Internal documents have also revealed that head office has been aware for at least a year that hundreds of its franchisees have been underpaying staff. ASIC is too timid, says former consumer tzar Allan Fels. Credit:Alex Ellinghausen "It seems to me that the business model will only work for the franchisee if they underpay or overwork employees. "I think the fact that so many people are not being paid by Australian standards undermines the whole foreign guest worker laws and regulations that we have. "The general understanding, I believe, by the Australian community is that we are prepared to have foreign guest workers providing that Australian standards are conformed with."

Professor Fels added that while franchisees are at fault for underpaying staff they were often being put into an almost impossible situation by the franchise agreement imposed by the "powerful franchisor", 7-Eleven head office. Investigation Launched The Fair Work Ombudsman has launched an investigation into 7-Eleven following damning findings of three raids of more than 80 stores in the past six years. The latest raid in September 2014 of 20 stores found a staggering 60 per cent were underpaying staff and doctoring their payroll.

In an exclusive interview with Fairfax Media and Four Corners, FWO Natalie James said the investigation was looking into whether head office was complicit in the fraud. "That is something that we're looking at, at the moment," she said. Ms James said under the Fair Work Act the responsibility for getting employee entitlements right rests with the franchisee. It seems to me that the business model will only work for the franchisee if they underpay or overwork employees. Allan Fels "The question that I would put to 7-Eleven is what's your contribution to this problem, to this conduct? What steps are you not taking that you might take to ensure that your franchisees are doing the right thing?"

Ms James said the investigation had found that some franchisees were being put under financial pressure. "What is 7-Eleven head office doing to ensure that the response to that pressure is not ripping of their workers?" she said. "I think 7-Eleven need to wake up to the fact that this conduct is persistent and it is a clear pattern and that really it's their moral responsibility, their ethical responsibility to step up and take some steps to do something about it." Under the franchise agreement, head office takes 57 per cent of gross profit and the franchisee gets the rest. Out of its cut, head office pays the rent (some of the properties are owned by 7-Eleven), supplies all the equipment and fittings, utilities and back office services including payroll. From their 43 per cent takings, the franchisee pays a raft of other running costs including all staff wages – which is a big expense. 7-Eleven stores are open 24 hours a day seven days a week, which equates to an estimated wage bill of $230,000 a year for a store with one employee working each shift.