The following excerpt is from Valentine v. Mobil Oil Corp., 789 F.2d 1388 (9th Cir. 1986):
The PMPA plainly contemplates that franchisors will have substantial flexibility in changing the terms of a franchise upon renewal. Baldauf, 553 F.Supp. at 415; see Veracka v. Shell Oil Co., 655 F.2d 445, 448 (1st Cir.1981), cited with approval in Humboldt, 695 F.2d at 388. Thus, section 2801 defines two separate concepts: the "franchise," consisting of a specific contract between a franchisor and a franchisee, 15 U.S.C. Sec. 2801(1); and the "franchise relationship," consisting of the mutual obligations and responsibilities between the parties arising from the marketing of motor fuel under a franchise. Id. Sec. 2801(2). 5 Under the PMPA, the franchisor has (absent specific cause) an obligation to renew only the franchise relationship, not the particular franchise. 6 Indeed, section 2802(b)(3)(A) contemplates the possibility of material changes in the terms of the franchise, allowing the franchisor to end the relationship if agreement cannot be reached with respect to such changes.
The above passage should not be considered legal advice. Reliable answers to complex legal questions require comprehensive research memos. To learn more visit www.alexi.com.