Listed petrol company Caltex Australia has announced plans to scrap its franchise retail model, in a bid to bring its expansive retail network under centralised control.
In announcing its full-year results, Caltex revealed it had split its operations into two separate businesses: fuel refining and convenience store retailing. The move became effective from 1 January 2018.
Caltex said that to better control its future growth and further retail expansion, it will “move to company operation of all of its retail franchise sites by mid-2020”.
As part of this expansion, it is rolling out new formats to more effectively compete in the grocery and convenience store space, under the brands The Foodary and Nashi.
Of its current 810 Caltex sites across Australia, just over half (433) are operated by franchisees. The company has been steadily increasing the proportion of company-operated sites, from 152 at the end of 2016 to its current 314 sites.
Bringing the stores in-house is expected to cost Caltex up to $120 million over the next three years alone.
“Franchising has been an integral part of growing the retail business. Caltex appreciates that this is a significant decision and it will affect many of our franchisees,” the company said in a statement.
“Caltex will work with our franchisees to manage the impact of this change, including by offering franchisees transition support and offering employment to all franchisee employees.”
The shift could see the 400-odd franchisees re-enter the market for new business opportunities, in a potential windfall for businesses seeking experienced franchisees to roll out new stores.
According to the 2016 Franchising Australia Report, the franchise sector in Australia is worth an estimated $146 billion.
Adam Zuchetti is the editor of My Business, and has steered the publication’s editorial direction since early 2016.