A car wash at a Tesco store was found using Romanian workers who were paid half the minimum wage, according to a report by the BBC.
The premises in Congleton, Cheshire, was operated by Waves Car Wash, which manages about 180 Tesco car washes.
Waves said it closed the franchise in June after a police raid found workers were earning £3.63 an hour. The UK minimum wage for over-25s is £7.20 an hour.
A spokesman for Tesco said it was “pleased that Waves took immediate action to terminate the operation”.
He added: “Waves works closely with legal authorities to ensure full checks of workers and ensure decent treatment, and their operation is regarded as industry-leading by independent labour experts.
“It is very disappointing that, on this occasion, the stringent procedures we agreed with them appear not to have been followed by the franchisee holder at this site.”
Joanna Graham, the company’s managing director, said: “All of our franchisees have to follow the same rigorous employment practices to ensure the legal and ethical treatment of every single worker.
“As soon as we became aware of the situation in Congleton, we took swift action to investigate and then terminate the agreement with the franchisee.
“We have a strict vetting process in place for all franchisees, followed by a programme of regular training and robust audits.”