§ 36-303.03 — Termination, cancellation, and failure to renew.

District of Columbia § 36-303.03

• Jurisdiction: District of Columbia
• Title 36: Trade Practices.
• Ch. 3: Retail Service Stations.
• Subch. III: Marketing Agreements.

Text

(1) A retail dealer shall have the right to terminate or repudiate any marketing agreement to which he is a party for any reason, without the imposition of any damages or penalties and without any recourse by the distributor for such termination or repudiation, within 7 days, not including Saturdays, Sundays, or holidays, after the day on which performance of such marketing agreement commences. For purposes of this subsection, the term “marketing agreement” shall not include any renewal, extension, modification, amendment, or novation of an existing marketing agreement. For purposes of this subsection, the term “performance” shall mean the granting of a present right, privilege, or authority to use a trademark, the granting of a present right, privilege, or authority to occupy a retail service station, or the actual delivery of any motor fuels, petroleum products, or automotive products to the retail dealer. In order to exercise his right to terminate or repudiate a marketing agreement pursuant to this subsection, the retail dealer shall:

(A) Mail written notice, by registered or certified mail, to the distributor of his intention to exercise his right under this subsection within the period specified in this subsection;

(B) Discontinue use of any trademark presently being used by such retail dealer pursuant to the marketing agreement;

(C) Deliver or tender, so far as is practical, to the distributor all money, equipment, and merchantable products, including all motor fuels, petroleum products, and automotive products which the retail dealer has not presently sold, which have been loaned, sold, or delivered to the retail dealer pursuant to the marketing agreement within 10 days after mailing the notice specified in this subsection; and

(D) Deliver or tender to the distributor full possession of any retail service station provided by the distributor pursuant to the marketing agreement within 10 days after mailing the notice specified in this subsection.

(2) The retail dealer shall receive full credit, or the cash equivalent, for all money, equipment, and merchantable products delivered to the distributor pursuant to subparagraph (C) of paragraph (1) of this subsection. Nothing contained within this subsection shall be construed as granting a similar right to terminate or repudiate to the distributor under a marketing agreement or as prohibiting the retail dealer from cancelling a marketing agreement during the period specified in this subsection.

(1) No retail dealer or distributor, except as otherwise provided in subsection (a) of this section, shall terminate, cancel, or fail to renew a marketing agreement unless he furnishes prior written notice to the other party. Such notice shall be sent to the other party by registered or certified mail not less than 90 days prior to the date on which the marketing agreement is to be terminated, cancelled, or not renewed, unless a shorter period is provided for in this subsection. Such notice shall contain a statement of the party’s intention to terminate, cancel, or fail to renew the marketing agreement, the date on which such action shall become effective, and a statement of the specific grounds for such action. No distributor shall terminate, cancel, or fail to renew a marketing agreement, or notify a retail dealer of his intention to take such action, unless he reasonably and in good faith believes that the facts and circumstances existing do, in fact, justify his reliance on the grounds specified in his notice of intention to take such action. Notice furnished pursuant to this subsection shall be effective on the date of the mailing.

(2) In the event that a termination or cancellation is based upon 1 or more of the grounds specified in paragraphs (1) through (4) and (10) through (17) of subsection (c) of this section, the 90 days advance notice shall not be required. However, in such an event, the distributor shall furnish written notice to the retail dealer as far in advance of the effective date of such termination or cancellation as is reasonably practical under the circumstances.

(3) The distributor’s failure to furnish prior written notice, as required by this subsection, of his intention not to renew a marketing agreement, whether or not such marketing agreement provides for automatic extension or renewal, shall constitute a renewal of the marketing agreement for a term of 1 year from its stated expiration date.

(c) No distributor shall terminate or cancel any marketing agreement with a retail dealer, either directly or indirectly, unless such termination or cancellation is based upon 1 or more of the grounds specified in this subsection. No distributor shall terminate or cancel any marketing agreement with a retail dealer unless the grounds for such termination or cancellation are expressly set forth in the marketing agreement:

(1) The retail dealer has failed to pay financial obligations due to the distributor under the marketing agreement, including, but not limited to, rents for any equipment or retail service station provided by the distributor and payments for any motor fuels, petroleum products, or automotive products delivered, on consignment or otherwise, to the retail dealer by the distributor pursuant to the marketing agreement, within the time and in the manner prescribed by the marketing agreement;

(2) The retail dealer has filed for or has been declared bankrupt, has petitioned for or has been declared insolvent, or has petitioned for a reorganization or credit arrangement under the applicable laws;

(3) A termination or dissolution of the partnership, corporation, or other entity operating the retail service station or the death of the retail dealer, provided that a termination or dissolution of a partnership or other entity shall not constitute a ground for the termination or cancellation of a marketing agreement where the remaining partners or individual members of the other entity have notified the distributor of their intention to operate the retail service station and to acquire the interests of the departing partners or members pursuant to § 36-303.05(a) to (d);

(4) The retail dealer has voluntarily abandoned, or has given notice of his intention to voluntarily abandon, his retail service station, other than pursuant to subsection (a) of this section or § 36-303.05 ;

(5) The retail dealer has unjustifiably left his retail service station vacant or unattended for an unreasonable period of time or has unjustifiably failed to open his retail service station for business for an unreasonable number of days during any calendar year. The period of time and number of days which shall be deemed unreasonable shall be expressly set forth in the marketing agreement, but in no event may such period of time be less than 9 consecutive days or such number of days be less than 18 days during any calendar year;

(6) The retail dealer, or some other person over whom the retail dealer has control and was grossly negligent in not exercising such control, has wilfully or maliciously destroyed or damaged the real or personal property, including any equipment that is used in the operation of the retail service station, of the distributor furnished pursuant to the marketing agreement and the retail dealer has refused to replace or repair such real or personal property;

(7) The retail dealer, or some other person over whom the retail dealer has control and was grossly negligent in not exercising such control, has deliberately adulterated, commingled, misbranded, mislabeled, or misrepresented to his customers any motor fuels, petroleum products, or automotive products delivered to the retail dealer by the distributor pursuant to the marketing agreement in a manner prohibited by the marketing agreement or by federal or District of Columbia law or contrary to customary practices in the retail service station industry;

(8) The retail dealer has made materially false, deceptive, or misleading representations to the distributor which are related to the operation of his retail service station business;

(9) The retail dealer has failed to comply with any federal or District of Columbia laws, rules, or regulations relating to the operation of a retail service station, including, but not limited to, laws, rules, or regulations relating to the payment of taxes and the maintenance of any necessary licenses, permits, or registrations, which the marketing agreement made the retail dealer responsible for complying with, and such failure to comply with such laws, rules, or regulations has or will adversely affect the business relationship between the retail dealer and the distributor or the business of the distributor;

(10) The retail dealer has been convicted of the commission or attempt to commit a felony, criminal misconduct or violations of law involving moral turpitude, fraud, or commercial dishonesty, which is related to the operation of his retail service station business and which would affect the ability of the retail dealer to operate his retail service station business or would tend to defame or seriously damage the reputation of the distributor or his trademark, provided that this subsection shall not apply to convictions that have been disclosed to the distributor by the retail dealer prior to entering into the marketing agreement;

(11) The condemnation, appropriation, or other public taking of the retail service station location covered by the marketing agreement, in whole or part, pursuant to the power of eminent domain or the loss of or damage to the retail service station facility by an act of God, to the extent that such taking or damage makes the continued operation of the retail service station completely unfeasible;

(12) The marketing agreement grants the retail dealer the right, privilege, or authority to occupy a retail service station leased by the distributor from another person and such lease is terminated, cancelled, or not renewed by such other person for a cause beyond the reasonable control of the distributor;

(13) The distributor has lost his legal right, for a cause beyond his reasonable control, to grant the retail dealer the right, privilege, or authority to use any trademark provided for in the marketing agreement;

(14) The retail dealer has so severe a physical or mental disability that he is rendered incapable of operating his retail service station for an unreasonable period of time and has been unable to provide for the continued operation of his retail service station by another person;

(15) The retail dealer has failed to substantially comply with any other essential and reasonable requirement, condition, or provision expressly set forth in the marketing agreement;

(16) The existence or occurrence of any cause or circumstance which would make termination or cancellation of the marketing agreement reasonable, just, and equitable in light of the facts and circumstances then existing; or

(17) The retail dealer and the distributor have executed a mutual agreement to terminate the marketing agreement in writing.

(d) No distributor shall fail to renew a marketing agreement with a retail dealer, either directly or indirectly, unless such failure to renew is based upon 1 or more of the grounds specified in this subsection. No distributor shall fail to renew a marketing agreement unless the grounds for such failure to renew are expressly set forth in the marketing agreement:

(1) The existence of any of the grounds which would justify the termination or cancellation of a marketing agreement pursuant to subsection (c) of this section;

(2) The distributor intends to and does in fact withdraw entirely, within 1 year of the effective date of the notice furnished pursuant to subsection (b) of this section, from the sale in the District of Columbia of motor fuels, petroleum products, and automotive products;

(3) The marketing agreement grants the retail dealer the right, privilege, or authority to occupy a retail service station owned, leased, or otherwise controlled by the distributor and the distributor intends to and does in fact withdraw entirely, within 1 year of the effective date of the notice furnished pursuant to subsection (b) of this section, from the business of owning, leasing, controlling, and operating retail service stations in the District of Columbia;

(4) The marketing agreement grants the retail dealer the right, privilege, or authority to occupy a retail service station owned, leased, or otherwise controlled by the distributor and the distributor intends to sell or lease the retail service station location to a person other than a subsidiary, parent, affiliate, or other entity controlled or managed by the distributor or controlling or managing the distributor, for a purpose other than the retail sale of motor fuels or intends to relinquish a leasehold interest in the retail service station location, without any intention of purchasing, executing a new lease for, or otherwise regaining control of the location;

(5) A failure on the part of the distributor and the retail dealer, both parties having acted in good faith in trying to effect a renewal, to agree to any reasonable and essential changes in or additions to the marketing agreement considering the then existing facts and circumstances;

(6) The retail dealer has failed to make reasonable repairs and maintenance to the real or personal property of the distributor furnished pursuant to the marketing agreement provided that the marketing agreement requires the retail dealer to assume such responsibility for repair and maintenance;

(7) The retail dealer has failed to substantially comply with any reasonable minimum standards for the operation of a retail service station which are expressly set forth in the marketing agreement, including, but not limited to, standards concerning the cleanliness and appearance of the retail service station and the safeness of facilities and services, within a reasonable time after receiving written notice of noncompliance and such failure to comply will damage the integrity of the distributor’s trademark or the reputation of either the distributor or other retail service stations operating under the distributor’s trademark; or

(8) The distributor has received substantiated repeated customer complaints concerning the conduct or practices of the retail dealer, including, but not limited to, repair or maintenance work of a substandard quality, obnoxious or disrespectful behavior towards customers, or dishonest, unethical, or fraudulent practices, and the continuance of such conduct or practices will damage the integrity of the distributor’s trademark or the reputation of either the distributor or other retail service stations operating under the distributor’s trademark.

(1) No distributor shall terminate, cancel, or fail to renew any marketing agreement, either directly or indirectly, for any of the following reasons:

(A) Refusal of the retail dealer to accept a renewal of a marketing agreement for a term of less than 1 year;

(B) Refusal of the retail dealer to take part in any promotional or advertising campaign, to meet sales quotas suggested by the distributor, to purchase or accept delivery of any motor fuels or petroleum products not specified in the marketing agreement, or any other products or equipment, to sell motor fuels, petroleum products, or automotive products at a price suggested by the distributor, or to comply with any standard of performance imposed upon such retail dealer by the distributor which exceeds the standards of performance imposed by the marketing agreement;

(C) Refusal of the retail dealer to keep his retail service station open and operating during those hours or days which, in the reasonable opinion of the retail dealer, are unprofitable or to follow the suggestions or advice of the distributor concerning days or hours of operation;

(D) The retail dealer’s attempt to exercise his right to sell, assign, or otherwise transfer his marketing agreement or any interest therein to another person; or

(E) The distributor’s desire to obtain possession of a retail service station currently leased to the retail dealer in order to engage in the retail sale of motor fuel on its own behalf.

(2) No marketing agreement shall specify any of the reasons contained in this subsection as grounds for the termination of, cancellation of, or failure to renew such marketing agreement by the distributor.

Legislative History

Apr. 19, 1977, D.C. Law 1-123, § 4-203 , 24 DCR 2371; Apr. 24, 2007, D.C. Law 16-305, § 51, 53 DCR 6198