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A grudge match in Japan: one corner, two 7-Elevens

HIGASHI-OSAKA, Japan – All over Japan it can seem like there is a 7-Eleven on every corner.

Now, on one corner of the working-class suburb of Osaka, there are two.

This unusual pairing is the latest manifestation of a grudge match between one of Japan’s most powerful companies and, arguably, one of its most stubborn men.

Mitoshi Matsumoto, a franchisee, ran one of two 7-Elevens until the chain revoked its contract in 2019 after daring to shorten its hours of operation. For over a year, his store has remained empty as he and 7-Eleven fought in court for control of the store. Fed up and with no end in sight, the company decided on an interim solution: it built a second store in Mr. Matsumoto’s former parking lot.

The outcome of the conflict will not only determine who can sell rice balls and cigarettes from a tiny patch of asphalt and concrete. It could also have profound implications for 7-Eleven’s authority over tens of thousands of franchise stores across Japan, which are part of a network of convenience stores so ubiquitous that the government sees it as vital to infrastructure. national in case of emergency.

7-Eleven did surprising lengths against Mr. Matsumoto. He hired a team of private investigators to watch his store for months, collecting a grainy video that the company says shows him headbutting one customer and attacking another’s car. with a flying kick. He also compiled a file of complaints against him, including one for a failed gift of “commemorative mayonnaise”. And now he says he plans to charge her for the cost of building the second store next to his own.

The company maintains that it acted against Mr. Matsumoto simply because he was a bad franchisee. But he argues that it is no coincidence that the company’s vision for him has dimmed sharply after he said he would defy his rigid demand that stores remain open 24 hours a day.

Prior to his seemingly minimal act of rebellion, the company had viewed him as a model worker. He had received praise for having, among other things, the highest sales of steamed pork buns in his region.

After his decision, 7-Eleven threatened his business and ultimately cut off supplies and took legal action to take over the store. With its actions, says Matsumoto, the company sends a message to other franchisees: the sticking out nail is hammered.

The fight taking place in a courtroom in Osaka will have ramifications for 7-Eleven and the rest of the major Japanese franchises, which control the vast majority of the country’s more than 50,000 convenience stores. 7-Eleven makes up nearly 40 percent of these, and its business practices, for better or worse, have long been considered the industry standard.

“The outcome of this trial will have a huge impact,” said Naoki Tsuchiya, professor of economics at Musashi University in Tokyo. “A loss would be a blow to the company”, but a victory “would divert the balance of power from franchisees to the corporate headquarters.”

Mr. Matsumoto ran the first of two 7-Elevens from its construction in 2012 until the end of 2019. Located on a busy street near one of the region’s largest private universities, the store was closed for 16 months old, musty, dark dust and accumulating.

The second 7-Eleven, a scaled-down version of the nearby store, is being built as a neighborhood service, the company said, after residents expressed concern that the empty store was a safety concern. . The new store has the shattered look of temporary housing that arises in the aftermath of a natural disaster. When the final touches are made in the next few days, it will be operated – 24 hours a day – by 7-Eleven itself.

For most of the seven years Mr. Matsumoto has operated his 7-Eleven, he has faithfully responded to requests for round-the-clock operations, increasing business profits but can be costly for franchisees, who bear the brunt of the burden. labor costs. However, the pace has become unsustainable as help has become harder and more expensive to find – a problem that worsened after his wife died from cancer in the spring of 2018.

In February 2019, he announced that he would close his store from 1 a.m. to 6 a.m. every day. 7-Eleven began to pressure him to return to 24-hour operations, his defense team wrote in court documents. Mr. Matsumoto, who prides himself on being persistent and outspoken, hasn’t backed down.

He spoke to the media and described the harsh working conditions in the industry, including his own workdays of 12 hours or more. Her story struck a nerve in a country where overwork is rampant and sometimes deadly.

His willingness to criticize 7-Eleven in a way that most other franchisees wouldn’t make him famous. It also highlights the hidden costs of ultraconvenience in Japan, where convenience stores serve many daily needs and are often touted as symbols of the country’s remarkable efficiency and customer service.

7-Eleven resigned during his clash with Mr. Matsumoto during his shorter hours. But his relationship with the company, which had always had some issues, reached a breaking point in October 2019 when he announced that he would be shutting down the store entirely for one day on New Year’s Day.

At the end of December, 7-Eleven informed him that he would revoke his contract unless he took unspecified steps to restore a “relationship of trust.” This gave him 10 days.

The company said it was addressing two issues. First, Mr. Matsumoto had attacked him on social media. Second, he had accumulated hundreds of customer complaints. (He would later claim, without providing any evidence, that these were the most stores in Japan.) It was the first time, he said, that the company had brought the problem to its own. Warning. The company denies this.

The first complaint arose in the months following the store’s grand opening. Mr. Matsumoto and his wife had lined the neighborhood with flyers promising a squeeze tube of “commemorative mayonnaise” to any customer who showed up on the first day.

The mayonnaise ran out within hours, and Mr. Matsumoto ended up telling hundreds of buyers to come back later in the week to claim their giveaways. Over a month later, a disgruntled customer tried to cash in on the IOU, then returned a scathing complaint when it was denied.

The other complaints range from serious accusations – berating customers – to petty quarrels. The file also contains a number of complaints from former employees regarding pay and working conditions which echo some of Mr Matsumoto’s complaints about 7-Eleven.

Mr. Matsumoto does not claim that everything in his store was perfect. For years he had been engaged in a heated battle over his parking lot, where customers from other companies often left their cars for hours without even a thank you.

By Japanese standards, Mr. Matsumoto’s neighborhood is a bit difficult. People are lining up. They cross the street against the light. They aren’t afraid to give a convenience store owner peace of mind.

He gave as well as he got, he readily admits, and he was not popular with the neighbors. On more than one occasion, a shouting match over parking spaces ended with a call to the police. They have always sided with him, Mr Matsumoto said.

7-Eleven had never seemed particularly interested in the occasional blast, but after stating that it closed early, he began to take an interest in it very specifically.

In the summer of 2019, the company hired private investigators to keep tabs on Mr Matsumoto’s store, she wrote in a court submission. Perched in a neighboring building, they spent months secretly filming the comings and goings of the store.

The result is 7-Eleven’s piece de resistance: five videos of what appear to be confrontations between Mr. Matsumoto and various patrons in the parking lot. Two involve what the company says is the flying car kick and the head butt, but much of the blurry footage presented in court is difficult to distinguish.

Another video shows Mr. Matsumoto berating a man in a white van. Two men strolling nearby surreptitiously record the argument, and the company crossed shaky footage from their cameras with video taken from the balcony above Mr. Matusmoto’s store to give multiple perspectives on the exchange.

When asked to comment, a representative for 7-Eleven referred reporters to the company’s court records.

Mr. Matsumoto’s legal team has years of experience fighting convenience store chains in court, but one of his attorneys, Takayuki Kida, said, “There isn’t a lot of case of all-out war, where 7-Eleven is crushing Someone. “

It’s easy to see why, said Mr. Tsuchiya, a professor at Musashi University. Attention to Mr. Matsumoto has already helped spur change in the industry.

In September, a large investigation by the Japanese Fair Trade Commission concluded that the 24-hour policy of the convenience store industry was not viable and ordered stores to give owners more flexibility or to do so. facing possible legal action.

Under pressure, 7-Eleven increased franchisees’ revenue share and, during the pandemic, took a more lenient stance on hours of operation. It is unclear how far the changes will go or whether regulators will follow through on their threat.

Mr. Matsumoto is puzzled by 7-Eleven’s decision to build a new store next to his own. “Everyone forgot about me,” he said during a recent site visit. “Now they’ve got me back in the news.”

As he watched a crane do excavation work, a passing cyclist stopped to share a few words of encouragement, urging Mr. Matsumoto not to let the “big guys” win.

Last year, Matsumoto says, the company offered him 10 million yen, or more than $ 92,000, to drop his case. The court encouraged him to accept the offer. But he wasn’t interested. Now the company is trying the reverse approach. His lawyers said they would charge him 30 million yen for the construction of the new store.

It’s the same for him anyway, Mr Matsumoto said. “It’s not about the money,” he said. “It’s about something bigger.”

The same could be said for 7-Eleven. A sign in front of the site sums it all up: the building is temporary.

Win or lose, the company plans to take it down.

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