Could the wage fraud investigation that has come to light as a result of the 7-Eleven wage scandal uncover similar abuses in other franchises? That’s the question that is being asked at the highest levels of government agencies around the world that are tasked with policing franchise owners and franchisees and making sure that they operate within the law. Government agencies are focusing on companies that tend to hire, young minimum wage earning employees and immigrants such as the fast food and convenience store industries. Low wage earners, especially immigrants, can easily be coerced into making cash “wage kickbacks” by threatening them with deportation. Paying employees’ low wages is one of the features that is often marketed as an actual benefit of owning the franchise.

According to www.bluemaumau.com, “The Department of Labor’s Wage and Hour Division has found that its investigations of well-known brand QSR franchisees are more likely to uncover wage violations than not. It’s the structure of the franchise model that contributes to that problem, says David Weil, WHD. Of the 20 well-known QSR franchise brands in the graph accompanying the Penn article, all were found by the WHD to have high rates of Fair Labor Standards Act (FLSA) violations, with Jimmy Johns in the unenviable first place (around 88 percent), followed by Subway, Popeyes, Dunkin’ Donuts and Little Caesars (around 80 percent). ”
source: http://www.bluemaumau.org/franchisees_have_high_rate_wage_violations

What the department of labor may be suggesting, is that lowering employee wage costs could be an actual business tactic of an entire segment of the franchise industry. Built into the profit and loss projections are managing employee wages and the lower you could keep them, the more profit you could make. As a matter of fact, it is possible that the fast food and convenience store franchise model would not even be viable unless the franchisee engaged in some scheme of employee wage fraud. As difficult as this issue is to raise, the widespread wage abuse by 7-Eleven corporation, and its heavy-handed approach to providing government agencies with a viable solution to the problem mandate, that all franchises employing a majority of minimum wage employees come under increased scrutiny.