid workers.

“Mr Wilmot acknowledged it would be difficult for him to play a central role in navigating the company through the current challenges it faces given his long-standing executive role and that a new independent CEO was appropriate in the current circumstances,” the statement said.

It went on to announce that Bob Baily would be appointed interim chief executive while Smith led “an executive search process to identify a permanent candidate for the CEO role”.

Former chairman Withers, however, will remain chairman of a group holding company which has 7-Eleven as one of its investments.

“Naturally this is a major decision for me to stand aside, however I will continue to be a shareholder and I am determined to make sure the company is in the right hands to move forward,” he said in a statement.

Smith said that the company had already implemented a number of initiatives in a quest to identify the extent of the underpayments, as well as an appropriate remedy to the problems they had caused.

These initiatives included refining 7-Eleven’s business model with the cooperation of franchisees.

The company claimed to have been investigating the allegations alongside the Fair Work Ombudsman and Ernst & Young prior to the scandal breaking.

Professor Allan Fels was also recently appointed to lead an independent panel which will identify underpaid workers and determine how much they are owed.


Most Read