Franchise Fined $300k AND Criminally Charged!

crying-over-finesHere’s an interesting article about a franchise being fined $300k for dumping oil down a drain. In addition to the fine, the franchisee was criminally charged. Although the liability may not extend to the franchisor, this sought of thing could escalate into a public relations nightmare.

Oil Down Drain Draws $300K Fine
as posted in The Lube Report (Industry News from Lubes-n-Greases), April 15, 2009

Heartland Automotive Services Inc., the largest U.S. Jiffy Lube franchisee, issued a public apology and will pay $300,000 in fines after pleading guilty to three misdemeanor charges of discharging oil into the Austin, Texas, sewer system, the Travis County district attorney announced Thursday.

The conviction on three counts of violating the Texas Water Code followed an investigation of a Heartland Jiffy Lube store on Burnet Road in Austin, Texas. In September 2007, members of the Texas Environmental Task Force executed a search warrant at the store. A subsequent investigation revealed employees routinely discharged oil and wastewater into the city’s sewer system with the knowledge of regional and district managers. The $300,000 fine is believed to be the largest for a Texas Water Code violation in Travis County, and possibly in the state, according to the district attorney’s office.

“We’ve closed that [Burnet Road] location, not because of this situation, but it was part of our rationalization of our store base as part of our bankruptcy last year,” Ralph Tschantz, Heartland Automotive marketing vice president, told Lube Report. Heartland emerged from Chapter 11 bankruptcy early this year. Tschantz said it is “highly doubtful” Heartland would ever reopen the Burnet Road store. “We have another store maybe half a mile down the road,” he added.

Heartland Automotive has an EPA expert on staff who has been through the Austin area market about three times, according to Tschantz. “As a result of the settlement, we’re going to go through those stores one more time and make sure they’re absolutely bulletproof,” he stated. “We have 31 stores in the greater Austin area. Our learning from this is to be much more attentive and go forward.”

Sgt. Jonathan Gray, lead investigator with the Texas Parks and Wildlife Department’s Environment Crimes Unit, stated that the “pit” at the Burnet Road Jiffy Lube location would flood every time there was a major rain. “It was a nasty mixture that was discharged into the City of Austin sewer system, and oil has a great potential to damage the environment,” Gray said. “Here, we caught it early enough to avoid a more serious problem.”

“What they had set up was piping and a pump that pumped [oil and rainwater] from the pit to a sink upstairs,” Travis County assistant district attorney Patty Robertson told Lube Report.

As part of an agreement, the district attorney’s office also ordered Omaha, Nebraska-based Heartland Automotive to issue a public apology that appeared in the April 9 Austin American-Statesman newspaper. In the apology, Heartland stated that the offenses relate to disposal of a mixture of oily water in 2006 and 2007. All the incidents occurred prior to Heartland’s entry into bankruptcy in January 2008.

“In addition to the $300,000 fine agreed to as part of the settlement, Heartland has invested in remediation efforts and training in its Austin operations to ensure any similar situations do not occur,” the company continued.

About Paul Segreto

Entrepreneur, Franchising & Small Business Professional, Top 100 Champion Small Business Influencer Awards 2014 & 2015, Popular Blogger & Podcaster
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One Response to Franchise Fined $300k AND Criminally Charged!

  1. Pingback: Business & Finance Blogs » Blog Archive » This Franchisee Is Not Very Green; Fined $300k

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