SECTIONS 20999-20999.4 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 20999-20999.4

20999. For purposes of this chapter, the following terms shall have
the following meanings:
(a) "Franchise" means any contract between a refiner and a
distributor, between a refiner and a retailer, between a distributor
and another distributor, or between a distributor and a retailer,
under which a refiner or distributor authorizes or permits a retailer
or distributor to use, in connection with the sale, consignment, or
distribution of gasoline, diesel, gasohol, or aviation fuel, a
trademark which is owned or controlled by such refiner or by a
refiner which supplies fuel to the distributor which authorizes or
permits such use. The term "franchise" includes the following:
(1) Any contract under which a retailer or distributor is
authorized or permitted to occupy leased marketing premises, which
premises are to be employed in connection with the sale, consignment,
or distribution of fuel under a trademark which is owned or
controlled by such refiner or by a refiner which supplies fuel to the
distributor which authorizes or permits such occupancy.
(2) Any contract pertaining to the supply of fuel which is to be
sold, consigned, or distributed under a trademark owned or controlled
by a refiner, or under a contract which has existed continuously
since May 15, 1973, and pursuant to which, on May 15, 1973, fuel was
sold, consigned, or distributed under a trademark owned and
controlled on such date by a refiner.
(3) The unexpired portion of any franchise, as defined by the
preceding provisions of this paragraph, which is transferred or
assigned as authorized by the provisions of such franchise or by any
applicable provision of state law which permits such transfer or
assignment without regard to any provision of the franchise.
(b) "Franchise relationship" means the respective fuel marketing
or distribution obligations and responsibilities of a franchisor and
a franchisee which result from the marketing of fuel under a
franchise.
(c) "Franchisor" means a refiner or distributor who authorizes or
permits, under a franchise, a retailer or distributor to use a
trademark in connection with the sale, consignment, or distribution
of fuel.
(d) "Franchisee" means a retailer or distributor who is authorized
or permitted, under a franchise, to use a trademark in connection
with the sale, consignment, or distribution of fuel.
(e) "Refiner" means any person engaged in the refining of crude
oil to produce fuel, and includes any affiliate of such person.
(f) "Distributor" means any person, including any affiliate of
such person, who either purchases fuel for sale, consignment, or
distribution to another, or receives fuel on consignment for
consignment or distribution to his or her own fuel accounts or to
accounts of his or her supplier, but shall not include a person who
is an employee of, or merely serves as a common carrier providing
transportation service for, such supplier.
(g) "Retailer" means any person who purchases fuel for sale to the
general public for ultimate consumption.
(h) "Marketing premises" means, in the case of any franchise,
premises which, under such franchise, are to be employed by the
franchisee in connection with the sale, consignment, or distribution
of fuel.
(i) "Leased marketing premises" means marketing premises owned,
leased, or in any way controlled by a franchisor and which the
franchisee is authorized or permitted, under the franchise, to employ
in connection with the sale, consignment, or distribution of fuel.
(j) "Contract" means any oral or written agreement. For supply
purposes, delivery levels during the same month of the previous year
shall be prima facie evidence of an agreement to deliver such levels.
(k) "Trademark" means any trademark, trade name, service mark, or
other identifying symbol or name.
(l) "Fuel" means gasoline, diesel, gasohol, or aviation fuel.
(m) "Failure" does not include any failure for a cause beyond the
reasonable control of either the franchise relationship or the
franchisee.
(n) "Fail to renew" and "nonrenewal" mean, with respect to any
franchise relationship, a failure to reinstate, continue, or extend
the franchise relationship at any of the following times:
(1) At the conclusion of the term, or on the expiration date,
stated in the relevant franchise.
(2) At any time, in the case of the relevant franchise which does
not state a term of duration or an expiration date.
(3) Following a termination, on or after the effective date of
this act, of the relevant franchise which was entered into prior to
the effective date of this act and has not been renewed after that
date.
(o) "Affiliate" means any person who, other than by means of a
franchise, controls, is controlled by, or is under common control
with, any other person.
(p) "Relevant geographic market area" includes this state or a
standard metropolitan statistical area within this state which has
been established by the United States Office of Management and
Budget.
(q) "Termination" includes cancellation.

20999.1. Notwithstanding the terms of any franchise, no franchisor
shall terminate, cancel, or fail to or refuse to renew any existing
franchise without good cause.
As used in this section good cause is limited to the following:
(a) The gasoline dealer or petroleum distributor failed to comply
with essential and reasonable requirements of the franchise
agreement;
(b) The gasoline dealer or petroleum distributor failed to act in
good faith in carrying out the terms of the franchise; or
(c) The franchisor is withdrawing from the marketing location at
which the franchise of a gasoline dealer is located, provided that
the franchisor pays the gasoline dealer the current wholesale market
value for all qualifying equipment and supplies purchased by the
gasoline dealer from the franchisor or affiliate of the franchisor.
This subdivision shall only apply to those gasoline dealer franchises
which are entered into or renewed on or after January 1, 1979. As
used in this subdivision, "qualifying equipment and supplies" means
all equipment and supplies purchased by the gasoline dealer from the
franchisor or an affiliate of the franchisor which is free and clear
of all liens, security interests and other encumbrances, valued on a
first-in, first-out basis, evidenced by receipted invoices, and is
(i) in first-class and resalable condition, (ii) in the original
packages or containers and (iii) bears the original labels and
trademarks, and (iv) the goods display no evidence of deterioration.
This subdivision shall not be construed to create any priority over
any other debt between the parties to the franchise arising from the
same franchise agreement.
(d) For other legitimate business reasons (except that a
termination, or cancellation of a franchise for the purpose of
enabling the petroleum distributor or manufacturer to assume
operation of the distributor's or gasoline dealer's business shall
not be considered to be a legitimate business reason unless the
gasoline dealer or distributor is paid reasonable compensation for
the value of his franchise, including a reasonable amount for
goodwill).

20999.2. No petroleum distributor shall deny to any gasoline dealer
or prospective gasoline dealer the right to be accompanied by
counsel or a personal representative to any meeting held between the
parties for the purpose of negotiating the terms of a franchise.

20999.25. (a) In the case of leased marketing premises as to which
the franchisor owns a fee interest, the franchisor shall not sell,
transfer, or assign to another person the franchisor's interest in
the premises unless the franchisor has first either made a bona fide
offer to sell, transfer, or assign to the franchisee the franchisor's
interest in the premises, other than signs displaying the franchisor'
s insignia and any other trademarked, servicemarked, copyrighted or
patented items of the franchisor, or, if applicable, offered to the
franchisee a right of first refusal of any bona fide offer acceptable
to the franchisor made by another to purchase the franchisor's
interest in the premises.
(b) In the case of leased marketing premises which the franchisor
leases from a third party, following notice by the franchisor to the
franchisee of termination or nonrenewal of the franchise by reason of
the expiration of the franchisor's underlying lease from the third
party, the franchisor shall, upon request by the franchisee and
subject to the franchisee purchasing or leasing the premises from the
third party prior to the date of termination or nonrenewal of the
franchise set forth in the notice, make a bona fide offer to sell to
the franchisee any interest the franchisor may have in the
improvements on the premises, other than signs displaying the
franchisor's insignia and any other trademarked, servicemarked,
copyrighted or patented items of the franchisor, at a price not to
exceed the fair market value of the improvements or the book value,
whichever is greater, or, if applicable, offer the franchisee a right
of first refusal of any bona fide offer acceptable to the franchisor
made by another to purchase the franchisor's interest in the
improvements. For the purposes of this subdivision, "book value"
means actual cost less actual depreciation taken.
(c) Nothing in this section shall be deemed to require a
franchisor to continue an existing franchise agreement or to renew a
franchise relationship if not otherwise required by federal law.
(d) For the purposes of this section, the following terms shall
have the following meanings:
(1) "Marketing premises" means, in the case of any franchise,
premises which, under such franchise, are to be employed by the
franchisee in connection with the sale, consignment, or distribution
of motor fuel.
(2) "Leased marketing premises" means marketing premises owned,
leased, or in any way controlled by a franchisor and which the
franchisee is authorized or permitted, under the franchise, to employ
in connection with the sale, consignment, or distribution of motor
fuel.

20999.3. (a) Any person who violates any provision of this chapter
may be sued in the superior court in the county in which the
defendant resides or where a franchise affected by the violation does
business, for temporary and permanent injunctive relief and for
damages, if any, and the costs of suit.
(b) No action shall be maintained to enforce any liability created
under any provision of this chapter unless brought before the
expiration of two years after the violation upon which it is based or
the expiration of one year after the discovery by the plaintiff of
the facts constituting such violation, whichever occurs first.

20999.4. At such time as a franchisor intends to withdraw from the
marketing of fuel through retail and distribution outlets in the
relevant geographic market area, prompt notification, together with a
plan describing the schedule and conditions of the withdrawal, shall
be provided by the franchisor to the Governor.