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NEWARK, N.J. -- More than two dozen BP franchisees in New Jersey have filed a lawsuit at the U.S. District Court here against the company for its tactics in the termination of its marketing agreements, reported the Star-Ledger.
The dealers claim that they must accept grossly inflated rent for its stores or an option to buy the properties at well over their market value. BP notified the stations in June that the company would be terminating existing franchise agreements, effective this week. The deadline for the termination has been extended until Sept. 11, due to the lawsuit, which will hold a hearing that day.
For one dealer in Mountainside, N.J., Paul Lopes, will have to pay $10,000 a month in rent, double his current rent of $5,000. In addition to that, his credit card fees will total $8,000 a month.
"That's $18,000 in the red right there without even pumping as gallon of gas," Lopes told the Star-Ledger. "How are you going to stay in business like that?"
Raffi Korogluyan, owner of two stations in Northern new Jersey, told the newspaper "We've put our lives into this business … This is completely wrong."
According to BP, the decision to end the marketing agreements is a desire for the company to slip out of the retail gasoline business and concentrate on wholesale trade. "It's a business decision. As a prudent business, you have to review your operations to see if it fits into your current business profile," BP spokesman John Curry told the Star-Ledger.
Some dealers told the paper that this is not the case. "They are using us as a buffer to raise prices to consumers," said Ara Alboyacian, a franchisee in Fort Lee, N.J. "Most of the guys will just have to turn in their keys and they will be out on the streets."
The dealers told the paper that they have tried to negotiate with BP about the termination, but have not seen results. Because of this, they have joined and filed the lawsuit which seeks an injunction to prevent BP from terminating the agreements, as well as compensatory damages.