Throughout New Jersey and Pennsylvania, the familiar Mobil gas station signage and products are gone, replaced with the new brand Lukoil.  Time will tell whether Getty Petroleum Marketing’s (“Getty”) re-branding efforts will have a positive or negative impact on its franchisees.  However, in the matter captioned, Akshayraj, Inc. v. Getty Petroleum Marketing, Inc., certain New Jersey and Pennsylvania franchisee operators are betting on the latter and have filed suit in the United States District Court in the District of New Jersey against Getty and Lukoil Americas Corporation (“Lukoil”). 

In their Complaint, the franchisee operators allege that the conversion to Lukoil has constructively terminated their franchise agreements, in violation of the Petroleum Marketing Practices Act, the New Jersey Franchise Practices Act and Pennsylvania’s franchise laws.  The plaintiffs contend that the brand change to Lukoil has resulted in the franchisees operating a generic station, as opposed to the “recognizable, identifiable and sought out [Mobil] branded stations.”   The plaintiffs further allege that were being charged the same higher whole sale prices for a product without any customer base or brand loyalty.

Defendants Getty and Lukoil moved to dismiss the Complaint.   The District Court dismissed the franchisee operator’s breach of contract claims, claiming that Getty breached the franchise agreement by refusing to provide Mobil products to its franchisees.  The court noted that the franchise agreements specifically provided Getty with the right, at its sole discretion, to change its brand (including its proprietary marks and products).  

Preliminary, the court also did not find any evidence of record to establish that Lukoil was a generic brand.  However, on the remaining counts dealing with this issue, the court converted the Defendants’ motion to dismiss to a motion for summary judgment.  The franchisee operator’s will now need to demonstrate some material question of fact related to whether Lukoil is a generic brand.