AN ACT Relating to retail trading practices in the sale of motor vehicle fuels; amending RCW 19.100.010; adding a new chapter to Title 19 RCW; prescribing penalties; providing an effective date; and declaring an emergency.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION. Sec. 1. Unless the context clearly requires otherwise, the definitions in this section apply throughout this chapter.

(1) "Motor fuel franchise" means any oral or written contract, either expressed or implied, between a motor fuel refiner-supplier and motor fuel retailer under which the motor fuel retailer is supplied motor fuel for resale to the public or for sale on commission or for a fee to the public, and includes any agreements between a motor fuel refiner-supplier and motor fuel retailer under which the retailer is permitted to occupy premises owned, leased, or controlled by the refiner-supplier for the purpose of engaging in the retail sale of motor fuel supplied by the motor fuel refiner-supplier.

(2) "Motor fuel refiner-supplier" means any person, firm, or corporation, including any affiliate of the person, firm, or corporation, engaged in the refining of crude oil into petroleum who supplies motor fuel for sale, consignment, or distribution through retail outlets and has an operable refinery capacity of three hundred twenty-five thousand barrels a day as reported to the federal department of energy.

(3) "Motor fuel retailer" means a person, firm, or corporation engaged primarily in the retail sale of motor fuel pursuant to a motor fuel franchise entered into with a refiner-supplier.

(4) "Motor fuel" means gasoline or diesel fuel of a type distributed for use in self-propelled motor vehicles and includes gasohol and aviation fuels.

(5) "Affiliate" means any person, firm, or corporation who controls or is controlled by any motor fuel refiner-supplier, and includes any subsidiary or affiliated corporation in which the motor fuel refiner-supplier or its shareholders, officers, agents, or employees hold or control more than twenty-five percent of the voting shares.

(6) "Retail motor fuel outlet" means any location where motor fuel is distributed for purposes other than resale.

(7) "Price" means the net purchase price, after adjustment for commission, brokerage, rebate, discount, services or facilities furnished, or other such adjustment.

NEW SECTION. Sec. 2. It is unlawful for any motor fuel refiner-supplier to discriminate in price between motor fuel retailers for purchases of motor fuel of like grade and quality, where the effect of the discrimination may be substantially to injure, destroy, or prevent competition with any retailer who receives the benefit of the discrimination, or with the customers of either retailer. Nothing in this section prevents differentials which make only due allowance for differences in the cost of manufacture, sale, or delivery resulting from the differing methods or quantities in which the fuel is sold to retailers. Upon proof being made of discrimination under this section, the burden of rebutting the prima facie case thus made by showing justification is upon the refiner-supplier.

NEW SECTION. Sec. 3. Notwithstanding the terms of any motor fuel franchise, a motor fuel refiner-supplier shall not absolutely prohibit or unreasonably withhold its consent to any sale, assignment, or other transfer of the motor fuel franchise by a motor fuel retailer to a third party without fairly compensating the franchisee for the fair market value, at the time of expiration of the franchise, of the franchisee's inventory, supplies, equipment, and furnishings purchased from the franchisor, and good will, exclusive of personalized materials which have no value to the franchisor, and inventory, supplies, equipment, and furnishings not reasonably required in the conduct of the franchise business. A franchisor may offset against amounts owed to a franchisee under this section any amounts owed by the franchisee to the franchisor.

NEW SECTION. Sec. 4. Notwithstanding the terms of any motor fuel franchise, no motor fuel refiner-supplier may prohibit or prevent the sale, assignment, or other transfer of the motor fuel franchise to a corporation in which the motor fuel retailer has a controlling interest if the motor fuel retailer offers in writing personally to guarantee the performance of the obligations under the motor fuel franchise.

NEW SECTION. Sec. 5. Notwithstanding the terms of any motor fuel franchise, the interest of a motor fuel retailer under such an agreement shall be considered personal property and shall devolve on the death of the motor fuel retailer to a designated successor in interest of the retailer, limited to the retailer's spouse, adult child, or adult stepchild or, if no successor in interest is designated, to the retailer's spouse, if any. The designation shall be made, witnessed in writing by at least two persons, and delivered to the motor fuel refiner-supplier during the term of the franchise. The designation may be revised at any time by the franchisee and shall be substantially in the following form:

@ig"I (franchisee name) at the .......... service station located at .......... , in the City of .......... , Washington, designate ............... as my successor in interest under section 7 of this act and ............... as my alternate successor if the originally designated successor is unable or unwilling so to act.

I so specify this ..... day of .......... , 19.. ."

NEW SECTION. Sec. 6. Notwithstanding the terms of any motor fuel franchise, the retailer shall be given the right of first refusal to purchase the real estate and/or improvements owned by the refiner-supplier at the franchise location, and at least thirty days' advance notice within which to exercise this right, prior to any sale thereof to any other buyer.

NEW SECTION. Sec. 7. Notwithstanding the terms of any motor fuel franchise, no motor fuel refiner-supplier may:

(1) Require nonprofitable or unsafe hours of operation by any motor fuel retailer;

(2) Require any retailer to meet mandatory minimum sales volume requirements for fuel or other products unless the refiner-supplier proves that its price to the retailer has been sufficiently low to enable the retailer reasonably to meet the mandatory minimum;

(3) Alter, or require the retailer to consent to the alteration of, any provision of the franchise during its effective term without mutual consent of the retailer;

(4) Interfere with any retailer's right to assistance of counsel on any matter or to join or be active in any trade association; and

(5) Set or compel, directly or indirectly, the retail price at which the retailer sells motor fuel or other products to the public.

NEW SECTION. Sec. 8. The commission of any act prohibited by this chapter shall constitute an unfair or deceptive act or practice under chapter 19.86 RCW and the attorney general and any aggrieved person, including but not limited to any motor fuel retailer being supplied by the offending motor fuel refiner-supplier, shall have all rights and remedies available under chapter 19.86 RCW.

Sec. 9. Section 1, chapter 252, Laws of 1971 ex. sess. as last amended by section 83, chapter 158, Laws of 1979 and RCW 19.100.010 are each amended to read as follows:

When used in this chapter, unless the context otherwise requires:

(1) "Advertisement" means any written or printed communication or any communication by means of recorded telephone messages or spoken on radio, television, or similar communication media published in connection with an offer or sale of a franchise.

(2) "Community interest" means a continuing financial interest between the franchisor and franchisee in the operation of the franchise business.

(3) "Director" means the director of licensing.

(4) "Franchise" means an oral or written contract or agreement, either expressed or implied, in which a person grants to another person, a license to use a trade name, service mark, trade mark, logotype or related characteristic in which there is a community interest in the business of offering, selling, distributing goods or services at wholesale or retail, leasing, or otherwise and in which the franchisee is required to pay, directly or indirectly, a franchise fee((~~: PROVIDED, That~~)). The term "franchise" includes without limitation the agreements between a motor fuel refiner-supplier and motor fuel retailer pursuant to which the retailer is supplied motor fuel for resale to the public or for sale on commission or for a fee to the public, or the agreements between a motor fuel refiner-supplier and motor fuel retailer under which the retailer is permitted to occupy premises owned, leased, or controlled by the refiner-supplier for the purpose of engaging in the retail sale of motor fuel supplied by the refiner-supplier. None of the following shall be construed as a franchise within the meaning of this chapter:

(a) The payment of a reasonable service charge to the issuer of a credit card by an establishment accepting or honoring such credit card or any transaction relating to a bank credit card plan;

(b) Actions or transactions otherwise permitted, prohibited or regulated under laws administered by the insurance commissioner of this state;

(5) "Bank credit card plan" means a credit card plan in which the issuer of credit cards as defined by RCW 9.26A.010(1) is a national bank, state bank, trust company or any other banking institution subject to the supervision of the supervisor of banking of this state or any parent or subsidiary of such bank.

(6) "Franchisee" means a person to whom a franchise is offered or granted.

(7) "Franchisor" means a person who grants a franchise to another person.

(8) "Area franchise" means any contract or agreement between a franchisor or subfranchisor whereby the subfranchisor is granted the right to sell or negotiate the sale of franchises in the name or on behalf of the franchisor.

(9) "Subfranchisor" means a person to whom an area franchise is granted.

(10) "Franchise broker or selling agent" means a person who directly or indirectly engages in the sale of franchises.

(11) "Franchise fee" means any fee or charge that a franchisee or subfranchisor is required to pay or agrees to pay for the right to enter into a business or to continue a business under a franchise agreement, including, but not limited to, the payment either in lump sum or by installments of an initial capital investment fee, any fee or charges based upon a percentage of gross or net sales whether or not referred to as royalty fees, any payment for the mandatory purchase of goods or services or any payment for goods or services available only from the franchisor, or any training fees or training school fees or charges; however, the following shall not be considered payment of a franchise fee: (a) the purchase or agreement to purchase goods at a bona fide wholesale price; (b) the purchase or agreement to purchase goods by consignment; if, and only if the proceeds remitted by the franchisee from any such sale shall reflect only the bona fide wholesale price of such goods; (c) a bona fide loan to the franchisee from the franchisor; (d) the purchase or agreement to purchase goods at a bona fide retail price subject to a bona fide commission or compensation plan that in substance reflects only a bona fide wholesale transaction; (e) the purchase or lease or agreement to purchase or lease supplies or fixtures necessary to enter into the business or to continue the business under the franchise agreement at their fair market or rental value; (f) the purchase or lease or agreement to purchase or lease real property necessary to enter into the business or to continue the business under the franchise agreement at the fair market or rental value; (g) amounts paid for trading stamps redeemable in cash only; (h) amounts paid for trading stamps to be used as incentives only and not to be used in, with, or for the sale of any goods.

(12) "Person" means a natural person, corporation, partnership, trust, or other entity and in the case of an entity, it shall include any other entity which has a majority interest in such an entity or effectively controls such other entity as well as the individual officers, directors, and other persons in act of control of the activities of each such entity.

(13) "Publish" means publicly to issue or circulate by newspaper, mail, radio, or television or otherwise to disseminate to the public.

(14) "Sale or sell" includes every contract of sale, contract to sell, or disposition of a franchise.

(15) "Offer or offer to sell" includes every attempt or offer to dispose of or solicitation of an offer to buy a franchise or an interest in a franchise.

(16) "Motor fuel" means gasoline or diesel fuel of a type distributed for use in self-propelled motor vehicles and includes gasohol and aviation fuels.

(17) "Motor fuel refiner-supplier" means any person, firm, or corporation, including any affiliate of the person, firm, or corporation, engaged in the refining of crude oil into petroleum who supplies motor fuel for sale, consignment, or distribution through retail outlets and has an operable refinery capacity of three hundred twenty-five thousand barrels a day as reported to the federal department of energy.

(18) "Motor fuel retailer" means a person, firm, or corporation engaged primarily in the sale of motor fuel pursuant to a motor fuel franchise entered into with a motor fuel refiner-supplier.

(19) "Retail motor fuel outlet" means any location where motor fuel is distributed for purposes other than resale.

NEW SECTION. Sec. 10. If any provision of this act or its application to any person or circumstance is held invalid, the remainder of the act or the application of the provision to other persons or circumstances is not affected.

NEW SECTION. Sec. 11. Sections 1 through 10 of this act shall constitute a new chapter in Title 19 RCW.

NEW SECTION. Sec. 12. This act is necessary for the immediate preservation of the public peace, health, and safety, the support of the state government and its existing public institutions, and shall take effect March 30, 1986.