Khan Vows Fight After Surrendering 7-Eleven Stores

Published in CSP Daily News

Former national franchise chairman offers defense

By  Mitch Morrison, Vice President & Group Editor

Tariq Khan

LONG ISLAND, N.Y. -- Tariq Khan, a past chairman of the National Coalition of Associations of 7-Eleven Franchisees (NCASEF), has surrendered his five Long Island, N.Y.-based stores after a court ruling in favor of 7-Eleven corporate, which sought to seize the sites from the veteran operator, as reported Monday in a Raymond James/CSP Daily News Flash.

But Khan says the fight isn't over.

"I have spent 26 years with 7-Eleven, this has been my life," he said in an exclusive interview with CSP Daily News. "I'd be a fool not to fight. This is about my reputation. I've spent a lot of resources to fight and I will continue to fight."

Khan acquired his first store in 1998 and by 2004 had been operating five sites on Long Island. During that time, he also climbed politically within the ranks of the national franchise coalition, where he would serve for an unprecedented 10 years as chairman, before losing to Massachusetts-based franchisee Dennis Lane five years ago.

Khan expressed exasperation with the media and emphatically defended his record as a straight-up businessman, rejecting accusations of siphoning funds for his own benefit, and instead saying he was no different than many other operators who have been undercut by dishonest employees.

"We have a long way to go in this case," he said. "It's sad the accusations the company has made falsely against me. There is not a convenience store in the country that doesn't have employees who steal from the store. That's what has happened to me."

That said, Khans said, "our plan is to defend ourselves and get control back of the stores.

"I have never done anything wrong to a soul. 7-Eleven has tried to destroy my credibility. And sadly, the court upheld (corporate's claim). While the outcome is something we'll have to abide by, we plan to fight it."

7-Eleven did not respond by press time for a request for comment on the court ruling or Khan's plans to fight for control.

But based on accusations made in legal documents filed this summer, 7-Eleven presents Khan and his family as pilferers whose stores routinely failed to properly scan items to the tune of hundreds of thousands of dollars over at least four years.

The complaint, filed in federal court in Brooklyn, N.Y., in early July, alleged that Khan, his wife, son and others have for years operated a "business within a business" at each of the five stores, diverting cash to buy merchandise inventory from suppliers and never reporting the invoices to 7-Eleven.

Dallas-based 7-Eleven Inc. moved for a temporary restraining order, accusing the Khans among other things of failing to scan all scanable items, failing to turn over to corporate all receipts for a preceding 24-hour collection period and failing to furnish copies of invoices for all purchases.

The Khans responded by filing a temporary restraining order of their own to prevent 7-Eleven from terminating their franchise rights or interfering with their ability to purchase through the company's primary wholesaler, McLane Co.

These claims and counter-claims came to a head earlier this month. According to a court ruling obtained by CSP Daily News, the U.S. District Court's Eastern District of New York, on Oct. 10, granted 7-Eleven's request for a preliminary injunction that would force Khan to cease operations and turn over the stores to 7-Eleven Inc.

The decision upheld an oral ruling by the court on July 2 that granted 7-Eleven a temporary restraining order and directed that all evidence be preserved.

Since July, both parties have engaged in numerous legal maneuvers, with Khan seeking to hold the reins of the five stores he has franchised, and 7-Eleven aiming to remove Khan from control.

In its Oct. 10 decision, the court said it "finds that there is more than sufficient evidence of fraud in this case to warrant termination of the franchise agreements without notice or opportunity to cure because the fraud goes directly to "the essence of the contract."

"7-Eleven presented substantial evidence of the Khans' repeated failure to properly record sales over a period of years."

Khan contends that whatever pilferage took place represented the acts of random employees and not a scheme under his direction. Toward that end, the court's rulings are limited.

"The preliminary injunction," the court states, "only will prevent the Khans from operating the stores during the pendency of this action until a final decision is reached on the merits.

"In the court's view, the granting of a preliminary injunction here is not the equivalent of granting the "ultimate relief" and, if 7-Eleven does not prevail on the merits, the stores could be returned to the Khans. Indeed, in that event, any net income due and owing to the Khans would be accounted for by 7-Eleven."

By Mitch Morrison, Vice President & Group Editor
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