When a Little Guy Decides to Take On Corporate Giant
By now, it’s stating the obvious to say you can travel most places in the country and find a Little Guy getting squeezed by a Big Guy.
Today’s journey takes us to the bottom of the Junipero Serra exit ramp on the southbound Interstate 5, where John Adam is doing a slow burn that has nothing do with the 100-degree heat outside his Exxon service station in San Juan Capistrano.
Once upon a time, like a mere five years ago, this was right where Adam wanted to be. The location looked like a natural: the Exxon sign was impossible to miss as drivers exited the freeway, and the prospect of growth in South County made a service station look like a ticket to the good life.
Not at all sheepish in describing how good life was supposed to be, Adam says his game plan five years ago was “five years of hard work, then basically semi-retirement.” That scenario, he said, was “based on what the growth potential was and what Exxon said it was going to become and what I thought I was capable of making it become. And based on the first-year income, I thought that would be true.”
So here he is now, a couple of days after his 32nd birthday, disillusioned with Exxon, losing money fast and wondering what the future holds.
Adam is one of about 40 service station dealers who are suing Exxon over the company’s planned withdrawal from the Southern California market. The company announced in May that it would pull out of 156 stations in Orange, Los Angeles and Ventura counties. That followed similar actions in San Diego, Riverside and San Bernardino counties.
The lawsuit, filed in July in federal court in Santa Ana, contends that Exxon misled its dealers--who bought their franchises--about the company’s intentions and violated provisions of the Petroleum Marketing Practices Act. Among other things, the dealers contend that the company hasn’t made good-faith offers to buy their stations, as the act requires.
When the lawsuit was filed, Exxon officials responded by saying: “Exxon believes that the complaint is groundless and without merit. Exxon intends to vigorously defend against the lawsuit.”
“It was not my life’s goal to take on the Exxon company,” Adam said. “All I wanted to do was get my own business and make enough money to make a comfortable living.”
Adam concedes that Exxon has a perfect right to get out of the service station business in Southern California. In fact, when he heard about their decision, he wasn’t all that unhappy. He figured he might buy up the lease for the station from Exxon and remain in business under another brand name or go independent.
But the price set for the lease far exceeds the value of the business, he believes, making it financially impossible for him to buy the station. And while he also concedes that the price was set by an appraisal company, Adam said another company came in with a much lower figure.
Believing that he is being priced out of the business into which his family has sunk about $300,000, Adam vows to go down fighting. His anger also stems from the fact that six months ago, he signed a new three-year lease with Exxon, an action that came just before the company announced its plans to vacate the market.
Exxon’s offers to buy out the dealers--representing about $70,000 in Adam’s case--has only made him angrier.
“They made these ridiculous offers in the hopes that most of the dealers would accept them and walk away because who can beat an oil company?” Adam said. “Who’s going to fight them and beat them? They’ve got so much money, they can squeeze us out.”
Who knows whether the passion in Adam’s argument will last or not. Maybe he’ll wind up taking the offer from the big boys; maybe not.
As he and his fellow dealers fight their own isolated battle with a corporate giant, you realize it’s not so isolated after all.
You can’t help but picture the thousands, if not millions, of private dramas that have occurred in American households in the last several years when headquarters told them it had made a decision they weren’t going to like.
Perhaps Adam thought being right next to the freeway in the Golden State in one of America’s burgeoning neighborhoods would exempt him.
That illusion, for him and thousands of other Californians, has disappeared.
Part of him would love to just give up, Adam says.
“I’m so burned out, I’m so sick of the situation. But I’m not going to walk away for $70,000, that’s for damn sure. I’m not going to walk away for $200,000. It’s going to take a helluva lot more money than that.”
Good luck, John, but beware. The last decade has showed us nothing if not that the Big Guys know how to play this game much better than the Little Guys.
