COMMENT

7-Eleven's head office is doing its best to appear shocked, offering to help franchisees caught in a wage fraud firestorm and the workers who've been dudded. This act shouldn't fool anybody.

On Monday the company launched into full damage control following 48 hours of shocking revelations of wage fraud.

7-Eleven has been rocked by revelations of widespread wage fraud.

It announced a review to be chaired by an as yet to be named "eminent and qualified" Australian to examine claims including underpayment of staff by franchisees and franchisee agreement terms.

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No review is needed because head office already knows about the systemic wage fraud. It has been going on for years, under its watch.

"The key factor here is that the panel will receive, review, and process any claim of underpayment, and authorise repayment where this is appropriate," chief executive Warren Wilmot said in a statement.

To do this it will need to set up proper systems, rather than the company's previous cover-up of this sort of behaviour.

Wilmot disagreed the 7-Eleven franchise system was based on franchisees underpaying their staff.

Many would beg to differ. Indeed, financial statements of a number of franchisee operations suggest that if proper wages were paid they would struggle to break even.

The statement goes on to declare: "We cannot allow the few to taint the achievements of the many."

The problem is there is a solid body of documented evidence and the testimony of a whistleblower that wage abuse isn't by the few but the many.

7-Eleven seems to be grappling with whether it needs to take responsibility or shift it onto the franchisees.

The company has offered to refund the franchise fee paid and help sell any stores where a goodwill payment has been made.

Unfortunately, for those looking to sell, this expose is likely to have an impact on the value of that goodwill.

Since Four Corners and Fairfax Media started investigating the wage abuse the number of stores for sale has increased from 50 to 76. There are threats that more will be sold.

Revelations over the weekend that behind the shiny 7-Eleven logo staff are paid $12 an hour to work in a business fraught with danger – three robberies a week – has caused a public uproar.

Monday morning started with a bang when head office sent out its foot soldiers to visit all 620 stores across the country to remind franchisees they are not allowed to talk to the media as well as try and "understand the reaction of franchisees" to the unwanted media attention.

Franchisees were baying for blood. At the weekend a group of franchisees from Brisbane had met to work out a game plan, determined they weren't going to let head office get off scot-free.

But this issue isn't going to go away. It has struck a chord with the public. It has raised an issue about the shadowy world of the labour market.

A petition has sprung up, hundreds of emails sent from workers, past and present, franchisees and insiders, shining a light on what is really going on.

Sydney lawyer Stewart Levitt is preparing a class action against 7-Eleven head office in Australia and the United States. Some workers have already signed up. But there is talk that franchisees might launch their own action, given the structure of the franchise model.

The brutal reality is staff aren't the only victims of the 7-Eleven franchise model, which controls most aspects of the business and requires stores to be open 24 hours a day seven days a week and hand over 57 per cent of gross profit.

The franchise model is based on the US model, which is a 50:50 split but wage costs are far lower than Australia.

The upshot is many franchisees would struggle to make a profit if they were forced to pay the correct wages. What is particularly egregious about 7-Eleven is that it is a powerful multibillion-dollar corporation with a global brand that has been caught turning a blind eye.

Head office has sat back for years and raked in the profits, at the expense of some of the most vulnerable in our society, overseas students on visas who don't know the rules of the land.

When 7-Eleven got wind that ABC's Four Corners and Fairfax Media were investigating the franchise giant it swung into action. The head of operations, Natalie Dalbo, issued an edict to crack down on wage fraud.

In the words of the whistleblower, head office went from turning a blind eye to panic mode.

It is a sad indictment that one of the world's most well-known brands is built on the backs of workers getting half pay or less. What is even sadder is it has been going on for years and nothing has been done.

Fair Work has conducted three separate raids over the past six years, but nothing has changed. The processes introduced have been window-dressing, trying to create the apparition of action without changing anything.

Exploiting staff is unconscionable and franchisees doing it should be punished severely. However, the role of head office pedalling a flawed business model and paying lip service to enforcement is almost worse.

Do you know more? Email Adele Ferguson at aferguson@fairfaxmedia.com.au or Sarah Danckert at sarah.danckert@fairfaxmedia.com.au.