When Raj Tala became fed up with paying expensive credit card fees at his Hess gas stations, he took advantage of Connecticut law and offered a discount to customers who paid cash.
“We’re not carrying their load anymore,” he said of the credit card companies. “That was the killer of the business.”
Tala’s decision sparked a lot of attention, from happy motorists who saved 20 cents a gallon to politicians who passed a law they say will allow retailers to offer cash discounts for gas, even if their franchise agreements say otherwise.
Attorney General Richard Blumenthal says he believes Connecticut’s law is the first of its kind in the nation, and he expects other states to follow.
“There’s a reason why 85 percent of our gas stations cannot provide these kinds of cash discounts,” he said “And it is essentially that the big oil companies dominate the franchises with very, very restrictive franchise agreements.”
But it’s unclear how beneficial the law will be. R. Timothy Columbus, a partner with the Washington, D.C. law firm Steptoe and Johnson LLP, has negotiated franchise agreements for about 30 years, including some in Connecticut, but has never seen an agreement that prohibited cash discounts for gas.
“I am unaware of any agreement that forbids that,” Columbus said. “I would be fascinated to see what these people are talking about — not because I doubt their belief — but because I’ve never seen it.”
Some oil companies say they’ve never told station owners they can’t offer discounts for cash.
“There’s nothing in the franchise agreement that would restrict them from offering a different price,” said Exxon Mobil Corp. spokeswoman Beth Snyder. The company, which has about 90 independent franchised stores in Connecticut, recommends that franchises stick with one price, but dealers make the final decision on pump price, she said.
Photo from Stock.xchng.
No comments yet.