March 26, 2026|Franchise Frontlines
March 26, 2026 | Superior Court of Connecticut | Judge Trial Referee Barry Stevens | Unpublished Opinion
Executive Summary
In an unpublished decision, a Connecticut trial court denied a motion to dismiss premised on the existence of a franchise relationship under the Connecticut Petroleum Franchise Act (“CPFA”), holding that a commissioned agent fuel arrangement did not constitute a franchise as a matter of law. The defendant argued that it was entitled to statutory protections governing termination of petroleum franchises, including notice and cause requirements. The plaintiff countered that the relationship was a lease coupled with a commissioned agent agreement, not a franchise. The court agreed with the plaintiff, concluding that the structure of the agreement—particularly the absence of fuel ownership, pricing control, and entrepreneurial risk—precluded franchise status. The decision reinforces the distinction between franchise relationships and agency-based fuel distribution models and highlights the importance of contractual structure in determining statutory protections.
Relevant Background
The dispute arose from a commercial property used as a gas station and convenience store. The original operator leased the premises and entered into a commissioned agent agreement under which it sold motor fuel on behalf of a supplier. Under that arrangement, the supplier retained title to the fuel at all times, controlled pricing, bore the risk of loss, and compensated the operator through a fixed commission based on gallons sold.
The governing agreements expressly stated that the relationship did not create a franchise and disclaimed any intent to establish a franchise relationship under state or federal law. The operator’s role was limited to selling fuel as an agent, maintaining records, and performing certain administrative functions, while the supplier retained control over core aspects of the fuel business.
After the property changed hands, the new owner sought to terminate the operator’s tenancy. The operator moved to dismiss the resulting eviction action, arguing that the relationship constituted a franchise under the CPFA and that the statutory termination protections had not been satisfied.
Decision
The court rejected the defendant’s argument, concluding that no franchise relationship existed. The analysis focused on both the contractual language and the practical realities of the parties’ arrangement.
The court first emphasized the absence of mutual intent to create a franchise relationship. The agreements expressly disclaimed franchise status and instead characterized the relationship as a commissioned agency. While contractual labels are not dispositive, the court found that the language aligned with the structure and operation of the arrangement.
More importantly, the court examined the economic substance of the relationship. The defendant did not purchase fuel, did not take title to it, and did not bear the risk of loss. Instead, title passed directly from the supplier to the retail customer, with the defendant acting as an intermediary compensated through commissions. The supplier controlled pricing, managed inventory, owned the equipment, and retained the financial upside and downside of fuel sales.
Based on these factors, the court determined that the defendant was not a “retailer” within the meaning of the CPFA. The absence of ownership, control, and risk allocation typically associated with franchisees weighed heavily against franchise classification.
The court further relied on recent appellate authority holding that similar commissioned agent arrangements do not constitute franchises as a matter of law. That authority reinforced the principle that statutory franchise protections apply only where the operator functions as an independent business selling fuel, rather than as an agent facilitating sales on behalf of a supplier.
Because no franchise relationship existed, the statutory notice and termination protections did not apply. The court therefore denied the motion to dismiss and allowed the eviction action to proceed.
Looking Forward
This decision provides a useful reminder that not all branded or structured commercial relationships fall within the scope of franchise law. In particular, commissioned agent models—common in certain industries such as petroleum distribution—may fall outside statutory franchise frameworks where the operator lacks ownership, pricing authority, and meaningful economic risk.
For franchisors and system designers, the case underscores the importance of aligning contractual structure with operational reality. Courts will look beyond labels to evaluate whether the elements typically associated with franchise status—such as independent ownership, control over key business decisions, and exposure to profit and loss—are present.
The decision also highlights how risk allocation can shape legal classification. Where the supplier retains title, sets pricing, and assumes the financial risk of the business, courts may be less inclined to treat the operator as a franchisee entitled to statutory protections.
At the same time, the opinion reflects a narrow and fact-specific analysis tied to the petroleum context and the CPFA. Other jurisdictions and statutory frameworks may apply different standards or reach different conclusions depending on the structure of the relationship and the applicable law.
For franchisors, the case illustrates both an opportunity and a caution. Alternative structures may, in some circumstances, reduce exposure to franchise regulation. However, those structures must be implemented consistently and reflect the actual operation of the business. Courts remain focused on substance over form when determining whether a franchise relationship exists.
This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.
Thomas O’Connell is a Partner at Buchalter LLP and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.
This communication is not intended to create, and does not create, an attorney-client relationship or any other legal relationship. No statement herein constitutes legal advice, nor should it be relied upon or interpreted as such. This communication is for general informational purposes only and is not a substitute for legal counsel. Readers should not act or refrain from acting based on any information provided without seeking appropriate legal advice specific to their situation. For more information, visit www.buchalter.com.
