Former Caltex franchise owners took to the streets of Sydney on Friday to protest against what they claim is unfair treatment by the company in terminating their businesses.

The outrage followed Caltex’s announcement it will scrap petrol station franchises by 2020 and acquire 433 franchise stories run by 237 franchisees.

Franchisees said their contracts are being rapidly terminated, with little warning as to when they will lose their stores. One of them, with five stores in Newcastle, said he was only notified of the change in ownership on the morning it happened.

“They just took us over,” he said. “The termination email came through at six in the morning and they had security and management there taking over the store at the same time as we got the email.”

Many of these terminations were based on grounds of non-compliance after a recent internal audit by Caltex of its petrol stores.

Franchisees say they were forced to pay up to $15,000 for an audit of their businesses to find out if they were compliant with Caltex’s rules, with one claiming he had in effect been made to pay to have his livelihood taken away.

“We had to pay for them to find a reason for us to be terminated,” this former franchisee said.

A key complaint amongst many former franchise owners is the length of time Caltex is taking to reimburse them for their petrol stations’ stock and goods.

They said it has taken weeks to receive money for the stock and items, while they were left without an income.

“Caltex knew the model was not right, and they’ve punished us for it,” said one former franchisee. “They’re making us out to be the criminals.”

‘They’re simply bullies’

Another terminated franchisee flagged he may have to declare bankruptcy. “We took out loans from the bank for these businesses, and now we have no business and have to pay back the loans,” he said.

“They gave us an hour’s notice and then that was it. They’re bullying us, they’re simply bullies. We’ve been left with nothing.”

Other franchise chains, includig 7-Eleven, who catch their franchisees in breach of agreements, for example for underpayment, deduct the unpaid wages from the on-sale of the franchise outlet but allow the outgoing franchisee to keep the balance of the value of the business when it is passed to a new owner.

The Caltex franchise agreement allows the petrol giant to seize a store without payment beyond the stock already purchase if it finds a franchisee has breached their obligations.

Caltex rejected the franchisees’ claims. saying the company’s model allowed franchisees to make a profit, draw a wage and pay their employees legal rates.

“Caltex finds the underpayment and other mistreatment of employees by its franchisees, including visa fraud and wages fraud to be unacceptable. Whistle-blowers have told Caltex their experiences of underpayment, making employees pay for drive-offs, intimidation, and exploiting a lesser knowledge of their rights,” a spokeswoman said.

“Caltex follows a fair and rigorous process before ever taking the serious step of ending a franchise agreement, recognising that such a step has significant implications for both the franchisee and Caltex.”

“We expect our franchisees to meet all of their obligations under our franchise agreement, including by paying their employees their full entitlements.”

Earlier in the week a parliamentary inquiry into the franchise sector was announced, examining the fairness of the relationship between brands and store owners.

The Australian Competition and Consumer Commission also announced on Friday it would focus on the Franchising Code of Conduct, particularly around large or national franchisors, in the coming year.

Extracted from The Sydney Morning Herald