ABSTRACT
In Derby Realty, LLC v. Macit, LLC, the Superior Court of Connecticut, Judicial District of Ansonia-Milford at Milford, denied a motion to dismiss in a summary process action, holding that a commissioned agent agreement for the sale of motor fuel did not constitute a franchise relationship under the Connecticut Petroleum Franchise Act. The court found that the parties expressly disclaimed any franchise relationship in their agreement and that the defendant lacked the entrepreneurial responsibility and ownership characteristics required to qualify as a retailer under the statute. The decision, rendered on March 26, 2026, relied heavily on the recent Connecticut Appellate Court decision in Branford Quick Mart, LLC v. Aldin Associates Ltd. Partnership and concluded that commissioned agents who sell motor fuel on behalf of property owners without purchasing, owning, or controlling the fuel are not entitled to the protections of the Petroleum Franchise Act.
CASE IDENTIFICATION AND PARTIES
This case, Derby Realty, LLC v. Macit, LLC, was decided on March 26, 2026, by the Superior Court of Connecticut, Judicial District of Ansonia-Milford at Milford. Derby Realty, LLC, the property owner, brought a summary process action against Macit, LLC, the commissioned agent, seeking possession of commercial property located at 208 New Haven Avenue in Derby, Connecticut. The commissioned agent moved to dismiss the action for lack of subject matter jurisdiction, arguing that its relationship with the property owner’s predecessor in interest, Alliance Energy, LLC, Global Partners LP, and Global Montello Group Corp., constituted a franchise relationship requiring sixty days’ written notice of termination under the Connecticut Petroleum Franchise Act. The court denied the motion to dismiss, holding that no franchise relationship existed between the parties as a matter of fact and law and that the property owner had standing to maintain the action.
FACTUAL BACKGROUND
Route 34 Auto Sales, Inc. owned the subject property, which operated as a gas service station and convenience store in Derby, Connecticut. Route 34 leased the property to Alliance Energy, LLC, Global Partners LP, and Global Montello Group Corp., effective January 23, 1998. Alliance, in turn, leased the existing building on the property to the commissioned agent, Macit, LLC, for a term of one year commencing April 1, 2022. The lease permitted the commissioned agent to use the demised premises solely for operating the convenience store but did not include the portion of the property utilized for the service station.
The lease between Alliance and the commissioned agent included a commissioned agent agreement whereby the commissioned agent agreed to act as Alliance’s commissioned agent with respect to the sale of Alliance’s petroleum products at the service station. The commissioned agent agreement expressly provided that title to all motor fuels would remain with Alliance until sold to retail customers and that title would never pass to the commissioned agent. The agreement further stated that proceeds from motor fuel sales would remain the sole property of Alliance and would be held in trust by the commissioned agent for Alliance’s benefit and account. Alliance retained the authority to establish retail prices for motor fuel sales at the service station, and the commissioned agent was required to sell motor fuels only at the retail prices established by Alliance.
Under the terms of the commissioned agent agreement, Alliance paid monthly commissions to the commissioned agent in the amount of $0.045 per gallon of motor fuel sold at the service station. The agreement explicitly disclaimed the creation of any employer-employee relationship, agency relationship, partnership, business opportunity, joint venture, or other form of joint enterprise between Alliance and the commissioned agent. The agreement also explicitly stated that it did not establish a franchise or franchise relationship between Alliance and the commissioned agent under any state or federal laws, rules, or regulations, and that the commissioned agent remained at all times a commissioned agent, lessee, and independent entity. The lease’s terms and conditions section provided that Alliance could terminate the lease and commissioned agent agreement upon thirty days’ prior notice if Alliance desired to sell, transfer, or assign all or a portion of the property or its interest therein.
The property owner, Derby Realty, LLC, was formed as a Connecticut limited liability company on November 12, 2023, with Iyad Jamal as its single member. On or around October 27, 2023, Ibrahim Jamal, Iyad Jamal’s brother, executed a purchase and sale agreement as part of a bid process to purchase Alliance’s interest in the property. Alliance accepted the bid by executing the purchase and sale agreement, which included the primary contingency of obtaining consent from Route 34 for the property owner to assume the lease from Route 34 to Alliance. After obtaining that consent, the property owner executed an assignment and assumption of the lease agreement with Alliance, effective July 1, 2024.
In anticipation of the assignment’s execution, Alliance provided notice to the commissioned agent on June 26, 2024, that it was selling and transferring its interest in the property and that the commissioned agent’s tenancy would terminate on July 31, 2024. The property owner was not assigned and did not assume the lease between Alliance and the commissioned agent. In July 2024, Iyad Jamal met with Abdulaziz Almashi, a member of the commissioned agent and the primary operator of the convenience store, and the two orally agreed that the commissioned agent could remain as a tenant on a month-to-month basis. That oral agreement included a rent amount different from the amount provided in the original lease and reflected Iyad Jamal’s intention to operate both the service station and the convenience store on the property. The property owner served the commissioned agent with a notice to quit possession of the premises on November 10, 2024, requiring that the commissioned agent vacate the premises by November 30, 2024, and the commissioned agent refused to vacate.
THE PARTIES’ POSITIONS
The commissioned agent argued that the commissioned agent agreement and lease created a franchise relationship within the meaning of the Connecticut Petroleum Franchise Act and that the property owner, as Alliance’s successor in interest, was required to provide the commissioned agent with sixty days’ written notice of termination setting forth due cause for the termination. The commissioned agent contended that because the property owner failed to provide such notice, the court lacked subject matter jurisdiction over the summary process action. The commissioned agent further argued that the property owner lacked standing to bring the action because it did not have an actual legal interest in the property.
The property owner countered that the commissioned agent agreement and lease between the commissioned agent and Alliance did not create a franchise relationship and that the Connecticut Petroleum Franchise Act did not apply. The property owner asserted that the parties expressly disclaimed any franchise relationship in the commissioned agent agreement and that the commissioned agent lacked the entrepreneurial responsibility and ownership characteristics required to qualify as a retailer under the statute. The property owner further argued that it possessed a legally cognizable interest in the property because it was duly assigned the lease for the subject property and formally assumed the rights and obligations thereunder. The property owner maintained that as holder of the lease interest, it had standing to enforce the lease and seek relief arising from that interest.
THE DISPUTED FRANCHISE AGREEMENT DOCUMENTS
The court examined the lease and commissioned agent agreement between Alliance and the commissioned agent in detail to determine whether the relationship constituted a franchise. The commissioned agent agreement provided that the commissioned agent agreed to act as Alliance’s commissioned agent with respect to the sale of Alliance’s petroleum products at the service station. The agreement explicitly stated that title to all motor fuels would be and remain with Alliance until sold to retail customers and that title would never pass to the commissioned agent. The agreement further provided that the proceeds from motor fuel sales would be and remain the sole property of Alliance and would be held in trust by the commissioned agent for Alliance’s benefit and account.
The commissioned agent agreement vested Alliance with exclusive authority to establish the retail prices for sales of motor fuels at the service station and required the commissioned agent to sell motor fuels only at the retail prices established by Alliance. The agreement provided that Alliance would pay monthly commissions to the commissioned agent in the amount of $0.045 per gallon of motor fuel sold at the service station during the period in which the commissioned agent agreement was in effect. The agreement explicitly disclaimed the creation of an employer-employee relationship between Alliance and the commissioned agent for any purposes whatsoever and stated that nothing contained in the commissioned agent agreement would be construed as creating any other type of agency, partnership, business opportunity, joint venture, or other form of joint enterprise, or fiduciary relationship between the commissioned agent and Alliance.
Most significantly, the commissioned agent agreement expressly stated that the agreement and lease were not intended to, and did not, establish a franchise or franchise relationship between Alliance and the commissioned agent under any state or federal laws, rules, or regulations. The agreement emphasized this point in italics, declaring that the commissioned agent remained at all times a commissioned agent, lessee, and independent entity whose obligations to Alliance would be determined by the terms of the agreement and lease. The lease’s terms and conditions section provided Alliance with the right to terminate the lease and commissioned agent agreement upon thirty days’ prior notice to the commissioned agent if Alliance desired to sell, transfer, or assign all or a portion of the property or its interest therein.
THE COURT’S ANALYSIS AND RESOLUTION OF THE FRANCHISE RELATIONSHIP ISSUE
The court began its analysis by identifying the legal standard governing whether a contract creates a franchise relationship. The court explained that in order to form a binding and enforceable contract, there must exist an offer and an acceptance based on a mutual understanding by the parties, and the mutual understanding must manifest itself by a mutual assent between the parties. The court stated that in order for an enforceable contract to exist, the court must find that the parties’ minds had truly met. If there has been a misunderstanding between the parties, or a misapprehension by one or both so that their minds have never met, no contract has been entered into by them and the court will not make for them a contract which they themselves did not make.
The court noted that the requirement that the parties have a meeting of the minds is consistent with the objective theory of contracts, which holds that the making of a contract does not depend upon the secret intention of a party but upon the intention manifested by his words or acts, and on these the other party has a right to proceed. The court explained that in construing the agreement, the decisive question is the intent of the parties as expressed, and the intention is to be determined from the language used, the circumstances, the motives of the parties, and the purposes which they sought to accomplish. The court emphasized that in any claim brought under the Petroleum Franchise Act, the court must first determine whether there is a franchise relationship under the contract.
The court then examined the statutory definitions under the Connecticut Petroleum Franchise Act. General Statutes section 42-133k(1) defines franchise as any contract between a refiner and a distributor, between a refiner and a retailer, between a distributor and another distributor, or between a distributor and a retailer, under which a refiner or distributor authorizes or permits a retailer or distributor to use, in connection with the sale, consignment, or distribution of motor fuel, a trademark which is owned or controlled by such refiner or by a refiner which supplies motor fuel to the distributor which authorizes or permits such use. A franchise relationship is defined as the respective motor fuel marketing or distribution obligations and responsibilities of a franchisor and a franchisee which result from the marketing of motor fuel under a franchise. A franchisor is defined as a refiner or distributor who authorizes or permits, under a franchise, a retailer or distributor to use a trademark in connection with the sale, consignment, or distribution of motor fuel, and a franchisee is defined as a retailer or distributor who is authorized or permitted, under a franchise, to use a trademark in connection with the sale, consignment, or distribution of motor fuel.
The court concluded that the evidence failed to indicate that the parties intended the commissioned agent agreement to constitute a franchise relationship. The lease and commissioned agent agreement contained no language characterizing the relationship between the commissioned agent and Alliance as a franchise. Indeed, the commissioned agent agreement specifically stated that the agreement and lease were not intended to establish a franchise relationship. The court observed that the agreement set forth discrete contractual duties consistent with an ordinary commercial relationship for the sale of motor fuel. The court further noted that there was no testimony that either the commissioned agent or Alliance considered the agreement to constitute a franchise or that they understood the agreement to be such at the time of execution. In other words, there was no meeting of the minds between the parties that the agreement would constitute a franchise relationship.
The court stated that in the absence of any contractual provision or testimonial evidence establishing that the commissioned agent agreement and lease executed between the commissioned agent and Alliance were intended to constitute a franchise relationship, the court declined to characterize the agreement as one. The court emphasized that the answer to whether the terms of the commissioned agent agreement come within the framework of the provisions of the Connecticut Petroleum Franchise Act is irrelevant if the parties of the contract had no desire or intent to form a franchise agreement. The court stated succinctly that the motion to dismiss must be denied because the motion is premised on the existence of a franchise agreement that does not exist based on the evidence presented. The court observed that not only does the witnesses’ testimony regarding the commissioned agent agreement fail to support the commissioned agent’s claims, the agreement itself explicitly states that no franchise or franchise relationship is established by its terms.
THE COURT’S ANALYSIS AND RESOLUTION OF THE RETAILER STATUS ISSUE
Even assuming there was evidence that the contracting parties intended their relationship to constitute a franchise, the court concluded that the commissioned agent agreement did not constitute a franchise agreement as a matter of law. The court relied heavily on the Connecticut Appellate Court’s recent decision in Branford Quick Mart, LLC v. Aldin Associates Ltd. Partnership, which concluded that commissioned agent agreements for the sale of motor fuel similar to the agreement in the present case do not constitute franchise agreements as a matter of law. In Branford Quick Mart, the franchisees operated convenience stores and gas stations similar to the commissioned agent in the present case. The franchisor in that case leased the convenience store premises to the franchisees but retained ownership of the surrounding property and provided motor fuel which was sold to the retail public. Pursuant to contractual provisions, the franchisees sold motor fuel and other petroleum products for the account of the franchisor.
The franchisor in Branford Quick Mart arranged deliveries of motor fuels to each location and the fuels were then sold to retail customers under a trademark owned or controlled by a refiner of motor fuels. The franchisees had no involvement with the purchase, negotiation, or transport of petroleum products delivered to the station, nor did they pay for motor fuel equipment. The franchisor owned the underground storage tanks and was responsible for their cleanup and repair, and if a petroleum product was lost in transit, the franchisor remained at risk for the loss. The Appellate Court, after reviewing the text, history, and case law addressing the Connecticut Petroleum Franchise Act, concluded that the franchisees were not retailers within the meaning of the Connecticut Petroleum Franchise Act and, thus, the leases and commissioned agent agreements executed between the parties did not establish a franchise relationship.
The court in Branford Quick Mart reasoned that although the motor fuel was sold to the public, it was sold by the franchisor rather than the franchisees because the franchisor purchased the motor fuel and owned it until such time as it is transferred to a motorist’s tank. The court stated that the franchisees may be agents of the seller, but they are not the seller, and therefore it is the franchisor rather than the franchisees that is the retailer. The court also concluded that commissioned agent agreements for the sale of motor fuel do not constitute consignment agreements under the Connecticut Petroleum Franchise Act because the commissioned agent does not take possession and control of the motor fuels such that they receive the fuel on consignment.
The court in the present case found the reasoning of Branford Quick Mart directly applicable. Similar to Branford Quick Mart, although the commissioned agent may have been an agent of a seller of motor fuel, first Alliance and later the property owner, the commissioned agent is not a seller of motor fuel because it does not purchase nor take possession or control of motor fuel. Thus, the commissioned agent is not a retailer within the meaning of the Connecticut Petroleum Franchise Act and, therefore, not entitled to its protections. The court also considered the testimony of Kumar Ananthan, vice president of Alliance, which the court found credible. Ananthan testified that Alliance ordered all of the fuel for the service station, arranged for its delivery, and sold the fuel itself. Ananthan testified that title to the gasoline passed directly from Alliance to the retail customer at the point of sale and that title never passed to the commissioned agent.
Ananthan also testified that retail pricing authority rested exclusively with Alliance, and Alliance established the retail price, controlled the margin, and was the party at risk of loss based on those pricing decisions. Ananthan testified that Alliance delivered, priced, and sold the gasoline, and that Alliance simply compensated the commissioned agent solely through commissions for its limited administrative responsibilities. Ananthan testified that Alliance owned and was responsible for all major equipment, including above-ground and underground storage tanks, and would be responsible for replacing that equipment if necessary. Ananthan also testified that Alliance retained control over all funds associated with motor fuel sales and that the commissioned agent simply entered the daily transactions into Alliance’s portal, while Alliance withdrew the cash and controlled the credit card receipts. Ananthan further testified that Alliance held the gasoline retailer’s license for the location and that the commissioned agent never held such a license.
THE COURT’S BASIS FOR ITS RULING
The court accepted the property owner’s position that no franchise relationship existed because the evidence supported the conclusion that the parties expressly disclaimed any franchise relationship and that the commissioned agent lacked the entrepreneurial responsibility and ownership characteristics required to qualify as a retailer. The court found persuasive the unambiguous language of the commissioned agent agreement, which explicitly stated that the agreement and lease were not intended to establish a franchise or franchise relationship. The court gave effect to the parties’ express intent as manifested in their written agreement, consistent with the objective theory of contracts. The court also found credible and unrebutted the testimony of Kumar Ananthan, which established that Alliance, not the commissioned agent, owned the motor fuel, established retail prices, bore market risk, owned major equipment, held the retailer’s license, and controlled funds from motor fuel sales.
The court rejected the commissioned agent’s position because the commissioned agent offered no testimony or evidence to refute the property owner’s showing that no franchise relationship existed. The commissioned agent presented no witness to testify regarding the parties’ intent when forming the commissioned agent agreement or to contradict Ananthan’s testimony regarding the operational realities of the relationship. The court found that the commissioned agent’s arguments focused on whether the terms of the commissioned agent agreement might fall within the framework of the Connecticut Petroleum Franchise Act, but the court deemed that question irrelevant in the absence of evidence that the parties intended to form a franchise. The court also found that even if the commissioned agent could establish intent to form a franchise, the commissioned agent agreement did not constitute a franchise as a matter of law under Branford Quick Mart because the commissioned agent was not a retailer within the statutory definition.
STANDING TO BRING THE SUMMARY PROCESS ACTION
The court also addressed and rejected the commissioned agent’s alternative argument that the property owner lacked standing to bring the summary process action. The commissioned agent had argued that the property owner did not have an actual legal interest in the property. The court explained that the property owner bears the burden of proving subject matter jurisdiction and that a plaintiff has the burden of proof with respect to standing. The court noted that in this case, the complaint on its face alleged facts sufficient to establish the property owner’s standing to maintain the summary process action, and the commissioned agent made allegations but presented no evidence to refute or dispute the complaint’s jurisdictional allegations.
The court held that when the allegations of the complaint are sufficient to establish subject matter jurisdiction, a defendant cannot prevail on a motion to dismiss by merely making a bald assertion that jurisdiction is lacking. The court stated that although the ultimate burden remains on the property owner to prove jurisdiction, under these circumstances, the burden of production is upon the commissioned agent to present evidence in support of its motion. The court found that the property owner met its burden of proving standing to maintain the action because the property owner was duly assigned the lease for the subject property and formally assumed the rights and obligations thereunder, thereby possessing a legally cognizable interest in the property. The court explained that it is axiomatic that an action upon a contract can be brought and maintained by one who is a party to the contract sued upon and that an assignee stands in the shoes of the assignor and succeeds to the assignor’s rights. Thus, as holder of the lease interest, the property owner had standing to enforce the lease and seek relief arising from that interest.
POTENTIAL SIGNIFICANCE OF THE DECISION FOR FRANCHISEES AND FRANCHISORS
The Derby Realty decision may have significant implications for both franchisees and franchisors operating under commissioned agent agreements for motor fuel sales in Connecticut. For parties seeking the protections of the Connecticut Petroleum Franchise Act, the decision appears to suggest that express contractual disclaimers of franchise status will be given effect, particularly when supported by operational realities demonstrating that the purported franchisee lacks ownership of inventory, pricing authority, market risk, and other indicia of entrepreneurial responsibility. The decision appears to state that parties cannot invoke statutory franchise protections when they have contractually disclaimed such a relationship and when the business arrangement does not meet the statutory definition of a franchise. This ruling may protect property owners and motor fuel suppliers who structure their relationships as commissioned agent arrangements and who do not intend to create franchise relationships subject to statutory termination requirements.
For commissioned agents operating gas stations and convenience stores, the decision may suggest that they should not rely on the Connecticut Petroleum Franchise Act’s notice and good cause requirements for termination if they do not purchase, own, or control the motor fuel they sell. The decision seems to clarify that acting as an agent of a motor fuel seller, even if associated with the seller’s trademark, may not transform the agent into a retailer entitled to franchise protections. This ruling may limit the ability of commissioned agents to resist termination or eviction when property owners or motor fuel suppliers decide to end the relationship or transfer their interests. The decision also may suggest that commissioned agents should negotiate for contractual termination protections if they desire advance notice or limitations on termination, as statutory franchise protections might not be available absent a genuine franchise relationship.
COMPARISON TO OTHER JURISDICTIONS
The Derby Realty decision appears to reflect Connecticut’s approach to distinguishing between true franchise relationships and commissioned agent arrangements, an approach that may align with federal law under the Petroleum Marketing Practices Act. Connecticut courts seem to have historically required that franchise relationships involve genuine entrepreneurial responsibility and market risk, not merely the use of a trademark or the sale of products on behalf of another. This approach appears similar to the framework applied by federal courts interpreting the federal Petroleum Marketing Practices Act, which defines a retailer as any person who purchases motor fuel for sale to the general public for ultimate consumption. Some federal courts have held that commissioned agents who do not purchase or take title to motor fuel may not qualify as retailers under the federal act.
Other state jurisdictions have reached similar conclusions when examining commissioned agent arrangements under their respective petroleum franchise statutes. Courts in several states have held that the critical distinction lies in whether the dealer purchases motor fuel for resale or merely facilitates sales on behalf of the supplier. Jurisdictions that focus on ownership, pricing authority, and market risk have seem to have generally concluded that commissioned agents are not franchisees entitled to statutory protections. However, some jurisdictions have broader franchise definitions that might encompass commissioned agent relationships if the agent has significant operational autonomy or if the relationship substantially resembles a franchise in economic substance. Connecticut’s approach, as reflected in Derby Realty and Branford Quick Mart, appears to emphasize formalistic distinctions based on title passage, pricing control, and contractual intent, which may provide clarity but may be criticized for prioritizing form over substance in some cases.
LAW AND ECONOMICS PERSPECTIVE
From a law and economics perspective, the Derby Realty decision may promote efficient contracting by enforcing the parties’ expressed intentions and avoiding the imposition of costly statutory obligations on relationships that lack the economic characteristics justifying such regulation. Franchise statutes seem to typically aim to protect franchisees who make substantial relationship-specific investments and who face hold-up problems due to franchisor market power. Commissioned agents who do not purchase inventory, invest in equipment, or bear market risk may not face the same vulnerability to opportunistic termination that justifies mandatory notice periods and good cause requirements. Allowing parties to structure their relationships as commissioned agent arrangements without triggering franchise regulation may reduce transaction costs and may permit more flexible business models, which can enhance economic efficiency and consumer welfare by facilitating entry into motor fuel retailing.
However, the decision may also raise potential concerns from a law and economics standpoint regarding the ability of sophisticated parties to contract around protective statutes through carefully drafted disclaimers. If franchisors can avoid statutory obligations simply by labeling a relationship as a commissioned agent arrangement while maintaining substantial control over the agent’s operations, the protective purposes of franchise statutes may be undermined. The decision’s emphasis on formalistic indicia such as title passage and pricing authority may create opportunities for strategic drafting that exploits legal distinctions without changing economic substance. Nonetheless, the Derby Realty court’s reliance on credible testimony regarding operational realities, including testimony that the supplier owned equipment, controlled pricing, bore market risk, and held the retailer’s license, may suggest that courts can look beyond contractual labels to ensure that economic substance aligns with legal form, thereby reducing the risk of evasion and promoting accurate legal characterization of business relationships.
FINAL DISPOSITION
The Superior Court of Connecticut, Judicial District of Ansonia-Milford at Milford, denied the commissioned agent’s motion to dismiss. The court held that no franchise relationship existed between the property owner and the commissioned agent because the parties expressly disclaimed any such relationship in the commissioned agent agreement and because the commissioned agent lacked the entrepreneurial responsibility and ownership characteristics required to qualify as a retailer under the Connecticut Petroleum Franchise Act. The court further held that the property owner had standing to bring the summary process action because it was duly assigned the lease for the subject property and formally assumed the rights and obligations thereunder.
