---
kind: "section"
citation: "15 U.S.C. § 2802"
title: "15"
title_heading: "Commerce and Trade"
number: "2802"
heading: "Franchise relationship"
release: "119-102"
date: "2026-07-12"
url: "https://uscodex.org/usc/15/2802"
units:
  - "Chapter 55 — Petroleum Marketing Practices"
  - "Subchapter I — Franchise Protection"
---

# §2802. Franchise relationship

- (a) **General prohibition against termination or nonrenewal—** Except as provided in [subsection (b)](#b) and [section 2803 of this title](/usc/15/2803.md), no [franchisor](/usc/15/2801.md?p=3) engaged in the sale, consignment, or distribution of [motor fuel](/usc/15/2801.md?p=12) in [commerce](/usc/15/2801.md?p=18) may—
  - (1) terminate any [franchise](/usc/15/2801.md?p=1-A) (entered into or renewed on or after June 19, 1978) prior to the conclusion of the term, or the expiration date, stated in the [franchise](/usc/15/2801.md?p=1-A); or
  - (2) [fail to renew](/usc/15/2801.md?p=14) any [franchise relationship](/usc/15/2801.md?p=2) (without regard to the date on which the relevant [franchise](/usc/15/2801.md?p=1-A) was entered into or renewed).
- (b) **Precondition and grounds for termination or nonrenewal—**
  - (1) Any [franchisor](/usc/15/2801.md?p=3) may terminate any [franchise](/usc/15/2801.md?p=1-A) (entered into or renewed on or after June 19, 1978) or may [fail to renew](/usc/15/2801.md?p=14) any [franchise relationship](/usc/15/2801.md?p=2), if—
    - (A) the notification requirements of [section 2804 of this title](/usc/15/2804.md) are met; and
    - (B) such [termination](/usc/15/2801.md?p=17) is based upon a ground described in [paragraph (2)](#b-2) or such [nonrenewal](/usc/15/2801.md?p=14) is based upon a ground described in paragraph [(2)](#b-2) or [(3)](#b-3).
  - (2) For purposes of this subsection, the following are grounds for [termination](/usc/15/2801.md?p=17) of a [franchise](/usc/15/2801.md?p=1-A) or [nonrenewal](/usc/15/2801.md?p=14) of a [franchise relationship](/usc/15/2801.md?p=2):
    - (A) A [failure](/usc/15/2801.md?p=13) by the [franchisee](/usc/15/2801.md?p=4) to comply with any provision of the [franchise](/usc/15/2801.md?p=1-A), which provision is both reasonable and of material significance to the [franchise relationship](/usc/15/2801.md?p=2), if the [franchisor](/usc/15/2801.md?p=3) first acquired actual or constructive knowledge of such [failure](/usc/15/2801.md?p=13)—
      - (i) not more than 120 days prior to the date on which notification of [termination](/usc/15/2801.md?p=17) or [nonrenewal](/usc/15/2801.md?p=14) is given, if notification is given pursuant to [section 2804(a) of this title](/usc/15/2804.md?p=a); or
      - (ii) not more than 60 days prior to the date on which notification of [termination](/usc/15/2801.md?p=17) or [nonrenewal](/usc/15/2801.md?p=14) is given, if less than 90 days notification is given pursuant to [section 2804(b)(1) of this title](/usc/15/2804.md?p=b-1).
    - (B) A [failure](/usc/15/2801.md?p=13) by the [franchisee](/usc/15/2801.md?p=4) to exert good faith efforts to carry out the provisions of the [franchise](/usc/15/2801.md?p=1-A), if—
      - (i) the [franchisee](/usc/15/2801.md?p=4) was apprised by the [franchisor](/usc/15/2801.md?p=3) in writing of such [failure](/usc/15/2801.md?p=13) and was afforded a reasonable opportunity to exert good faith efforts to carry out such provisions; and
      - (ii) such [failure](/usc/15/2801.md?p=13) thereafter continued within the period which began not more than 180 days before the date notification of [termination](/usc/15/2801.md?p=17) or [nonrenewal](/usc/15/2801.md?p=14) was given pursuant to [section 2804 of this title](/usc/15/2804.md).
    - (C) The occurrence of an event which is relevant to the [franchise relationship](/usc/15/2801.md?p=2) and as a result of which [termination](/usc/15/2801.md?p=17) of the [franchise](/usc/15/2801.md?p=1-A) or [nonrenewal](/usc/15/2801.md?p=14) of the [franchise relationship](/usc/15/2801.md?p=2) is reasonable, if such event occurs during the period the [franchise](/usc/15/2801.md?p=1-A) is in effect and the [franchisor](/usc/15/2801.md?p=3) first acquired actual or constructive knowledge of such occurrence—
      - (i) not more than 120 days prior to the date on which notification of [termination](/usc/15/2801.md?p=17) or [nonrenewal](/usc/15/2801.md?p=14) is given, if notification is given pursuant to [section 2804(a) of this title](/usc/15/2804.md?p=a); or
      - (ii) not more than 60 days prior to the date on which notification of [termination](/usc/15/2801.md?p=17) or [nonrenewal](/usc/15/2801.md?p=14) is given, if less than 90 days notification is given pursuant to [section 2804(b)(1) of this title](/usc/15/2804.md?p=b-1).
    - (D) An [agreement](/usc/15/7a.md?p=2), in writing, between the [franchisor](/usc/15/2801.md?p=3) and the [franchisee](/usc/15/2801.md?p=4) to terminate the [franchise](/usc/15/2801.md?p=1-A) or not to renew the [franchise relationship](/usc/15/2801.md?p=2), if—
      - (i) such [agreement](/usc/15/7a.md?p=2) is entered into not more than 180 days prior to the date of such [termination](/usc/15/2801.md?p=17) or, in the case of [nonrenewal](/usc/15/2801.md?p=14), not more than 180 days prior to the conclusion of the term, or the expiration date, stated in the [franchise](/usc/15/2801.md?p=1-A);
      - (ii) the [franchisee](/usc/15/2801.md?p=4) is promptly provided with a copy of such [agreement](/usc/15/7a.md?p=2), together with the summary statement described in [section 2804(d) of this title](/usc/15/2804.md?p=d); and
      - (iii) within 7 days after the date on which the [franchisee](/usc/15/2801.md?p=4) is provided a copy of such [agreement](/usc/15/7a.md?p=2), the [franchisee](/usc/15/2801.md?p=4) has not posted by certified mail a written notice to the [franchisor](/usc/15/2801.md?p=3) repudiating such [agreement](/usc/15/7a.md?p=2).
    - (E) In the case of any [franchise](/usc/15/2801.md?p=1-A) entered into prior to June 19, 1978, and in the case of any [franchise](/usc/15/2801.md?p=1-A) entered into or renewed on or after such date (the term of which is 3 years or longer, or with respect to which the [franchisee](/usc/15/2801.md?p=4) was offered a term of 3 years or longer), a determination made by the [franchisor](/usc/15/2801.md?p=3) in good faith and in the normal course of business to withdraw from the marketing of [motor fuel](/usc/15/2801.md?p=12) through retail outlets in the [relevant geographic market area](/usc/15/2801.md?p=16) in which the [marketing premises](/usc/15/2801.md?p=8) are located, if—
      - (i) such determination—
        - (I) was made after the date such [franchise](/usc/15/2801.md?p=1-A) was entered into or renewed, and
        - (II) was based upon the occurrence of changes in relevant facts and circumstances after such date;
      - (ii) the [termination](/usc/15/2801.md?p=17) or [nonrenewal](/usc/15/2801.md?p=14) is not for the purpose of converting the premises, which are the subject of the [franchise](/usc/15/2801.md?p=1-A), to operation by employees or agents of the [franchisor](/usc/15/2801.md?p=3) for such [franchisor](/usc/15/2801.md?p=3)’s own account; and
      - (iii) in the case of [leased marketing premises](/usc/15/2801.md?p=9)—
        - (I) the [franchisor](/usc/15/2801.md?p=3), during the 180-day period after notification was given pursuant to [section 2804 of this title](/usc/15/2804.md), either made a bona fide offer to sell, transfer, or assign to the [franchisee](/usc/15/2801.md?p=4) such [franchisor](/usc/15/2801.md?p=3)’s interests in such premises, or, if applicable, offered the [franchisee](/usc/15/2801.md?p=4) a right of first refusal of at least 45 days duration of an offer, made by another, to purchase such [franchisor](/usc/15/2801.md?p=3)’s interest in such premises; or
        - (II) in the case of the sale, transfer, or assignment to another [person](/usc/15/7a.md?p=6) of the [franchisor](/usc/15/2801.md?p=3)’s interest in such premises in connection with the sale, transfer, or assignment to such other [person](/usc/15/7a.md?p=6) of the [franchisor](/usc/15/2801.md?p=3)’s interest in one or more other [marketing premises](/usc/15/2801.md?p=8), if such other [person](/usc/15/7a.md?p=6) offers, in good faith, a [franchise](/usc/15/2801.md?p=1-A) to the [franchisee](/usc/15/2801.md?p=4) on terms and conditions which are not discriminatory to the [franchisee](/usc/15/2801.md?p=4) as compared to [franchises](/usc/15/2801.md?p=1-A) then currently being offered by such other [person](/usc/15/7a.md?p=6) or [franchises](/usc/15/2801.md?p=1-A) then in effect and with respect to which such other [person](/usc/15/7a.md?p=6) is the [franchisor](/usc/15/2801.md?p=3).
  - (3) For purposes of this subsection, the following are grounds for [nonrenewal](/usc/15/2801.md?p=14) of a [franchise relationship](/usc/15/2801.md?p=2):
    - (A) The [failure](/usc/15/2801.md?p=13) of the [franchisor](/usc/15/2801.md?p=3) and the [franchisee](/usc/15/2801.md?p=4) to agree to changes or additions to the provisions of the [franchise](/usc/15/2801.md?p=1-A), if—
      - (i) such changes or additions are the result of determinations made by the [franchisor](/usc/15/2801.md?p=3) in good faith and in the normal course of business; and
      - (ii) such [failure](/usc/15/2801.md?p=13) is not the result of the [franchisor](/usc/15/2801.md?p=3)’s insistence upon such changes or additions for the purpose of converting the [leased marketing premises](/usc/15/2801.md?p=9) to operation by employees or agents of the [franchisor](/usc/15/2801.md?p=3) for the benefit of the [franchisor](/usc/15/2801.md?p=3) or otherwise preventing the renewal of the [franchise relationship](/usc/15/2801.md?p=2).
    - (B) The receipt of numerous bona fide customer complaints by the [franchisor](/usc/15/2801.md?p=3) concerning the [franchisee](/usc/15/2801.md?p=4)’s operation of the [marketing premises](/usc/15/2801.md?p=8), if—
      - (i) the [franchisee](/usc/15/2801.md?p=4) was promptly apprised of the existence and nature of such complaints following receipt of such complaints by the [franchisor](/usc/15/2801.md?p=3); and
      - (ii) if such complaints related to the condition of such premises or to the conduct of any employee of such [franchisee](/usc/15/2801.md?p=4), the [franchisee](/usc/15/2801.md?p=4) did not promptly take action to cure or correct the basis of such complaints.
    - (C) A [failure](/usc/15/2801.md?p=13) by the [franchisee](/usc/15/2801.md?p=4) to operate the [marketing premises](/usc/15/2801.md?p=8) in a clean, safe, and healthful manner, if the [franchisee](/usc/15/2801.md?p=4) failed to do so on two or more previous occasions and the [franchisor](/usc/15/2801.md?p=3) notified the [franchisee](/usc/15/2801.md?p=4) of such [failures](/usc/15/2801.md?p=13).
    - (D) In the case of any [franchise](/usc/15/2801.md?p=1-A) entered into prior to June 19, 1978, (the unexpired term of which, on such date, is 3 years or longer) and, in the case of any [franchise](/usc/15/2801.md?p=1-A) entered into or renewed on or after such date (the term of which was 3 years or longer, or with respect to which the [franchisee](/usc/15/2801.md?p=4) was offered a term of 3 years or longer), a determination made by the [franchisor](/usc/15/2801.md?p=3) in good faith and in the normal course of business, if—
      - (i) such determination is—
        - (I) to convert the [leased marketing premises](/usc/15/2801.md?p=9) to a use other than the sale or distribution of [motor fuel](/usc/15/2801.md?p=12),
        - (II) to materially alter, add to, or replace such premises,
        - (III) to sell such premises, or
        - (IV) that renewal of the [franchise relationship](/usc/15/2801.md?p=2) is likely to be uneconomical to the [franchisor](/usc/15/2801.md?p=3) despite any reasonable changes or reasonable additions to the provisions of the [franchise](/usc/15/2801.md?p=1-A) which may be acceptable to the [franchisee](/usc/15/2801.md?p=4);
      - (ii) with respect to a determination referred to in subclause (II) or (IV), such determination is not made for the purpose of converting the [leased marketing premises](/usc/15/2801.md?p=9) to operation by employees or agents of the [franchisor](/usc/15/2801.md?p=3) for such [franchisor](/usc/15/2801.md?p=3)’s own account; and
      - (iii) in the case of [leased marketing premises](/usc/15/2801.md?p=9) such [franchisor](/usc/15/2801.md?p=3), during the 90-day period after notification was given pursuant to [section 2804 of this title](/usc/15/2804.md), either—
        - (I) made a bona fide offer to sell, transfer, or assign to the [franchisee](/usc/15/2801.md?p=4) such [franchisor](/usc/15/2801.md?p=3)’s interests in such premises; or
        - (II) if applicable, offered the [franchisee](/usc/15/2801.md?p=4) a right of first refusal of at least 45-days duration of an offer, made by another, to purchase such [franchisor](/usc/15/2801.md?p=3)’s interest in such premises.
- (c) **Definition—** As used in [subsection (b)(2)(C)](#b-2-C), the term “an event which is relevant to the [franchise relationship](/usc/15/2801.md?p=2) and as a result of which [termination](/usc/15/2801.md?p=17) of the [franchise](/usc/15/2801.md?p=1-A) or [nonrenewal](/usc/15/2801.md?p=14) of the [franchise relationship](/usc/15/2801.md?p=2) is reasonable” includes events such as—
  - (1) fraud or criminal misconduct by the [franchisee](/usc/15/2801.md?p=4) relevant to the operation of the [marketing premises](/usc/15/2801.md?p=8);
  - (2) declaration of bankruptcy or judicial determination of insolvency of the [franchisee](/usc/15/2801.md?p=4);
  - (3) continuing severe physical or mental disability of the [franchisee](/usc/15/2801.md?p=4) of at least 3 months duration which renders the [franchisee](/usc/15/2801.md?p=4) unable to provide for the continued proper operation of the [marketing premises](/usc/15/2801.md?p=8);
  - (4) loss of the [franchisor](/usc/15/2801.md?p=3)’s right to grant possession of the [leased marketing premises](/usc/15/2801.md?p=9) through expiration of an underlying lease, if—
    - (A) the [franchisee](/usc/15/2801.md?p=4) was notified in writing, prior to the commencement of the term of the then existing [franchise](/usc/15/2801.md?p=1-A)—
      - (i) of the duration of the underlying lease; and
      - (ii) of the fact that such underlying lease might expire and not be renewed during the term of such [franchise](/usc/15/2801.md?p=1-A) (in the case of [termination](/usc/15/2801.md?p=17)) or at the end of such term (in the case of [nonrenewal](/usc/15/2801.md?p=14));
    - (B) during the 90-day period after notification was given pursuant to [section 2804 of this title](/usc/15/2804.md), the [franchisor](/usc/15/2801.md?p=3) offers to assign to the [franchisee](/usc/15/2801.md?p=4) any option to extend the underlying lease or option to purchase the [marketing premises](/usc/15/2801.md?p=8) that is held by the [franchisor](/usc/15/2801.md?p=3), except that the [franchisor](/usc/15/2801.md?p=3) may condition the assignment upon receipt by the [franchisor](/usc/15/2801.md?p=3) of—
      - (i) an unconditional release executed by both the landowner and the [franchisee](/usc/15/2801.md?p=4) releasing the [franchisor](/usc/15/2801.md?p=3) from any and all liability accruing after the date of the assignment for—
        - (I) financial obligations under the option (or the resulting extended lease or purchase [agreement](/usc/15/7a.md?p=2));
        - (II) environmental contamination to (or originating from) the [marketing premises](/usc/15/2801.md?p=8); or
        - (III) the operation or condition of the [marketing premises](/usc/15/2801.md?p=8); and
      - (ii) an instrument executed by both the landowner and the [franchisee](/usc/15/2801.md?p=4) that ensures the [franchisor](/usc/15/2801.md?p=3) and the contractors of the [franchisor](/usc/15/2801.md?p=3) reasonable access to the [marketing premises](/usc/15/2801.md?p=8) for the purpose of testing for and remediating any environmental contamination that may be present at the premises; and
    - (C) in a situation in which the [franchisee](/usc/15/2801.md?p=4) acquires possession of the [leased marketing premises](/usc/15/2801.md?p=9) effective immediately after the loss of the right of the [franchisor](/usc/15/2801.md?p=3) to grant possession (through an assignment pursuant to [subparagraph (B)](#c-4-B) or by obtaining a new lease or purchasing the [marketing premises](/usc/15/2801.md?p=8) from the landowner), the [franchisor](/usc/15/2801.md?p=3) (if requested in writing by the [franchisee](/usc/15/2801.md?p=4) not later than 30 days after notification was given pursuant to [section 2804 of this title](/usc/15/2804.md)), during the 90-day period after notification was given pursuant to [section 2804 of this title](/usc/15/2804.md)—
      - (i) made a bona fide offer to sell, transfer, or assign to the [franchisee](/usc/15/2801.md?p=4) the interest of the [franchisor](/usc/15/2801.md?p=3) in any improvements or equipment located on the premises; or
      - (ii) if applicable, offered the [franchisee](/usc/15/2801.md?p=4) a right of first refusal (for at least 45 days) of an offer, made by another [person](/usc/15/7a.md?p=6), to purchase the interest of the [franchisor](/usc/15/2801.md?p=3) in the improvements and equipment.
  - (5) condemnation or other taking, in whole or in part, of the [marketing premises](/usc/15/2801.md?p=8) pursuant to the power of eminent domain;
  - (6) loss of the [franchisor](/usc/15/2801.md?p=3)’s right to grant the right to use the [trademark](/usc/15/2801.md?p=11) which is the subject of the [franchise](/usc/15/2801.md?p=1-A), unless such loss was due to [trademark](/usc/15/2801.md?p=11) abuse, violation of Federal or [State](/usc/15/2801.md?p=19) law, or other fault or negligence of the [franchisor](/usc/15/2801.md?p=3), which such abuse, violation, or other fault or negligence is related to action taken in bad faith by the [franchisor](/usc/15/2801.md?p=3);
  - (7) destruction (other than by the [franchisor](/usc/15/2801.md?p=3)) of all or a substantial part of the [marketing premises](/usc/15/2801.md?p=8);
  - (8) [failure](/usc/15/2801.md?p=13) by the [franchisee](/usc/15/2801.md?p=4) to pay to the [franchisor](/usc/15/2801.md?p=3) in a timely manner when due all sums to which the [franchisor](/usc/15/2801.md?p=3) is legally entitled;
  - (9) [failure](/usc/15/2801.md?p=13) by the [franchisee](/usc/15/2801.md?p=4) to operate the [marketing premises](/usc/15/2801.md?p=8) for—
    - (A) 7 consecutive days, or
    - (B) such lesser period which under the facts and circumstances constitutes an unreasonable period of time;
  - (10) willful adulteration, mislabeling or misbranding of [motor fuels](/usc/15/2801.md?p=12) or other [trademark](/usc/15/2801.md?p=11) violations by the [franchisee](/usc/15/2801.md?p=4);
  - (11) knowing [failure](/usc/15/2801.md?p=13) of the [franchisee](/usc/15/2801.md?p=4) to comply with Federal, [State](/usc/15/2801.md?p=19), or local laws or regulations relevant to the operation of the [marketing premises](/usc/15/2801.md?p=8); and
  - (12) conviction of the [franchisee](/usc/15/2801.md?p=4) of any felony involving moral turpitude.
- (d) **Compensation, etc., for franchisee upon condemnation or destruction of marketing premises—** In the case of any [termination](/usc/15/2801.md?p=17) of a [franchise](/usc/15/2801.md?p=1-A) (entered into or renewed on or after June 19, 1978), or in the case of any [nonrenewal](/usc/15/2801.md?p=14) of a [franchise relationship](/usc/15/2801.md?p=2) (without regard to the date on which such [franchise relationship](/usc/15/2801.md?p=2) was entered into or renewed)—
  - (1) if such [termination](/usc/15/2801.md?p=17) or [nonrenewal](/usc/15/2801.md?p=14) is based upon an event described in [subsection (c)(5)](#c-5), the [franchisor](/usc/15/2801.md?p=3) shall fairly apportion between the [franchisor](/usc/15/2801.md?p=3) and the [franchisee](/usc/15/2801.md?p=4) compensation, if any, received by the [franchisor](/usc/15/2801.md?p=3) based upon any loss of business opportunity or good will; and
  - (2) if such [termination](/usc/15/2801.md?p=17) or [nonrenewal](/usc/15/2801.md?p=14) is based upon an event described in [subsection (c)(7)](#c-7) and the [leased marketing premises](/usc/15/2801.md?p=9) are subsequently rebuilt or replaced by the [franchisor](/usc/15/2801.md?p=3) and operated under a [franchise](/usc/15/2801.md?p=1-A), the [franchisor](/usc/15/2801.md?p=3) shall, within a reasonable period of time, grant to the [franchisee](/usc/15/2801.md?p=4) a right of first refusal of the [franchise](/usc/15/2801.md?p=1-A) under which such premises are to be operated.

## Source credit

(Pub. L. 95–297, title I, § 102, June 19, 1978, 92 Stat. 324; Pub. L. 103–371, §§ 2, 3, Oct. 19, 1994, 108 Stat. 3484.)

## Notes

### Editorial Notes

### Amendments

1994—Subsec. (b)(3)(A)(ii). Pub. L. 103–371, § 2, inserted “converting the leased marketing premises to operation by employees or agents of the franchisor for the benefit of the franchisor or otherwise” after “purpose of”.

Subsec. (c)(4). Pub. L. 103–371, § 3, redesignated portion of introductory language of par. (4) as subpar. (A), redesignated former subpars. (A) and (B) as cls. (i) and (ii), respectively, of subpar. (A), and added subpars. (B) and (C).