Retailers Sue Suncor Over Franchise Terminations

TORONTO -- Following an internal announcement last week of Suncor's intention to terminate the retailer franchise agreements of all 300 of its independent Sunoco retailers in Ontario, a potential class action lawsuit was filed this week on behalf of all Sunoco-branded fuel retailers in Ontario, against Suncor Energy Products Inc. and its parent, Suncor Energy Inc.

As part of Calgary-based Suncor's plan to end the Sunoco franchises, approximately 100 retail sites will be sold in April 2010, while the remainder will be rebranded Petro-Canada with different operators. All 300 current Sunoco retailers will be terminated in the process, according to a statement released by the plaintiff's lawyer, David Sterns of Sotos LLP. The termination of the Sunoco retailers is part of Suncor's decision to eliminate the Sunoco brand in Ontario following Suncor's merger with Petro-Canada in 2009.

The suit, which was filed in the Ontario Superior Court of Justice and is seeking up to C$200 million ($194 million), accuses Suncor of failing to comply with Ontario's franchise law when it entered into its most recent franchise agreements. The law entitles retailers to rescind franchise agreements and obtain substantial compensation, according to the statement.

Suncor hasn't commented publicly on the suit, according to a report by The Canadian Press.

"Suncor's franchise operators have been treated as chattels in the amalgamation process, " Sterns said in a statement. "The operation of Ontario's franchise legislation will result in Sunoco's dealers, who built up the Sunoco brand through years of hard work and loyal service, receiving a return on their personal efforts and investments."

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