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Second Circuit Holds Trial Franchisees Have Termination Claim Under the PMPA
By Abby Risner on May 29, 2013 at 10:15 AM

The Second Circuit held that two trial franchisees properly asserted an action under the PMPA when their franchisor failed to comply with the notice provisions under the Petroleum Marketing Practices Act (“PMPA”) prior to terminating their franchises.

The two franchisees operated five motor fuel stations in New York. Their franchisor, an ExxonMobil distributor, terminated their trial franchises without any notice. Plaintiff obtained summary judgment in their favor, and after an evidentiary hearing, was awarded damages.

Rejecting the franchisor’s claim that the notice provisions in the PMPA did not permit a right of action, the Second Circuit affirmed and concluded that the PMPA provides a right of action when a franchisor fails to provide the required notice for termination of a trial franchise because the termination provisions of the PMPA, including the notice requirements, apply to trial franchises. The Second Circuit noted that this protects a trial franchisee from arbitrary or sudden termination during its trial period.

The Second Circuit also upheld the award of compensatory damages, punitive damages, attorneys’ fees and costs, and interest to the franchisees. The case is Jimico Enterprises, Inc. v. Lehigh Gas Corporation (Feb. 20, 2013).

For assistance with issues related to the Petroleum Marketing Practices Act, contact the Franchising & Distribution Group.

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