7-Eleven to pay $98M to settle franchisee class action
Convenience store giant 7-Eleven has agreed to pay $98 million to settle two class
actions accusing it of misleading franchisees, the largest class action settlement
reached so far this year.
As part of the settlement in the Levitt Robinson-led class actions, which still requires
court approval, funder Galactic would earn a 25 per cent commission of $24.5
million under a proposed common fund order.
Levitt Robinson’s administration costs as well as legal costs and disbursements for
running the class actions, plus $40,000 for each of the six applicants, will also be
deducted from the settlement sum.
The settlement was reached in June, just days after the High Court refused 7-
Eleven’s special leave application which challenged the power of judges to make
common fund orders upon settlement.
Stewart Levitt, senior partner of Levitt Robinson, told Lawyerly at the time that both
parties had negotiated in good faith and had reached a “mutually satisfactory”
agreement. The High Court’s denial of the special leave application played a role in
the mediation outcome, according to Levitt, who said the timing was “propitious”.
The class actions, which were filed in February 2018, allege 7-Eleven engaged in
breach of contract, misleading and deceptive conduct, and unconscionable conduct
that has kept franchisees from turning a profit. Very few of the franchises in the 7-
Eleven system were financially viable without employees being underpaid or the
owners of the franchises or their family members working “unreasonable or
unsociable” hours at below-award rates, the class actions allege. Claims of
unconscionable conduct were also added earlier this year.
A separate settlement between the applicants and Australia and New Zealand
Banking Group, which was also named as a respondent, was approved by Justice
Mark Moshinsky in August last year.
ANZ was accused of breaching its responsible lending obligations and the Code of
Banking Practice, and engaging in unconscionable conduct by providing loans to
purchasers of 7-Eleven franchises. Under the settlement, the class action applicants
agreed to drop their claims against ANZ in exchange for the bank suspending the
limitations period in the event they decide to pick up the claims later. The bank is
not released from liability.
The plaintiffs are represented by Philip Tucker, instructed by Levitt Robinson. 7-
Eleven is represented by Philip Solomon QC and Myles Tehan, instructed by Norton
The class actions are Davaria Pty Limited v 7-Eleven Stores Pty Ltd & Ors, which
defines its group members as franchisees, and Pareshkumar Davaria & Anor v 7-
Eleven Stores Pty Limited & Anor, which encompasses a broader class member
definition that includes nominated directors and guarantors.