The Reality of Convenience Stores

Sep 23, 2015

The incident took place on August 28th, when a manager of Seven-Eleven Japan informed Mr. Takumi Ikehara, the Union Chair of the CU and current operator of a Seven-Eleven store in Okayama Prefecture, about the refusal. Mr. Hamazaki, both a General Manager and Zone Manager for Seven-Eleven, paid a personal visit to Mr. Ikehara’s store and told him that Seven-Eleven “would not renew the contract with [Mr. Ikehara] after the current contract expires in December”.

About the astonishing reality behind the scenes, Mr.Ikehara said, “”Well, I was really surprised. So were our lawyers. Mr.Hamasaki told me, “We cannot renew the contract with you because you criticized Seven-Eleven Head Office to the Okayama Prefectural Labor Commission.” During that session with the Okayama Prefectural Labor Commission, when being asked, “Won’t such statements in the Commission session have negative effects upon renewal of contract and so on in the future?”, Mr. Hamasaki had answered, “That is unlikely.” Actually, he is telling me that I should have said nothing.”

Without a contract renewal, it is impossible for Mr. Ikehara to run his business. Capital investments, such as facilities within the store, quickly turn from sources of profit to burdens of debt. For owners of convenience stores, this is the “penalty” from Head Office that people fear the most. Due to this constantly looming threat, the majority of store owners attempt to behave as obediently as possible so as to not invoke the wrath of upper management.

Indeed, because of this constant risk of ruin, many store owners say that, after they have joined the Convenience Store Union, the very first agenda that they have in regards to union negotiation with Seven-Eleven management is the clarification of the conditions for contract renewal. They feel that the threat of refusal of contract renewal is a tactic used by Seven-Eleven management to punish people that Head Office has taken a dislike to, sending a clear message of intimidation to other owners that misbehavior will not be tolerated.

It seems clear that Seven-Eleven is trying to “bust” the Chair of the Convenience Store Union, but just what is this union? It will take a little while, but we will try to explain.

As you might already know, Seven-Eleven exists nationwide in a franchise system. There are more than 17,000 stores across the country and 97% of them are franchise stores operated by independent owners. In contrast, the number of directly company-operated store is only about 470.

The franchise system works as follows: Seven-Eleven Japan supplies store owners (about 80% of whom previously worked office jobs, with others hailing from from different businesses such as liquor- or food-shop) with training for convenience store management (developed by Seven-Eleven), and then both the company and the franchise owner share the store profits in return.

In this system, stores are obligated to serve the public, and so are equally contractually obliged to open every day of the year for 24 hours a day. Because of the stress involved in such an operation and the nature of the business as a whole, many owners have committed suicide, died of overwork, gone bankrupt, and experienced divorce and the collapse of family due to financial difficulties.

To change these conditions, owners need to have a chance to negotiate with the head office for the improvement of contract conditions. Franchise owners argue that while they are stated to be independent business operators in the contract, they are being forced to work 24 hours a day without any say in the operation of their own business, all under the direction of management and the supervision of Seven-Eleven Head Office.

In effect, while they are treated as independent business owners in the signed contract, they are not being treated as such in reality.

In addition, they are required to send takings to the Head Office every day under the threat that the contract is cancelled if they fail to send this money, or if they sell items at a discounted price that Head Office did not authorize.

Thus, they claimed the rightfulness of organizing the union by saying that they are employees rather than independent business people, considering the reality of their labor.

After receiving the claim, the Okayama Prefectural Labor Commission spent four years hearing from both sides – Seven-Eleven Head Office and store owners in equal part. Then, in March 2014, the historical ruling was made that “store owners of Seven-Eleven Japan are regarded as workers under the Trade Union Act.”

Of course, Seven-Eleven appealed against this ruling and requested re-examination to the Central Labor Relations Commission.

In April, 2015, during the process of deliberation, the Tokyo Municipal Labor Relations Commission made a ruling admitting organization of the union by store owners of Family Mart. This was also brought to the Central Labor Relations Commission by the appeal of Family Mart.

This refusal of contract renewal and “busting” of the union chair cannot have a positive effect for Seven-Eleven Japan in the deliberation at the Central Labor Relations Commission. So, the question is, why such bare-knuckled behavior now?

News Socra asked the PR section of Seven-Eleven Japan the reason of this refusal of contract renewal. The answer was, “Nothing has been decided about that contract renewal.”

– Hitoshi Watanabe (Economic Journalist)