Japan to convenience stores: ‘please’ solve rift over long hours

Tokyo lacks authority in labor dispute between companies and franchisees

JUNICHI SUGIHARA, Nikkei staff writer, APR 6, 2019

TOKYO — A Japanese cabinet minister urged the nation’s convenience store chains on Friday to resolve the mounting discontent among short-handed franchisees, making the unusual request in the absence of legal authority for the government to intervene.

Many franchise owners, contractually bound to 24-hour operations, staff their outlets themselves for long hours due to Japan’s deep shortage of workers.

“Dissatisfaction among franchisees is growing,” Hiroshige Seko, the economy minister, told the leaders of convenience store chains including Seven-Eleven Japan, a unit of Seven & i Holdings.

Seko asked the executives to devise remedies for these long hours.

“We want the head offices to turn their attention to this matter and voluntarily engage in mutually beneficial initiatives for sustained growth,” he said.

Isamu Nakayama, chairman of the Japan Franchise Association, said the trade group will “create a dialogue with franchisees and work with chain operators.”

Other leading operators in Japan include FamilyMart Uny Holdings, Lawson and Ministop.

Friday’s meeting was prompted by a survey from the economy ministry that found about 60% of franchisees are short-staffed. The survey targeting franchise owners at eight chain operators was conducted between December and March.

Franchise agreements typically require the stores to remain open 24 hours a day. Unable to find enough employees, the franchisees work the unfilled shifts just to keep their outlets in business. They are demanding that companies shorten store hours and take other steps to address their labor conditions.

The economy ministry deems convenience stores a key part of community infrastructure and wants to help give more stability to franchisees. But the ministry sees no legal structure for exerting its authority on this matter.

Franchise owners previously sought collective bargaining rights. But the Central Labor Relations Commission, an arm of the labor ministry, rejected the move on March 15, arguing that franchisees are not laborers under the country’s union law.

Attention then turned to whether the franchisees could be legally considered contractors. But because the chains and franchisees enter into agreements ostensibly as equals, this was deemed not to be the case.

The situation also is unlikely to be considered abuse of a superior bargaining position under Japan’s anti-monopoly law.

“It’d be a problem if a change were made after signing the contract that would harm one party,” Kazuyuki Sugimoto, chairman of the Japan Fair Trade Commission, said at a Wednesday meeting of the Diet lower house’s economy and industry committee.

But if franchise owners consent to round-the-clock operations when they sign the agreement, the requirement is not a violation of the law, he said.

The economy ministry will create an expert panel to discuss the issue. Convenience store companies will be asked to work out remedies and seek feedback from franchisees.

Some opposition legislators want a new law regulating franchise businesses. But the ministry “opposes excessive regulations by the government,” Seko said.