Legal Challenges Facing C-store Businesses in 2013

As a highly regulated industry, convenience store businesses of every size are greatly impacted by changes to state and federal law and other legal issues. From standalone stores to chains with retail locations nationwide, c-store owners benefit from keeping a close eye on the constantly changing legal landscape.

Retailers are likely very aware of real estate laws and environmental laws as they relate to underground storage tanks, but there are many other laws affecting c-stores that may not be as familiar. Here is a quick overview of three lesser-known, yet very important legal challenges facing c-store owners in 2013.

Jennifer Sawyer

1) Evolving Technology and Software License Agreements. As the world becomes ever more automated and interconnected, c-store owners must acquire and upgrade technology to stay competitive and offer their customers attractive, value-added services. For example, many c-stores now offer loyalty card programs with associated discounts and payment options. Software and systems are needed to operate and manage these programs, so c-store owners need to be familiar with the various types of contracts under which technology is acquired and used.

When entering into software license agreements, convenience store owners need to make sure they obtain all necessary and appropriate rights, including the right to use the software at all applicable stores and facilities, such as ones acquired or built in the future. They should also ensure that the fees they will be required to pay under the agreement are clearly stated and predictable for the future, and that the licensor makes firm commitments regarding supporting and maintaining the software.

Jennifer Mafera

If the software is unique and will be used in performing mission-critical functions, c-store owners should consider whether the software licensor should be required to deposit the source code for the software in an escrow account, for release to the store owner if certain conditions are met (for example, if the licensor goes out of business or ceases to support and maintain the software). Payment card industry requirements can be a concern as well.

Software is also often made available in a software-as-a-service (SaaS) model now, where the software is hosted remotely by the service provider and made available via the Internet. SaaS agreements pose additional challenges, especially if personal or individually identifiable information -- such as information on c-store customers -- will be stored online. Nearly every state now has a data security breach notification law, and c-store owners need to be aware of their duties under these laws and how risks might be minimized.

2) Health Care Insurance Changes Affecting Companies With 50 or More Employees. A growing number of c-store owners will be faced with key staffing decisions in 2013 as they determine whether they can afford to provide health care coverage and/or pay government-imposed penalties for full-time employees in 2014. Deciding whether to downsize c-store staff, hire contract workers or reduce full-time employees to part-time status will be on the minds of many retailers this coming year.

Ron Talley

In June, the U.S. Supreme Court ruled in favor of the constitutionality of the Patient Protection and Affordable Care Act (PPACA), clearing the way for health care reform. However, two of the major effects of PPACA will be increased pressure for c-store owners to provide health care coverage for employees and additional penalties for companies not in compliance.

Beginning on Jan. 1, 2014, employers with 50 or more full-time employees must pay a fee if any full-time employee receives health insurance premium assistance through a health insurance exchange, which will offer standardized, state-regulated health care plans from which individuals may purchase health insurance eligible for federal subsidies. Employers offering health care coverage must pay the lesser of $2,000 per full-time employee or $3,000 for each full-time employee who receives premium assistance through an exchange.

Although these requirements don't take effect until 2014, employers will want to plan now for the implications on their business.

Milt Petersen

3) Controversy Over Product Labeling Compliance. Although there has been a good deal of discussion about employment issues surrounding the health care act, a lower profile but equally important issue in the c-store industry involves labeling. The Patient Protection and Affordable Care Act includes a provision requiring uniform nutrition disclosure information at foodservice establishments, including c-stores. The PPACA's proposed regulations would require c-stores to provide specific nutritional information, including calorie counts, on menus and menu boards.

If approved by Congress in 2013, the Common Sense Nutrition Disclosure Act could serve as a more reasonable alternative for c-store owners. This act, introduced by Rep. John Carter (R-Texas), serves as a viable alternative and has already been endorsed by NACS. The new legislation would limit the provision in Section 4205 of PPACA to businesses deriving 50 percent or more of their revenue from food intended for immediate consumption or food that is prepared and processed on-site. Prepackaged food would be considered exempt.

C-store retailers should watch the Common Sense Nutrition Disclosure Act as it moves through the legislative process. If this act fails to pass, the implications could be widespread, translating into an increased regulatory burden and higher costs to post on-site nutritional information at every convenience store in the United States.

The HunterMaclean Convenience Store and Gas Station Practice Group includes attorneys Jennifer Sawyer ([email protected]), Jennifer Mafera ([email protected]), Ron Talley ([email protected]) and Milt Petersen ([email protected]). They can also be reached at 912-236-0261.

Editor's Note: The opinions expressed in this column are the author's are do not necessarily reflect the views of Convenience Store News.