A lawsuit by 7-Eleven franchisees alleges the convenience store chain’s business model and funding contracts, in the dorm of their small business loans, with ANZ bank are flawed and unfair.
Lawyers for 7-Eleven and ANZ bank appeared before the Federal Court in Melbourne on Friday for a preliminary hearing about a class action by former and current 7-Eleven store operators.
“We say that the system is flawed, the business model is flawed, the contract is unfair,” barrister Tim Castle told the court.
The class action alleges 7-Eleven breached its contract and engaged in misleading or deceptive conduct over the financial information it provided to franchisees.
The lawsuit also alleges ANZ breached its contract by failing to assess franchisees’ ability to repay their loans when approving their applications.
The franchisees allege the bank “failed to exercise the care and skill of a diligent and prudent banker” when assessing their ability to repay small business loans, according to the statement of claim.
The class action claims ANZ should not have approved loans for franchisees, which would have prevented them from entering 7-Eleven franchise agreements.
By approving the loans, ANZ allegedly engaged in “unconscionable conduct”, the franchisees say.
The convenience store giant is under under fire from store operators over the “unfair contract terms” of their franchise agreements.
The chain is accused of imposing strict operational control which effectively restricts franchisees from “making their own decisions about how best to run their businesses”.
Franchisees say they have no control over the suppliers who sell them stock, or the retail sale prices, but were forced to incur the cost of any stock losses.
The case will return to the Federal Court for a further administrative update in May.