Caltex franchisees take to the streets

By Sarah Stowe | 02 Mar 2017 View comments

Angry franchisees protest against “oppressive” and “unAustralian” franchisor demands. 

Caltex store owners took to the streets in Martin Place, Sydney, on Wednesday, protesting against “oppressive” and “unAustralian” franchisor demands for a hefty auditing fee and personal documents. The franchisees said they are being targeted in the audit for “a small minority” that had underpaid workers.

A spokesperson for the protest spoke to Inside Franchise Business at the demonstration.

“There have been issues around audits and they are accusing us with underpayments,” he said.

“They’ve issued a large chunk of franchisees with audits with a cost attached to the audits of a minimum for $10,000 per site."

He suggested that Caltex carry out the audit directly with franchisees instead of engaging “high cost” firm Ernst & Young. This was the first time Caltex had implemented auditing and requesting personal documents such as passports and visa information dating back to 2012.

“This was never the case in the past. All of a sudden they started doing this late last year and are now expecting franchisees to foot the bill and do all the work,” he continued.

“We’re small business operators so we don’t have time to go around chasing documents.”

Julian Segal, Caltex CEO told Inside Franchise Business, “Caltex respects the right of people to protest and encourages the protestors to watch out for their safety and that of others.

“Caltex is committed to ensuring the majority of our valued franchisee partners who do the right thing are not unfairly affected by the inappropriate actions of others.”

As for the underpayment debacle, which is the root cause of these audits, the franchisee spokesperson said, “We believe it is a small minority and we shouldn't be targeted as such that they are putting us all the same boat, effectively accusing everybody else of doing the same thing.

“The fee structure is very punishing and that may have led to some people doing the wrong thing.

“But we don’t think that there is any excuse for not paying workers anything different than what they should be paid.

“We want to cooperate with Caltex and get rid of this wage underpayment issue as much as they would like to do.”

However, another franchisee, Sanjeev Sharma, who runs a Caltex in the Parramatta area, said that if franchisees could afford to pay wages, they would not be protesting.  

“This is totally unfair, totally unAustralian what Caltex is doing to us,” he said.

“We ask them to amend the model, back pay to us so we can transfer the salaries down the chain. They have to be fair to us in sharing the profitability.”

Segal said the company stands by its position.

“There is no excuse for wage fraud or the mistreatment of employees. We will continue to work with the Fair Work Ombudsman to stamp out wage fraud across our network,” he said.

“A review of the Caltex franchise model has confirmed the model allows franchisees to draw a wage, make a profit and pay employees in accordance with lawful wage rates.

“The review included external legal advice supported by an independent assessment of franchise profitability by a leading advisory firm.”

But the spokesperson for the demonstration insisted franchisees were to face a no-win situation.

“They are asking for visa and passport details of employees. This puts us in a conflict because under the Privacy Act we can’t disclose those documents.  

“In fact they have have threatened us with termination if we don’t comply. We have to effectively break one law to comply with the audit.”

However, Rob Toth, partner at Marsh & Maher Lawyers said the franchisor can request documents if there is full disclosure to all parties.

He pointed out, "There has to be a genuine basis for a franchisor to conduct an audit.

"As per the Franchising Code of Conduct, both parties (the franchisor and franchisee) must act in good faith.

"Franchisees are obliged to follow what is outlined in a franchise agreement.”

The spokesperson said “We’d like to talk to Caltex and tell them of our grievances and would like them to come to the table with us and work with us. We would like to continue, we like the brand, that’s why we’re in it.

“We want Caltex to treat us fairly.”