What is the responsibility of a franchisor to ensure its franchisees operate legally? Does the FCPA apply to franchises? These are but two of the questions that many U.S. franchisors may be thinking about a bit more today than they were yesterday in light of the reported raids by agents from the U.S. Immigration and Customs Enforcement (ICE) of 7-Eleven stores across the country, looking for undocumented workers. The parent franchisor attempted to distance itself from the entire imbroglio by releasing a statement that “7-Eleven Franchisees are independent business owners and are solely responsible for their employees including deciding who to hire and verifying their eligibility to work in the United States.”
The problem for the parent franchisee is that it is well aware of problems in its franchisees over this very issue. Back in 2013 another series of ICE raids resulted in the arrests of nine 7-Eleven franchise owners and managers in New York and Virginia on charges of employing undocumented workers. That was one of the largest criminal immigrant employment investigations ever conducted. For the parent franchisor, aside from the issue of how much income it has accepted from franchisees who employ undocumented workers, is what did they require of their franchisees in light of the 2013 raids and convictions. Moreover, what did the parent franchisor do to verify that these franchisees were complying with immigration and employment law?
From the FCPA perspective, it seems almost laughable that a franchisor would knowing turn a blind eye to a documented, existing problem; simply claiming it is all the responsibility of a franchisee. If there is one thing the FCPA experience demonstrates, it is that multiple systems of controls, oversight and monitoring are required. Simply saying compliance is their responsibility (whoever they might be) is not sufficient. For 7-Eleven, I hope this acts as a wakeup call to put into practice the well-known Reagan truism trust but verify.