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7-Eleven: LI franchisee shortchanging chain

An exterior view of the 7-Eleven convenience store

An exterior view of the 7-Eleven convenience store at 145 West Sunrise Hwy. in Freeport. Photo Credit: Google

7-Eleven Inc. has sued the franchisee of five Long Island stores for $1 million or more, accusing him of bilking the company out of hundreds of thousands of dollars.

The suit, filed Friday in federal court in Brooklyn, says Tariq Khan, of Hewlett, along with several relatives and dozens of business associates or employees, diverted profits over the course of at least four years, from 2009 to 2013.

The stores named in the suit include two in Freeport and one each in Lynbrook, Elmont and Rockville Centre. None of them were targeted in the federal raids last week of Long Island 7-Eleven stores accused of exploiting workers living in the United States illegally.

Khan did not return calls seeking comment. It was not clear whether he had retained a lawyer.

An employee at the Lynbrook store who identified himself as Mohammed K. said Tuesday morning that he was aware of the lawsuit. "They're in court right now, I think," he said. Khan was not at the store, he said.

The lawsuit alleges Khan breached a profit-sharing agreement with the Dallas-based company. Local 7-Eleven franchisees typically lease their stores and equipment from 7-Eleven and agree to split at least half their profits with the company. The suit says Khan underreported the stores' profits, depriving 7-Eleven of its proper share.

The lawsuit claims Khan, store managers and employees would regularly take money for sales but then cancel those transactions on the cash register so they wouldn't be recorded. Other schemes, according to the suit, included ringing up the wrong sale price and pocketing the difference, such as ringing up $7.09 Skoal Wintergreen chewing tobacco as hot beverage refills at $1.36.

The suit also says the stores run by Khan would use off-the-books suppliers and move inventory between stores to hide the activity.

7-Eleven Inc. said in the suit it discovered these and other breaches of contract when conducting an audit, including a review of cash register videos, after Khan sought to renew one of his franchise agreements.

The suit says the convenience store chain has terminated its franchise agreement with Khan. A company representative declined to comment beyond the allegations in the suit.

Among the 7-Eleven stores named in the lawsuit are:

1571 Hempstead Tpke., Elmont

80 Brooklyn Ave., Freeport

145 West Sunrise Hwy., Freeport

169 Atlantic Ave., Lynbrook

324 Merrick Rd., Rockville Centre

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