History
Questions:
1.Identify a multinational company operating in Australia. Provide a brief description of the company including the following (5 Marks):
The industry the company operates in
Number of staff in Australia
Number of staff globally
Location of global headquarters
2.Identify any regulatory framework/s affecting the multinational company you have identified operating in Australia and discuss why and how it affects the company. For example, multinational corporations, like local companies, are subject to 30 per cent corporate tax (5 Marks)
3.Identify any treaties, conventions or agreements that have impacted on the products or services that multinational company provides in Australia. How does it impact the goods/services?
1.7-Eleven Stores Private Limited is a multinational organisation that has its base of operation is Australia. As a company that deals with proprietary jobs, it extracts most of its earnings from the country’s food retailers industries. Currently in the Australian base; the organization operates with an estimate of 1000 workers which incorporates its auxiliaries and a total of 45000 workers worldwide. This American-Japanese convenience store chain oversees its various transactional dealings with its headquarters located in Irving, the Texas. (Webster 2017)
The organization has around 56600 stores located in more than 18 nations and runs various franchises. The chain was initially named ‘Tote’m Stores’ then in 1946; it was given a different name. From Texas, the shop shifted to Canada and then to Mexico in the years 1969 and 1971 respectively. Later, in the November of 2005, the 7-Eleven chain in Japan became its parent organization. Today, the company spreads across nations such as Taiwan, Malaysia, Thailand, Sweden, Australia, Denmark, Hong Kong, Norway, etc. due to major steps taken in area licensing and agreements in franchises.
The company established its first store in the August of 1977 and now, the same company controls an estimate of 630 branches in New South-Whales, Queensland, Western Australia, Victoria and the Capital territory of Australia. The various services and products given out by 7-Eleven are 7-Eleven company fuel, treats, News, slurpee beverages, stationary and gifts, Auto and Car care, Personal care and caring, Citilink facilities for payment and Australian Parcel post lockers.
The company aimed to provide easy access to items of daily use to its customers through its easily accessible stores including their favored brand of beverages, snacks and several other products of convenience; the stores made fresh groceries and personal care items cheap and readily available. The organization’s motto states ‘Give the consumers, what they desire, when and from where they desire it’ it was also the very first store of its kind to operate in a 24 hours cycle, It was also the first to sell coffee in what’s famously knows as ‘to-go’ cups. 7-Eleven was the first store of its kind to allow its consumers the liberty to select between several soft drink beverages aligned in the store’s fountain. It’s the first chain stores to ever sell prepaid mobile top-up cards in 1948 and provide ATM facilities to its consumers.
Services
The organization has made its name from bringing innovation in something as mundane as shopping products by introducing new technology. Addition of new and much refined technology hasn’t hindered the functions of the company; instead, it led to a certain boon. Customer service has reached new heights with the introduction of a new smart-phone application in this digitalized society where loyalty programs like such levitate social standards and lively conveniences to a drastic degree. (Hanrahan, Ramsay and Stapledon 2013)
The organization constantly tries to evolve its technology and update itself with the advancing changes, which is necessary to factor in the possibility that a corporate giant like 7-Eleven has constantly invested in several software and business projects that have evolved the company as a whole. Hence, the company successfully supplies consumption goods to its various branches in a regular basis. The organization strongly strives to keep itself up to date with state of art technology and tools to benefit the customers. It solely strives for innovations, in every aspect of transaction and business; it believes in inspiring its workers and works at developing a supportive customer following for its products and its services throughout the globe. Despite its success and growth, 7-Eleven persists at fixing its focus, creating things easier for its consumers and keeping them pleased.
2.Fair Work Regulations 2009, Fair Work Act(FW Act), the Franchising Codes of Conduct and Australian Consumer laws and the Australian Competition and Consumer Commission etc. are the various governmental laws and regulations that govern the operations of the company and other business firms.
The Franchising codes of Conduct and the Competition and Consumers Act control the various franchises; In-fact, they also manage 7-Eleven and every other Multinational Organization with its operations in Australia. Even so, such regulators have shown to fail in balancing franchisees and entrepreneurial franchisors protection. If a franchisee is not given a franchisors discloser agreement within a set limit of 14 days, they will remain incapable of signing any franchisee agreement whatsoever. The franchisee may end the said agreement during the week long cooling period provided to them after the signing process. Hence, it can be seen that a franchisee has 21 days within which they are capable of performing due diligence, if necessary in order to determine whether joining with the said company is worth it or not. (Buchan et al. 2017)
Such requirements may drastically effect the various organizations operating in Australia; the main reason to this can be the mention of current knowledge on franchisor, the given business activity of the franchise and the functioning its system (Sealy and Worthington 2013). The franchisees may often be subjected to false security since the said document is given as a significant part of the legal compliance. The process of the due diligence isn’t that easy of a task, as it is required of the franchisees to ignore the said ‘halo effect’ that are projected by famous brands like that of 7-Eleven and focus on a certain specific task while conducting the processes. In marketing terminology, ‘halo effect’ may refer to the sense of biasness projected by consumers for a particular brand, while purchasing groceries or goods influenced by their favoring different goods of the same brand. In short, the effect may be defined as the consumer’s favor for one area leading to their favoring another.
Innovation
Franchise system is said to be a complex web of several relational contracts, in order to safely manage such a system, advice from an experienced accountant or a lawyer who have significant sources of information regarding such fields is necessary. Even so, such hiring procedures are extremely time consuming as well as difficult (Buchan et al. 2017).
Since the said franchise is evolved by a franchisor for their individual profits; franchisors are capable of contacting out any risks or obligations incurred by the franchisee subjected to any reward whatsoever, hence, the said frameworks have bestowed legal powers on franchisor in the franchisor-franchisee association (Hannigan 2015). In context to Franchise Code of conduct’s ‘division 5’ a franchisee has the right to cut off or sign out of any contract in the case of criminal involvement or failure of payment, the franchisor-franchisee relationship won’t end though.
7-Eleven has once been involved in a scam where 7-Eleven was sued for supposedly not paying its workers properly; hence, the franchise involved has to undertake a significant amount of loss due to their insufficient knowledge about the said system. Franchisees involved were sued for rigging the books of accounts, showing false information on payment of wages and salaries in order for franchisors to earn profit. Hence, the imbalance in the already asymmetric relationship between these two entities can be said to have been the chief cause of what happened. Hence, to rectify all that is done, a stringent and symmetric administrative framework is needed.
3.Typical agreements made by the said franchisee have greatly affected the dealings of goods and services by the company in the Australian continent. As discussed previously, the franchisor cannot be held responsible on how the franchisee may treat its workers because they are supposed to be independent entities (Sivaraman and Turner 2016). The franchisees are tied to following their business activities while also subjecting their products to a uniform system as stated in the business system in the ACCC.
An enquiry on the supposed falsification of employee wages and salary records and the underpayment was conducted on June 2014 by the Work Ombudsman (FWO) in Australia. It was then seen that the organization had totally failed to uphold the norms of FW Act of 2009 and Fair Work Regulations of 2009. This also included significant manipulation and rigging of accounts in order to conceal underpayment of salary and in international and global levels, by the company’s franchisee.
The Federal Circuit Court held the company responsible for manipulation of employees by false payments and rigging of accounts and created business models that disregarded the various norms and ethics of the work place and employee entitlement in case of a corporate giant. 7-Eleven was fined for over $40000 for non compliance of organization’s rules opposed to the various Australian laws and regulatory frameworks governing the various business operations of the continent. The court decision also held the company responsible for deceiving the FW Ombudsman by concealing evidences of the rigging (Webster 2017).
Regulations
Franchiser’s agreement states that the Franchisor cannot be involved in any case of supposed wishful conduct by the franchise or in cases of non compliance when it comes to provisions given to the employees. The franchisors are mostly worried about the profits and pay that can be redeemed from the company. The non-discloser regulations force the franchisees into unwillingly getting into a contract with an organization, since they are already intimidated by the Halo effect brought by several corporate giants. Hence, to provide the franchisors with sum of profit required, they had to rig the various accounting statements (Buchan et al. 2017).
The services and goods sold by the organization had faced a serious blow due as an aftermath of the scandal. The organization engaged itself in damage control measures in order to reduce the several losses that it was incurring. The company withdrew most of its financial support from most of its franchisees after it was revealed that more than 138 shops out of the said 600 had only earned a total of around $300000 in the year which was utilized in payment of wages, frights and other costs (Sivaraman and Turner 2016).
The wage scam had significantly reduced the number of customers who were purchased from the stores due to a supposed loss of trust in the organization and lack of honesty when it came to the quality of the said goods and services that were marketed by the company’s retailers. Due to ill performance, more than 50 stores of the 7-Eleven chain were ordered to permanently shut down in the year 2015; these branches were unable to fully provide their employees with their payment.
Hence, it can be stated that the losses incurred by a chain as famed as 7-Eleven in Australia was because of a rather asymmetrical form of agreement made by the franchisee. In order to prevent further occurrences of such cases of loss of Goodwill and a supposedly massive loss of money and to maintain a lawful franchisee-franchisor relationship, measures must be taken. Laws governing such relationships must be strong and downright stringent. Franchise Agreements concerning both the franchisors and franchisee can be drafted by the said franchisors of the company (Sivaraman and Turner 2016).
The agreement may also include clauses stating that the said franchisor of the company will be rightfully involved in the various business matters and may the franchisor may also ask for reports about the running of the franchisee’s business and suggest any necessary changes required in order for it to function properly and smoothly. At the same time, to prevent occurrence of events like that of 7-Eleven and to keep an eye on other related matters other than that of just the company’s profit, the franchisors may also rightfully monitor the exact number of employees involved in the business and check whether they are provided appropriate wages and salaries of not, they can also verify the accounts and other documents in order to see whether there aren’t any signs of rigging or false implementation of statements in the books of accounts and the business as a whole. The corporation of these two or the franchisor and the franchisee going hand in hand will not only lead to development and fulfillment of objectives, but will also provide customer satisfaction.
Reference list
Australian Competition and Consumer Commission
Australian Securities and Investments Commission (ASIC)
Buchan, J., Frazer, L., Weaven, S., Tran?Nam, B. and Grace, A., 2017. The Adequacy of Pre?purchase Due Diligence in Independent Small Business and Franchising. Australian Accounting Review.
Fair work act 2009 (Cth)
Fair Work Regulations 2009
Franchise Code of Conduct
Hannigan, B., 2015. Company law. Oxford University Press, USA.
Hanrahan, P.F., Ramsay, I. and Stapledon, G.P., 2013. Commercial applications of company law.
https://www.7eleven.com.au/about-us
Sealy, L. and Worthington, S., 2013. Sealy & Worthington’s Cases and Materials in Company Law. Oxford University Press.
Sivaraman, G. and Turner, P., 2016. The 7-Eleven wages scandal: The need for law reform. Precedent (Sydney, NSW), (135), p.53.
Webster, J., 2017. More than underpayments and civil penalties–Taking a strategic approach to regulatory workplace relations litigation. Journal of Industrial Relations, p.0022185617705816
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