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    Dealers Consider Forming LLC to Negotiate With Getty Realty

    The move would allow the retailers to avoid a distributor and set rental terms themselves.

    By Brian Berk, Convenience Store News

    STAMFORD, Conn. -- A group of dealers served by the Gasoline & Automotive Service Dealers of America (GASDA) is considering forming its own limited liability company (LLC) in order to negotiate directly with Getty Realty Corp., GASDA Executive Director Michael J. Fox told CSNews Online.

    If created, one goal of the LLC would be to sign a master lease with Getty Realty regarding the operation of the dealers' 43 convenience stores and gas stations, the majority of which are located in Connecticut. The formation of an LLC would allow these retailers to avoid a distributor and set rental terms themselves, according to Fox.

    The 43 locations were formerly leased by Getty Realty to Getty Petroleum Marketing Inc. (GPMI), which subsequently subleased the properties to the independent operators. GPMI declared bankruptcy on Dec. 5, and the U.S. Bankruptcy Court, Southern District of New York, granted Getty Realty's request to break the GPMI master lease, effective April 30.

    Since that ruling, Getty Realty has sold several properties and signed leases with new distributors, including Chestnut Petroleum Distributors (CPD). However, the independent operators claim Chestnut has set unfair terms compared to their prior agreements with GPMI.

    As for whether Getty Realty would renegotiate leases with a newly formed LLC, the company's chief indicated the answer is no.

    "We have already signed a long-term lease with Chestnut Petroleum," David Driscoll, president and CEO of Getty Realty, told CSNews Online this morning.

    Some of the dealers have attempted to send rent checks to Getty Realty directly. Those uncashed checks have been returned, as confirmed by Driscoll to CSNews Online and proven by a letter CSNews Online obtained from one of the store operators in Connecticut.

    "We are trying to do the right thing," Driscoll said. "We [are a real estate investment trust] and do not operate the properties themselves."

    According to Fox, GASDA has never asked Getty Realty to operate the properties. He said the entire situation is "hogwash" and an "attempt by Getty Realty and CPD to control the retail price of gasoline, thereby increasing the cost to consumers in the state of Connecticut, reducing competition and giving control to one distributor who would be able to exercise market power on retail pricing in the state."

    Further, Fox said GASDA will be "calling on both state and federal legislators to intervene to protect the public in this matter." He cited a specific Connecticut law that prohibits gasoline suppliers from exerting "undue control" or destroying "fair and honest competition" in the marketplace.

    According to CSNews Online sources, most of the other retailers formerly under GPMI and now subleasing from other distributors -- including Lehigh Gas and Ramoco Fuels -- have been happy with their new lease agreements. But there are a few that have expressed complaints, sources confirmed.

    John Morgan, attorney for many of the independent operators, could not be reached for comment.

    Getty Realty Corp. owns and leases about 1,400 properties nationwide.

    By Brian Berk, Convenience Store News
    • About Brian Berk Brian Berk is managing editor of Stagnito Business Information's Convenience Store News and Convenience Store News for the Single Store Owner, where he specializes in covering motor fuels, technology and financial news. He has served the magazine industry for 14 years and has also worked in the radio and newspaper fields. Berk holds a bachelor's degree in communications from the State University of New York at Cortland and a master's degree in journalism from Quinnipiac University in Hamden, Conn.

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