Congress enacted legislation to protect the gasoline dealers from arbitrary loss of their investment. What happens when the party with disparate and superior bargaining power creates a work-around to avoid federal protections owed a service station operator where the protective statute prohibits waiver of its provisions? In the case of Rehoboth Petroleum v. Petroleum Marketing Group, (E.D.P.A. No. 25-3746) (Oct. 8, 2025 Rufe, J.), the court was constrained by case law from granting full injunctive relief requested by the operator but expressed its displeasure with the sharp business practices. The court did grant interim protection to the dealer while the parties worked out their dispute and ultimately settled their case.

Rehoboth Petroleum, Inc. brought suit against Petroleum Marketing Group Inc. and its affiliated landlord (collectively, PMG), arguing PMG had violated the Petroleum Marketing Practices Act (PMPA), 15 U.S.C. Section 2801-2841 by terminating the parties’ commission agent agreement without proper notice and without cause. As contemplated in the PMPA, the service station operator sought an emergency injunction against termination of its agreement to operate and the termination of the underlying lease for its operation. The court reluctantly concluded that Rehoboth, the gas station operator, was not a franchisee of the petroleum marketing license holder and property owner PMG, and for that reason, the relaxed conditions for an injunction under the PMPA did not apply. The court did enjoin the site owner from evicting the operator in the interim and the gas station operator was also given leave to amend its complaint.

The court was apparently by the realization that PMG achieved contractually what was intended to be prohibited by the PMPA. Rehoboth operated a Gulf Gas Station and Circle K Market convenience store located in Devon, Pennsylvania (the site). PMG is the holder of a license, franchise, or other authorization to operate the same gas station and through an affiliate owns the real property where the gas station and convenience store are located. Rehoboth and PMG are parties to the commission agent agreement (agreement) under which PMG permits Rehoboth to operate the gas station and convenience store as an independent contractor. Rehoboth invested roughly $500,000 to acquire the business.

Unlike gasoline dealers protected under the PMPA, Rehoboth did not purchase gasoline from PMG but rather sells gasoline on behalf of PMG at the pricing that PMG sets. When fuel is transferred from PMG to Rehoboth, PMG retains title to the fuel and pays taxes on the fuel. Rehoboth merely sells the gasoline for PMG and receives a $0.05 commission per gallon, in addition to operating the Circle K convenience store on the site.

The PMPA prohibits waiver of its provisions. Nevertheless, the agreement provides: "There is no exception that this agreement would or could create a franchise relationship and confers any rights under either the Petroleum Practices Marketing Act (15 U.S.C. Sections 2801) or any State-Enacted Franchise Act." This language is not a controlling factor in the court’s decision but undeniably is a factor.

In March 2025, a PMG development district manager began noting operational deficiencies in Rehoboth’s maintenance of the gas station and convenience store. Over time, Rehoboth addressed some but not all of the deficiencies. The manager ultimately sent the Rehoboth a letter indicating, “if these items are not completed today, consequences include ... terminating your agreement.” On July 7, 2025, PMG sent Rehoboth a “notice of termination,” which purported to terminate the agreement of Aug. 6, 2025. In response, Rehoboth filed a complaint with an motion for a preliminary injunction alleging that PMG’s termination of the agreement violated Rehoboth’s rights under the PMPA.

The controlling issue for the court was whether the relationship under the agreement between the independent contractor and PMG is a “franchise relationship” and thereby covered by the PMPA. If the independent contractor could not prove that it was a “franchisee” under the PMPA, it would not prevail on its PMPA claim, and it will not satisfy the modified test for a preliminary injunction under the PMPA.

Notably, the court stated that “PMG attempts to contract around Rehoboth’s statutory protections through language disavowing the creation of either a franchise relationship or any rights under the PMPA.” However, the PMPA states that franchise agreements may not release or waive rights under the PMPA. As such, the court indicated its focus of analysis would be whether, under the PMPA’s definition, Rehoboth qualifies as a “franchisee.”

The PMPA provides that if a franchise relationship exists, an agreement governing that relationship may be terminated only with 90 days’ notice and for cause. Under the PMPA, a “franchise” is 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.” The parties agreed that PMG qualified as a distributor and that Rehoboth did not.

The court focused on whether Rehoboth was a “retailer” for purposes of the statute. A “retailer” is “any person who purchases motor fuel for sale to the general public for ultimate consumption.” Rehoboth conceded that it did not “purchase” fuel and did not meet this definition. Under an alternative analysis, courts look at multiple factors to decide whether gasoline operators “have enough of the indicia of entrepreneurial responsibility and risk to be considered independent dealers and businessmen.” This “constructive retailer” analysis failed to save the PMPA claim as it is limited to preventing risk because the scope of entrepreneurial risk relevant to assessing the PMPA’s applicability extends only to an operator’s business with respect to its fuel, a risk not present in this case.

Clearly displeased, the court stated, “PMG’s contrived attempt to shirk Rehoboth’s statutory protections through a PMPA waiver clause and fine-tuned provisions aimed at confirming PMG’s ownership of its fuel potentially raise significant contractual concerns.” The court allowed Rehoboth to file additional claims relating to its business relationship with Circle K, and the court granted a preliminary injunction prohibiting PMG from evicting or otherwise causing Rehoboth to vacate the premises of the convenience store.

Many courts have interpreted the PMPA as its application is as ubiquitous as the service station operators it protects. The court here noted the public policy objective intended and granted appropriate relief.

Reprinted with permission from February 17, 2026 issue of The Legal Intelligencer© 2025 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.