The Caltex Scandal Deepens

Caltex franchises protesters say that they have been ripped off by the company selling an unworkable franchise model and they are demanding a greater share of the company’s profits. Hundreds of franchisees gathered the other day in front of the company’s corporate headquarters to protest. Franchisees are complaining that the Caltex franchise model does not leave room for profit and that the company used the hardships franchisees experience to simply reacquire the established businesses. It is claimed that because they have been squeezed by the company over 60% of the stores are unprofitable. Franchisees complain that the franchise model is structured in such a way that they are required to work long hours and still do not make a profit. Lawyers for the franchises state that the main complaint of the franchisees, is that Caltex is unwilling to engage franchisees in negotiations to listen to and to attempt to solve their profitability issues.

In order to survive, some franchisees have been accused, by a self-policing Caltex corporation, of engaging in wage and visa fraud by either underpaying employees or paying employees and then demanding a “cash-kickback”. Employees, mostly immigrants, have sued the company saying that they have been threatened with deportation.

Caltex has stated that it is aggressively auditing their franchisees to make sure that wage abuse is not occurring. When they find fraud, they terminate the franchise agreement immediately. Caltex is also being accused of using the wage fraud scandal as an alibi to reacquire their franchises at rock bottom prices to be re-franchised or merged into their corporate network. Protesters are taking this a step further and accusing Caltex of deliberately designing a franchise model that they knew was unworkable and planned for franchisees to eventually fail. Recently, Caltex terminated a seven-store franchise owner worth $5 million for wage fraud abuse, pure profit for Caltex.