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Franchise owners battle Caltex over unfair treatment

CaltexCaltex franchisees are up against the global petrol company. The franchisor is said to be treating them in an ‘oppressive’ and ‘unAustralian’ manner.

They said Caltex is demanding a hefty auditing fee and for them to provide personal documents.

They also said that they are being targeted in the audit for ‘a small minority’ that had underpaid workers.

Caltex store owners took to the streets in Martin Place, Sydney, on Wednesday, to protest.

A spokesperson for the protest spoke to sister publication 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.”

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

“[The petrol company] 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 that they “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 branch 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. Wage fraud or mistreatment of employees is inexcusable. Caltex will continue to work with the Fair Work Ombudsman to erradicate any wage fraud happening within the petrol company.

“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,” said Segal. “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 threatened us with termination if we don’t comply. We have to effectively break one law to comply with the audit,” according to the spokesperson.

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

“There has to be a genuine basis for a franchisor to conduct an audit,” Toth pointed out. “As per the Franchising Code of Conduct, both parties (the franchisor and franchisee) must act in good faith.”

He said further that “franchisees are obliged to follow what is outlined in [an] agreement.”

“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,” the spokesperson said. “We want Caltex to treat us fairly.”

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