NEW YORK TIMES



 

The country’s antimonopoly regulator has warned the powerful industry to improve the treatment of franchisees who have been fighting for shorter opening hours.

Japanese convenience store owners who have been fighting for a break from their grueling 24-hour, 365-day-a-year operations may be closer to shorter opening hours.

In a report on Wednesday, Japan’s Fair Trade Commission took the industry’s top chains to task for business practices that have generated enormous profits by pushing growing operating costs onto franchise owners.

The report, which was based on a survey of more than 8,400 convenience store franchisees, detailed numerous problems with the companies’ business models, starting from the franchisee recruitment process and extending to the most fundamental aspects of store management.

It is the most comprehensive examination to date of an industry that is as opaque as it is ubiquitous. Companies, like 7-Eleven, Lawson and FamilyMart, have closely guarded their business practices, including from their own franchisees, making it difficult to ascertain the extent of the issues facing them.

Among the most serious problems cited by the report were companies’ coercing franchisees into buying more products than they could sell, pushing them to maintain 24-7 operating hours and making misleading recruitment promises to store owners about the prospects for their new businesses.

The commission warned that those practices, among others, may have run afoul of Japan’s antimonopoly law by “abusing a superior bargaining position.” It requested that the country’s eight leading convenience store chains submit a plan for taking corrective measures. The commission also said it would seek further information about possible legal violations by the companies.

Convenience stores are ubiquitous in Japan, with more than 55,000 locations so widely spread throughout the nation that the government considers them part of the national infrastructure.

But the industry has come under heavy scrutiny in recent years after allegations by franchisees that companies have used strong-arm tactics to force them to overstock their stores and maintain 24-7 operations, leading some short-handed and overworked owners to collapse from exhaustion.

In early 2019, the decision by Mitoshi Matsumoto, a 7-Eleven franchise owner in the Osaka area, to close his store in defiance of company policy set off a media frenzy and put the issue in the spotlight. The trade commission began its inquiry nearly one year ago, amid mounting public pressure on the industry to change its practices.

 

7-Eleven severed Mr. Matsumoto’s contract in December after he decided to close his shop for the New Year’s holiday. The company has said the decision was made in response to customer complaints. The matter is now the subject of competing lawsuits.

Reached by phone, Mr. Matsumoto, who has been working as a carpenter since losing his store, said that while he was encouraged by the commission’s report, he was concerned that big companies like 7-Eleven would still be able to avoid making major changes to their practices.

“If we don’t end the battle here and win a decisive victory, I think that the current situation will just drag on,” he said.

In a statement, 7-Eleven said it accepted the commission’s findings and “is working toward improving,” adding that it had set up a team to address and resolve the issues raised in the report.

The company, which came under Japanese ownership in 1991, accounts for nearly 40 percent of convenience stores nationwide.
FamilyMart and Lawson did not immediately respond to requests for comment.

7-Eleven’s management model, which emphasizes 24-hour operations every day of the year and strict controls on store inventory, was for years considered the industry’s gold standard and became the norm across convenience chains nationwide.