Ex-Manchester store owner stands his ground in 7-Eleven battle
He hires an attorney in dispute over accounting, franchise pact
The former owner of a Manchester 7-Eleven has given up the keys to his store, but he has retained an attorney to continue to battle the convenience store chain in court.
Paul Dixon told NHBR via e-mail that 7-Eleven Corp. – temporarily enjoined by a state court from seizing the store – seized the store’s income from credit sales instead, preventing Dixon from paying his employees or purchasing inventory.
“Enough is enough,” said Dixon, a Goffstown resident who has owned the franchise for eight years. “I spent the last few years at 7-Eleven only trying to protect my investment of approximately $250,000 while making no money (as the proximate result of 7 Eleven’s accounting), despite the store’s gross volume of approximately $1 million.”
7-Eleven has previously declined comment because the matter is in litigation, but according to court filings the company says that Dixon repeatedly violated his franchise contract by failing to maintain a net worth (total assets minus liabilities) of $15,000. The shortfall was $3,725 at first, but it was allegedly the third time that such a shortfall happened, and Dixon didn’t correct the situation, the company said.
Indeed, by the end of April, as the litigation drew on, the store’s net worth dropped below zero, according to Andrew Brothers, who manages 91 stores in New England. (There are some 9,600 7-Eleven stores nationwide.)
Brothers added an audit in March indicated an inventory shortage at Dixon’s store of more than $8,000 and a cash shortage of $2,300, and that could be because of theft or the franchisee’s failure to report all sales and inventory purchases.
Furthermore, Brothers alleged that after May 16, the store made no deposits into the 7-Eleven account, and disconnected the cash register from the 7-Eleven system.
Dixon, representing himself, filed his lawsuit in April, arguing that 7-Eleven’s accounting system was “in total error” and called it a “shortage scheme” that has been challenged in the past by an attorney for the 7-Eleven Northeast Franchise Association.
After Dixon obtained a temporary restraining order on April 15, 7-Eleven moved the case to federal court, arguing that while abiding by the order, it did want access to the store to inspect records.
While the federal court set up a hearing on that motion, 7-Eleven countersued, arguing for the right to seize the property, based on the aforementioned allegations.
Dixon repeated to NHBR his charges that 7-Eleven never gave him a proper explanation of its accounting system, which is different from his own.
“It is not uncommon for 7-Eleven franchisees to be charged thousands, even tens of thousands, of dollars to restore MNW (minimum net worth) accounts in connection with a store audit that has, at a later date, proved to be wrong,” he said, adding, that they are “not formally challenged by a franchisee for fear of some type of ‘retaliatory’ treatment.”
Dixon said he would continue the litigation to pursue money damages and retained Stephen Wight, a Lawrence, Mass., attorney. Wight told NHBR, that it “was not clear about what kind of procedure to undertake in court” as of yet and would not offer any further comment.