May 16, 2014
By Brenda Flanagan
Karamjeet Sodhi bought his first 7-Eleven franchise in New Jersey 26 years ago, worked 80-hour weeks, even slept in the store. It paid off.
He ended up owning a half-dozen franchises — a real 7-Eleven success story.
Until last June. He says that’s when 7-Eleven suddenly terminated him and demanded that Sodhi surrender his stores, basically give back all six franchises.
“They started accusing me that I’m doing something wrong with my business, stealing money from them, which I never did,” said Sodhi.
7-Eleven accused Sodhi of several violations, including fraud, claiming he broke their franchise agreement by under-reporting his store revenues so that he wouldn’t have to share that money with 7-Eleven.
“I was shocked that they could do this to us. We never have any problem with 7-Eleven,” Sodhi said.
Sodhi hired Jerry Marks — a lawyer who claims 7-Eleven also allegedly targeted other franchisees in New Jersey, New York and California. Marks filed countersuits in Camden Federal Court.
“We suspected that 7-Eleven had a plan to take over stores — stores that were really good stores,” Marks said.
It’s called churning — seizing a franchise and reselling it at a profit. Sodhi bought this franchise for $385,000. Now he figures it’s worth at least double that.
“My stores are very good stores, they are high-volume stores. They want to take it back — free — and sell it to other people,” said Sodhi.
Sodhi’s case recently got a boost when Kurt McCord stepped forward. The former 7-Eleven corporate investigator quit his job and turned whistleblower — claiming in court documents that 7-Eleven adopted “a strategy of ‘churning’ franchise locations, [using] its superior financial, legal and corporate strength to seize the stores of profitable franchisees without providing them fair compensation.” McCord certified that 7-Eleven targeted Sodhi.
“He specifically said in his certification that he and another asset protection investigator had looked at Mr. Sodhi because they were trying to dig up some fraud. And they couldn’t find any,” Marks said.
7-Eleven sued Sodhi anyway. It didn’t reply to our requests for comment, but in court documents, 7-Eleven accused Sodhi of “illicit, wide-ranging schemes…to secretly, and successfully, siphon hundreds of thousands of dollars in cash” and called McCord’s statement “a warped, fun-house mirror type of reflection.” The federal judge said Sodhi can keep his stores until the case is decided.