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Faced With Soaring Fraud, Shell Oil Pays Each Franchisee Gas Station $400 To Boost Security

Written by Evan Schuman
May 30th, 2012

When Shell Oil got fed up with the soaring fraud rate at many of its gas stations, it prioritized deploying better security. But faced with the franchisee conundrum that Shell didn’t own the systems it wanted to upgrade, it took the unusual move of paying the owners $400 per station to install new locks. It initially offered only $250, but franchisees weren’t moved.

This followed Shell having created “its own test lab to replicate fraud and try out new deterrents,” according to a report in CSPNet. StorefrontBacktalk Retail Columnist Todd Michaud, who has managed IT for several franchisee chains, said the resentment of franchisees regarding IT is legendary. “Most franchisees feel that IT spending belongs in the same level of hell as the IRS. Even if the spending shows to have significant benefit attached, too many failed projects, broken promises and over-inflated ROI tied to past projects haunt the decisions of today,” Michaud said. “Many times, franchisors are left with no options but to incent or even fund the technology investment to make it happen. Unfortunately, most franchisors feel as strongly about not paying for franchise IT as the operators do themselves. In this case, my guess is that the incentive to the jobbers far outweighed the” damages from continued fraud.


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One Comment | Read Faced With Soaring Fraud, Shell Oil Pays Each Franchisee Gas Station $400 To Boost Security

  1. Jim Huguelet Says:

    In the case of retail petroleum, this is even more complicated than the usual franchise-based retail business due to the myriad of channels that exist between the typical petroleum brand and their marketers based upon site ownership, methods of distribution, and level of control that the brand has over the locations flying its flag. However, dispenser skimming has unfortunately become such a pervasive issue in some markets (and one that ultimately creates damage for the entire brand) that the incentives are likely money well spent.

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