There’s a new trend among bank lenders in Australia, and it’s bad news for global convenience store chain 7-Eleven. Reports from The Sydney Morning Herald published Monday (Sept. 28) said some of the nation’s largest lenders have ceased lending to 7-Eleven franchises.
Reports said that the banks’ actions are a collective response to a recent scandal that has hit the chain following claims the company exploits individual store owners. A lending drought for the company is likely to impact the business’ efforts to sell 78 stores across Australia, reports added.
Unnamed sources told the publication that banks have decided not to provide financing to 7-Eleven franchisees that are looking to acquire new store locations. Banking giant ANZ is said to be the company’s largest lender at present, and sources said that the bank has entirely shuttered lending operations to the firm. While a spokesperson for the institution declined to elaborate on the matter, ANZ did confirm that it has reached its financing “appetite” for the firm, reports said. The spokesperson did not say which other banks have stopped working with the chain.
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But sources added that banks are wary of providing new financing to the company due to the ongoing scandal. An investigative report published just weeks ago found that some 7-Eleven staff were working for just A$5 an hour. The corporation said it will be probing the matter and working with the Australian Competition and Consumer Commission to handle back wage requests.
Reports said that there have been claims that franchise owners are now forced to compensate their workers adequately and thus are experiencing cash flow issues.
In response to the reports, a 7-Eleven spokesperson told the publication that it does not have a hand in the financing obtained by individual franchise owners.
“Franchisees pursue their own financing options, and individual banks make their own decisions about business lending,” the company said. “There is no formal relationship between a franchisee’s financier and 7-Eleven Stores Pty Ltd, but if franchisees are experiencing difficulties with banks, we would be happy to assist in whatever way we can with their negotiations,” the spokesperson added.
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