Barriers reduced for selling biodiesel at franchised stations

By | October 14, 2008
Retailing biodiesel blends is easier than ever, according to Jess Hewitt, president of Houston-based Gulf Hydrocarbon Inc. and chairman of the NBB Marketing Committee. A recent change in the law ensures that gas station franchises can't prohibit franchisees from selling biofuels. "This has been a critical step in ensuring that petroleum marketers have the power to make their own business decisions and respond to market demand for biodiesel," Hewitt said.

Branded retail franchises now have more power to determine their product mix while helping the nation meet the renewable fuels standard of 36 billion gallons per year by 2022. B20 biodiesel blends can now be sold under the canopy.

The 2007 Energy Independence and Security Act recently expanded the use of renewable fuels by increasing usage standards. It also lowered barriers for branded retailers to sell renewable fuels. An amendment to the Petroleum Marketing Practices Act states that branded petroleum refiners and distributors cannot prohibit a franchisee from selling renewable fuels including B20, nor can the branded fuel supplier stop the franchisee from advertising biodiesel.

The changes apply to distributors and retailers signing new franchise documents, such as branded supply agreements and leases, after December 2007. Under provisions in the new law, franchise-related documents shall not contain any provisions restricting the franchisee or any affiliate of the franchisee from:

› Installing a renewable fuel pump or tank› Converting an existing tank or pump for renewablefuel use, as long as the tank is either warranted or certified for use with renewable fuels

› Advertising the sale of renewable fuel

› Selling renewable fuel on the marketing premises of the franchisee

› Purchasing renewable fuel from sources other than the franchisor if the franchisor does not offer its own renewable fuel

› Listing renewable fuel availability or prices on service station signs, fuel dispensers or light poles

› Allowing for payment of renewable fuel with a credit card.

However, the refiner or distributor can place "reasonable requirements" on the franchisee. For example, franchisees remain prohibited from mislabeling, misbranding or violating the franchisor's trademark.

The revision to PMPA makes it much easier for owners of franchisee gas stations, service stations and truck stops to provide biodiesel even if the branded refiner or distributor does not supply it. This barrier has been lifted and franchises can make the choice based on customer demand.
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