United Petroleum is at war with former franchisees as accusations fly of underpayment and ruined lives. And it all started over a meat pie.
Jigar Patel got out of his car near a United Petrol service station on Melbourne’s urban fringe, and switched on the covert pen camera he’d recently bought online.
As he walked towards the shop, he put the camera in his shirt pocket.
He can be heard stating the date, time and location — and what he was there for.
“I’m going inside to ask for a job, and see how much they get paid,” he said.
Jigar suspected it would to be well below the award rate.
He says he’d been told as much by other United workers who came to him looking for work when he was running his own franchise in Wallan, in Melbourne’s outer north.
So in February and March this year, Jigar set about finding out.
He drove around 15 United sites with his hidden camera, pretending to be looking for a job.
“Some were paying $13 or $14 maximum,” he said.
“One guy told us $18.
“It shocked us.”
Jigar’s amateur investigation was driven by more than idle curiosity.
He and his business partner Jaydeep Bhatti had been terminated from their United franchise on Australia Day this year in a 2am phone call telling them the company had taken over the site — partly over allegations of underpaying their staff.
“We lost more than half a million dollars we invested in this business,” Jigar said.
“We were thinking we would build a secure future for our families with this business.
“Everything is gone.
“Financially, we are broke. Mentally, we are broke,” Jaydeep said.
According to United, the two men were terminated for “deliberately, fraudulently and repeatedly” paying staff incorrectly.
Jigar and Jaydeep acknowledge there were mistakes, but say they had complained to United it was impossible to pay staff full rates and survive.
“We were trying to do the right thing,” Jigar said.
“The structure is, you can’t afford to pay wages.
“If you want to operate the site, you are paying from your own pocket.”
It starts with a breach notice
They’re among a group of former United franchisees who claim to have been unfairly kicked out of their franchises.
One was terminated after a single breach notice for keeping pies in a warmer for too long, and for not having soap in staff toilets.
They’re currently suing the company for hundreds of thousands of dollars in damages.
Other franchisees were terminated after a series of breach notices — over underpayment, food safety, even litter on the service station forecourt.
Many of the alleged breaches are hotly disputed by former franchisees.
Jigar and Jaydeep lost the $145,000 they spent buying the franchise from United, the $320,000 they paid the former owner, and their source of income.
Others have told the ABC they lost similar amounts.
“Financially, we are broke. Mentally, we are broke,” Jaydeep said.
United Petroleum made it clear it intended to get out of franchising after it was the subject of a scathing report by the Fair Work Ombudsman in 2017.
The report found the company had no system to monitor whether staff were being paid correctly, and that senior management didn’t think United was responsible for ensuring compliance with workplace laws.
United announced it was moving away from franchising, towards running its own sites, or employing commission agents.
“Commission agents are effectively an unprotected species,” said lawyer Stewart Levitt, who is representing three former United franchisees.
“They are much more readily terminated than franchisees.”
What really frustrates Jigar is that the forensic-style surveillance he alleges United used on him and other franchisees to detect breaches — including monitoring them with CCTV — appears to have stopped dead.
“They never audit the commission agents,” he claims.
United denies there is underpayment going on at its commission agent sites.
It says it “takes its obligations to employees seriously and has robust practices and procedures in place to ensure employees are properly paid.”
“Allegations that employees in the United network have been subject to systemic underpayment that is well below award are absolutely false and incredibly damaging,” it said.
“Indeed, United has taken immediate steps to confirm that employees are being properly paid at those sites.”
But United would not confirm if it was still using video surveillance at its commission agent sites, saying only that they had been externally audited.
And so in March this year, Jigar — with no job, no business, and no future — travelled across Melbourne with his pen camera, talking to staff at United sites about their pay.
The Fair Work Ombudsman is aware of Jigar’s recordings, and has confirmed it’s continuing the investigation of United Petroleum that began in 2017.
Meanwhile, Jigar and Jaydeep are preparing to follow other former franchisees who have taken United to court seeking damages for their lost business.
But it’s just the latest battle in a war that began four years ago — over a pie shop.
‘My profit was going in the bin’
In 2017, the Pie Face franchise was in receivership for the second time when it was bought for an undisclosed sum by United, with a plan to resurrect it through its network of stores.
Jigar and Jaydeep were told they would soon be running a Pie Face bakery on top of their fuel business — and they were horrified.
They wrote to the company saying they were already struggling to make a profit.
“We told them: ‘If you want it, you operate it. We don’t want it’,” Jigar said.
“But we were told Pie Face is going to be there, either with you or without you.”
United told the ABC that commission agents and franchisees had “overwhelmingly welcomed” Pie Face into their service stations.
“In the three years in which Pie Face has been offered for sale, only one franchisee has expressed disappointment in the product,” it said.
But several former franchisees have told the ABC the Pie Face rollout was a disaster that destroyed their otherwise profitable petrol and convenience store businesses, and that United was aware of their concerns.
Suddenly, they had to take on extra staff.
Electricity bills shot up.
There were new systems and standards to learn.
Worst of all, they weren’t selling many pies.
Every month, thousands of dollars’ worth of unsold food was thrown away — at the franchisees’ expense.
“My profit was literally going in the bin,” Jaydeep said.
There was no profit at all.”
“Everything changed after Pie Face,” said Yasmin*, who was locked out of her United franchise in October 2019.
The ABC has seen one of Yasmin’s wastage reports, showing losses of more than $8,000 in a month in unsold food.
“We asked them, ‘Please, share the cost of electricity, or wastage, or the wages’,” she said.
Yasmin said before Pie Face she had a good relationship with the company, and business was good.
United even talked of making her an ambassador for the company.
But when Pie Face arrived, and losses began racking up, the relationship soured.
Yasmin received her first breach notice in April 2018.
There were two more in August and November, then three more until she was finally locked out in 2019.
Some were for faults like messing up Uber Eats orders, untidiness, or for not having enough pies ready for sale.
Three were for alleged wage breaches.
In one notice, United alleged Yasmin had failed to pay a trainee; in another, it used CCTV and payroll data to calculate she was incorrectly paying some employees.
Some were being underpaid, while others were being overpaid.
It was around this time Yasmin was diagnosed with breast cancer, which has now spread to her bones.
She is currently undergoing chemotherapy, living in Melbourne’s outer west with her husband and young daughter, and owes the bank more than $400,000.
She wrote to United soon after she was terminated, begging for help.
The company said if it had known about her health situation at the time, it “might have looked at things differently”.
But it didn’t change anything. United raised the prospect of offering Yasmin a job — which her illness would have prevented her from taking — or $50,000 cash. She refused.
Another franchisee, Ishaq*, was locked out of his United site in February this year after just 10 months.
After arriving from Afghanistan as a refugee in 2012, he spent $550,000 buying a United franchise in Melbourne’s east.
He had pulled together savings from his job at Australia Post, money from asset sales in Afghanistan, and a large loan.
“After buying this business, I faced a lot of pressure and problems,” he said.
His lawyer, Stewart Levitt, claims United failed to disclose anything about Pie Face in the franchise agreement or disclosure documents, preventing his client from making a “reasonably informed decision about the business”.
Ishaq also claims that the figures he’d been given by the previous operator were way off, and he was not making enough in sales to cover costs.
When lockdown struck, Ishaq emailed United asking for help with power and rent.
He says he didn’t get a written response, but did get a visit from a United manager.
“He was really pissed off,” Ishaq said.
“He had come inside the counter area, saying, ‘I’m going to give you a breach. I will send you the first breach, and after three breaches you will be kicked out’.’”
He says the company conducted around 30 audits and inspections of his site in five and a half months.
In six months, Ishaq threw out more than $70,000 worth of unsold Pie Face products.
During that time, he stopped paying his power bills in his standoff with United, earning him another breach notice.
Ishaq was even less happy when he discovered that some of the Pie Face products he had been selling — and eating — were wrongly labelled as halal.
United said the problem was rectified within 24 hours of Ishaq notifying it.
The following month, it removed Ishaq’s Pie Face outlet, but also told him to prepare for an audit.
He was terminated in February for refusing to co-operate with the audit, and over the unpaid power bills.
Questions raised over fuel
Jigar and Jaydeep were also told they would be audited shortly after complaining to United about fuel they were selling.
After a tip-off from a driver, they tested the E10 fuel to see if it contained the advertised 10 per cent ethanol.
They found it contained almost none.
United denied there was a problem, so Jigar went to The Australian newspaper, which ran a story.
Then in July last year, as Melbourne’s second lockdown was taking hold, the company increased Jigar and Jaydeep’s rent by $150 a day.
United strongly denies the allegations against it, saying they are being made by “three disgruntled franchisees who, in the absence of having legitimate legal claim against United, are seeking to cause deliberate and significant damage to the reputation of United and … the small businesses … in the United network.”
The company says its E10 fuel is labelled in accordance with all legal requirements and regulatory standards.
United says the franchisees who spoke to the ABC have “no credibility” and were fairly terminated.
After being contacted by the ABC, United commissioned a retail data company to conduct a “spot audit” of the sites identified by Jigar, which found “no substantiated evidence” to support the allegations of systemic underpayment.
However, that audit — which examined roster, payroll, and payslip data at 12 of the 15 sites — does not state if it looked into whether staff were being paid cash in hand.
The other three sites were subject to a different agreement with United, which did not provide United a right of audit.
In March, around half a dozen former franchisees staged a small protest outside United’s head office in Hawthorn.
Some have told the ABC they don’t have the resources to take United on in court.
These people are mainly migrants. They’ve invested their last dime in these businesses,” Stewart Levitt said.
“They haven’t got the knowledge, the familiarity with the system or the wherewithal to be able to fight back.”
The body representing service station operators said as much in 2014 in a submission to Treasury. It stated:
“It is not unusual for new entrants to the industry to be newly arrived business migrants who often lack the ability to make balanced assessments of … the financial viability of the business they are about to purchase.”
“Most of these agreements, if subjected to independent legal advice, would not receive a favourable assessment and yet the ‘take it or leave it’ approach of the big business offering is difficult for these vulnerable people to resist.”