Caltex Australia to get rid of franchises by 2020

Caltex Australia will get rid of its franchisees by 2020. The petroleum giant has announced it would spend up to $120 million to bring its 433 franchise stores under company control in two years’ time.

The move has nothing to do with the staff underpayment scandal it was involved in last year, the company said Tuesday after revealing its full-year profit result. The company, which has had a 1.5 percent rise in full-year operating profit, said that a two-year review of the franchise model found that controlling its core business was the best way to achieve its growth targets.

“This is key to accelerating the changes required to provide a more consistent customer experience, to roll out new platforms, to standardise services and to simplify supply arrangements,” chief executive Julian Segal said. He added that the company will spend $100 million to $120 million in converting all franchises into company-owned stores by mid-2020.

The announcement follows a Fairfax investigation in 2016 that some franchise outlets had underpaid their workers. Last year, Caltex set up a $20 million assistance funds to compensate affected employees. It also vowed to terminate stores involved in the malpractice.

There were already 77 franchisees that had left due to breaches, news.com.au reports. The petrol company is about halfway through its audit of its franchise network.

By the end of 2017, Caltex operated 314 out of 810 petrol stations. Caltex franchisees operate 433 sites.

Caltex delivered a full-year profit of $619 million, up 18% on the previous corresponding period. The improved numbers were driven by a strong performance from the Lytton Refinery, with its earnings reaching $308 million for the year.