THE PRESS ENTERPRISE
PE.com | Southern California News | News for Inland Southern California
BY LAURIE LUCAS
February 07, 2014; 10:52 AM
Joined by a small group of supporters, the Patel family will protest on Saturday, Feb. 8 in front of the 7-Eleven store in Riverside they used to run. For 19 years, the India-born Dilip and Saroj Patel operated a franchise at 5958 Magnolia Avenue at the corner of Jurupa Ave., until the corporation took back their store on Dec. 5 after accusing them of a coupon scam. The Patels, both in their 60s, deny the charges and want customers to know they weren’t ready to retire. They say they didn’t even get the opportunity to sell the store, valued at more than $450,000, which brought in annual revenues of about $1.9 million.
Their son Dev Patel, 27, who lives in Corona with his wife two children managed the 7-Eleven he considered his nest egg. Acting as the family’s spokesman, he began organizing the Saturday protests from 10 a.m. to noon three weeks ago. He has hired Jerry Marks, a New Jersey-based attorney who has represented franchisees for 20 years and has won some of large judgments in 2010 and 2011, including a $206 million class action against Quizno’s.
“7-Eleven seized our franchise store through bullying and storm trooper tactics,” Dev Patel said. “There was no negotiating. They’ve branded us criminals. All of our eight employees have lost their jobs.” Margaret Chabris, a spokesperson for 7-Eleven at the U.S. home office in Dallas, declined to be interviewed, but wrote in an email: “Because of the potential of legal action, we are not at liberty to publicly discuss the matter with the Patels. But we know that the new management for that location will run a 7-Eleven that is responsive to the needs of the community and a model store. We’re sure customers will be pleased with what they find there.” Marks said in a phone interview that “the situation is wrong, just plain wrong.” “Our goal is to get the Patels the value of what was taken away,” he said. We also want to obtain remedial and corrective damages to stop these abuse policies.” The attorney said he’s investigating a pattern of discrimination by 7-Eleven against long-term franchisees who are predominantly older Indians from the eastern part of that country.
Marks said that 7-Eleven, the world’s largest convenience retailer with more than 43,500 stores and global sales of more than $63 billion, used “improper interrogation techniques. They ambushed my clients, employed Gestapo tactics, interrogated them in a small room, and frightened the hell out of Dilip and Saroj, he said. But 7-Eleven bungled the procedure because they didn’t obtain any settlement agreement in writing from Saroj Patel, who owned 50 percent of the franchise. “Legally,” Marks said, “what they did was worthless.” Marks said he spoke to one of 7-Eleven’s attorneys who has denied any wrongdoing. “They’re not going to win,” Marks said. “My clients were illegally removed from their store.” Rankin Gasaway, the Dallas-based senior vice-president, general counsel and secretary for 7-Eleven, did not return a call seeking comment. But the Patels are not quietly fading away. Dev Patel has told the story on radio, posted a long commentary with photos on a website called Unhappyfranchisees.com and continues the weekend protests. Dilip, 63 and Saroj, 60, paid $60,000 to the franchise seller and $70,000 to 7-Eleven in 1995 for the 3,200-square-foot store. In 2010 Dev, who’d worked on and off at the store while growing up stepped in as manager.
With a day’s notice, at 10 a.m. on Thursday, Dec. 5, several corporate officials coerced his parents to sign away the Magnolia Avenue store without a refund of franchise fees or chance for the Patels to sell, Dev said The 7-Eleven managers accused the couple of reaping $100,000 through fraud by giving away $1.50 Slurpee coupons, ringing them up for $3 apiece, billing the corporation and pocketing the dough. By 10 p.m. that same day, 7-Eleven had the store back, Dev said. The 7-Eleven team also told the Patels that the corporation’s right to recover a franchise was in the 300-page agreement they’d signed 19 years ago. A take back provision is not uncommon. “Almost every franchise agreement says that the franchisors can do whatever they want,” said Sean Kelly, who has worked 25 years consulting, marketing and drawing up hundreds of franchise programs. But Kelly, who’s based in Lancaster, Pa., said 7-Eleven seems to employ a takeover tactic in the industry known as “churning.” Without closing a store for even a day, management ousts the current franchisees, installs their own people and resells the franchise for hundreds of thousands of dollars.
“7-Eleven has more control over its franchisees and franchises than any other company,” said Kelly, who launched the website Unhappyfranchisee.com five years ago, where Dev Patel has posted his story. “Typically, the company owns the store, the land, the equipment and finances the inventory,” Kelly said. Franchisees like Dilip Patel don’t own anything, but they pay for the rights to operate the store and split the profits. “I can’t say that all store seizures are completely wrong or completely right,” Kelly said. “There certainly is fraud on the part of some franchisees. But 7-Eleven needs to give the franchise owners a chance to appeal, to give their side of the story before the company resells. In the case of the Patels, I think this is a potential black eye for 7-Eleven. The fact that the Patels are holding up signs and are outspoken makes their story exceptional.” Raphaela Nelson, 40, said that as a neighbor of the store, and as a parent and teacher, she’s “really upset” by the Patels’ departure. Her students at Magnolia Elementary School, her son’s Little League and many organizations have benefitted from the Patel’s generosity. “They’ve rewarded reading with treats and donated hotdogs and hamburgers to our PTA,” Nelson said. “The Patels integrated the community into their store. They knew people by name, asked about grades and hung up the children’s posters. We knew the staff. I haven’t been back since they left the store.”
Contact Laurie Lucas at 951-368-9559 or firstname.lastname@example.org