Shell Abandons Family Business

The introduction of sales tax in St Petersburg has forced OOO Shell AZS to abandon the practice of instituting family management at Shell petrol stations.

<BR>The introduction of sales tax in St Petersburg has forced OOO Shell AZS to abandon the practice of instituting family management at Shell petrol stations.<BR>Two Shell stations are operating in St Petersburg, both opened in the autumn of last year. One was managed by Boris Yarov. Shell's St Petersburg office was carrying out an experiment: which of the two management systems was more profitable for the company. Shell's management had planned to open another five stations by August 1999. The results of their experiment were to influence the choice of the form of management. The important factor was that given franchise management, any individual enterprise is a separate taxpayer. <BR>One of the main obstacles to the idea of family management was the introduction of a 5% sales tax. "In the 'company-franchise-consumer' chain, we had to pay this tax twice," says Anton Popov, deputy financial general director of Shell AZS. "The largest area of expenses is wages for franchise staff, as the enterprise's budget is determined by Shell. At the same time, we didn't raise the price of fuel, as a result of which we had to find additional reserves within the company."