SECTIONS 21140-21149 - California Statutes

BUSINESS AND PROFESSIONS CODE

SECTION 21140-21149

21140. 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) "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.
(c) "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.
(d) "Refiner" means any person engaged in the refining of crude
oil to produce fuel, and includes any affiliate of such person.
(e) "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.
(f) "Retailer" means any person who purchases fuel for sale to the
general public for ultimate consumption.
(g) "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.
(h) "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.
(i) "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.
(j) "Trademark" means any trademark, trade name, service mark, or
other identifying symbol or name.
(k) "Fuel" means gasoline, diesel, gasohol, or aviation fuel.
(l) "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.

21140.1. Notwithstanding the terms of any franchise, a franchisee
shall not be precluded from purchasing fuel from any available source
if the franchisor is unable or refuses to supply the franchisee with
fuel.
Failure to deliver contracted, agreed upon, or requested
quantities of fuel within 72 hours of such specified contract time,
agreement, or request shall constitute an inability or refusal to
supply a franchisee. Requests for deliveries of fuel may be
telephoned to the franchisor, except that when the franchisee intends
to seek fuel from another supplier pursuant to Section 21140.1
should the franchisor be unable or refuse to supply him or her, a
request for fuel must be made in writing to a franchisor at least 48
hours before desired delivery.
Once such notice has been given, and the franchisor has failed to
deliver contracted, agreed upon, or requested quantities of fuel no
further written request shall be required from the franchisee until
such time as the franchisor notifies the franchisee in writing that
the franchisor is prepared to deliver contracted, agreed upon, or
requested quantities of fuel.
Nondelivery of fuel by the franchisor due to accident, fire, theft
or other similar acts shall not constitute an inability or refusal
to supply the franchisee.
If the franchisee sells fuel supplied from a source other than the
franchisor, the franchisee shall prominently post a sign disclosing
this fact to the public on each pump dispensing fuel purchased from
other than the franchisor. The sign shall not be smaller than 8" x 10"
with letters not less than three inches in height.
This provision shall not be construed to permit a franchisee to
purchase more fuel than may be allowed by any federal statute or
regulation.

21140.2. From the effective date of this section it shall be
illegal for any franchisor by any action to require a franchisee to
purchase only those tires, batteries, motor oil, and other automotive
accessories sold by the franchisor. A franchised retail gasoline
dealer may sell any tires, batteries, motor oil, and other automotive
accessories as may be available to him or her for retail sale.

21140.3. The franchisor's executive officer, representative, or
agent of the franchisor who negotiates any contract in violation of
this chapter or who otherwise coerces a franchisee in violation of
this chapter shall be subject to a civil penalty of up to one hundred
thousand dollars ($100,000) for each offense. That penalty,
reasonable attorney fees and costs of the suit shall be assessed and
recovered in a civil action brought by the Attorney General or by any
district attorney, county counsel, or city attorney in any court of
competent jurisdiction. If brought by a district attorney or county
counsel, the entire amount of the penalty shall be paid to the
treasurer of the county in which the judgment was entered. If brought
by the Attorney General, one-half of the penalty, attorney fees, and
costs of the suit shall be paid to the treasurer of the county where
the action was brought and one-half shall be paid to the State
Treasurer. If brought by a city attorney, one-half of the penalty,
attorney fees, and costs of the suit shall be paid to the treasurer
of the county and one-half to the city.

21140.4. Any person who is injured in his business or property by
reason of a violation of this chapter may sue therefor in any court
having jurisdiction in the county where the defendant resides or is
found, or any agent resides or is found, or where service may be
obtained, without respect to the amount in controversy, and to
recover three times the damages sustained by him, and shall be
awarded attorneys' fees together with the costs of the suit. Any
action brought pursuant to this section shall be commenced within
four years after the cause of action accrued.

21140.6. (a) On and after January 1, 1980, it shall be unlawful to
include in any franchise agreement any term which provides for the
termination of the franchise by the franchisor upon the death of the
franchisee if the franchisee, prior to his demise, designates a
successor-in-interest in a form prescribed by and delivered to the
franchisor.
(b) For the purposes of this section, "successor-in-interest"
shall be restricted to either a surviving spouse or adult child of
the franchisee, provided that such spouse or child, at the time of
the franchisee's death, shall meet the reasonable qualifications then
being required of dealers by the franchisor for the operation of
such service stations.
(c) This section shall not apply to a "trial franchise" as defined
in the Petroleum Marketing Practices Act (Public Law 95-297).
(d) The designated successor-in-interest shall be allowed 21 days
after the death of the franchisee to give written notice of his or
her election to assume and operate the franchise. The notification
shall contain such information regarding business experience and
creditworthiness as is reasonably required by the franchisor. The
successor-in-interest must offer to assume the franchise in writing
three days (excluding Saturdays, Sundays, and holidays) after such
election and must commence operation of the franchise within 10 days
after it has been assumed.
(e) Franchisors may require that franchisees desiring to designate
a successor-in-interest pursuant to this section deposit with the
franchisor at the time of such designation such sum as would be
reasonably estimated to be necessary to compensate the franchisor for
rent for a period of 21 days. This deposit is intended to compensate
the franchisor in the event the designated successor-in-interest
fails for such period after the death of the franchisee to assume the
franchise obligation. Any unearned portion of such deposit resulting
from the successor-in-interest assuming responsibility for the
franchise sooner than 21 days after the date of the franchisee's
death, or from the temporary operation of the facility by the
franchisor during such 21 days, shall be refunded by the franchisor
to the estate or legal representative of the deceased franchisee. In
addition to such deposit, the franchisor may require a franchisee
desiring to qualify under this section to arrange for the discharge
or performance of other franchise obligations such as, but not
limited to, insurance, but excluding any obligation to be open to the
public, for a period of up to 21 days after his demise.
(f) The franchise available to the successor-in-interest pursuant
to this section is intended to be no greater than or less than the
franchise as it existed in the name of the deceased franchisee at the
time of such franchisee's death. This section is not intended to
expand or diminish the rights of franchisors or franchisees under
either federal or state law.
(g) A franchisee may designate a primary and one alternate
successor-in-interest. The alternate, if one is designated, shall
have no rights under this section in the event of any exercise of
rights by the primary successor-in-interest. If an alternate desires
to assume and operate the franchise in the event the primary
successor-in-interest fails to do so, the alternate must give notice
of such election and otherwise comply with paragraph (d) of this
section.
(h) Unless otherwise specifically provided herein, any actions to
be performed by the franchisor or by the successor-in-interest
hereunder shall in each instance be performed within a reasonable
time.
(i) Unless the franchisor otherwise agrees in writing, there shall
be no operation of the franchise following the death of the
franchisee by anyone (other than the franchisor for its own account)
until all parts of the franchise have been expressly assumed as
herein provided, including, but not limited to, such items as lease
or leases, products agreement, loaned equipment agreement, federal
and state environmental law compliance agreements, licensing, and tax
permits.
(j) Following the death of a franchisee, and prior to the
operation of the franchise by the successor-in-interest as herein
provided, the franchisor shall have the option to operate the
franchise by contract or otherwise for its own account without
obligation or duty to the heirs or estate of the deceased franchisee
or to the successor-in-interest except for the obligation to account
to the heirs or the estate of the deceased franchisee for the
inapplicable portion of any prepaid rent or other sums prepaid to the
franchisor, and for any physical inventory salvaged from the
franchise and used or sold by the franchisor.
(k) If the successor-in-interest assumes the franchise and there
has been no intervening operation of the franchise by the franchisor,
the successor-in-interest shall account to the heirs or estate of
the deceased franchisee for the value or other disposition of
personal property of the franchisee located at or related to the
franchise.
(l) The liability for failure to comply with this section shall be
limited to those damages provided by Section 3300 of the Civil Code.
Any action pursuant to this section shall be commenced within one
year after the cause of action accrued.
(m) In the event any provision of this section is deemed void or
unenforceable, the remaining portions, to the extent severable, shall
be given effect.

21148. (a) Notwithstanding the terms of any franchise, a franchisor
may not withhold its consent to the sale, transfer, or assignment of
the franchise by the franchisee to another person unless the
franchisor demonstrates in writing to the franchisee within 45 days
of receiving the application, or required paperwork, from the
potential buyer any of the following:
(1) The proposed purchaser of the franchise has less business
experience and training than that normally required by the franchisor
of prospective franchisees.
(2) The proposed purchaser of the franchise has less financial
resources than that normally required by the franchisor of
prospective franchisees.
(3) The proposed purchaser of the franchise does not satisfy the
then-current uniformly applied requirements, if any, of the
franchisor applicable to prospective franchisees.
(4) The proposed purchaser of the franchise operates a franchise
under an agreement with a franchisor other than the franchisor to
whom the sale, transfer, or assignment is proposed, if the
then-current uniformly applied requirements, if any, of the
franchisor precludes prospective franchisees from operating a
franchise under an agreement with another franchisor.
(5) The franchisee has not offered in writing to sell, transfer,
or assign the franchise to the franchisor on terms and conditions
which are the same as those of the sale, transfer, or assignment of
the franchise to the proposed purchaser; and the franchisee has not
allowed the franchisor at least 30 days in which to either accept or
decline the franchisee's written offer, prior to the sale, transfer,
or assignment of the franchise to the proposed purchaser.
(b) Notwithstanding the terms of any franchise, a franchisor may
not withhold its consent to the sale, transfer, or assignment of the
franchise by the franchisee to another person for the purposes of
diminishing the market value of the franchise.
(c) Notwithstanding the terms of any franchise, a franchisor may
not withhold its consent to the sale, transfer, or assignment of the
franchise by the franchisee to another person because that other
person is of foreign origin or is non-English speaking as long as the
prospective franchisee is able to adequately communicate with the
franchisor and the appropriate federal, state, and local governmental
agencies concerning matters of management, operations, environmental
compliance, and public safety.
(d) If the franchisor consents to the sale, transfer, or
assignment of the franchise to a prospective purchaser, the
franchisor may require the franchisee to pay a transfer fee to the
franchisor, provided the amount of the fee is reasonable when
compared to the sale price of the franchise and provided the fee is
not required in an effort to frustrate the proposed sale.

21149. Notwithstanding the terms of any franchise, the franchisor
may not prohibit or prevent the sale, transfer, or assignment of the
franchise to a corporation if both of the following conditions are
satisfied:
(a) The franchisee has a controlling interest in the corporation.
(b) The franchisee offers in writing to personally guarantee the
corporation's performance of its obligations under the franchise.