dollar entry was caused by a computer error. Id. at p.133.
21. After a review of Plaintiff's computer program, Sunoco determined
that the only way, using Plaintiff's register, to end up with a negative
entry was to manually input return sales. See N.T., 6/18/02. Weagley,
22. On July 10, 2001, Plaintiff submitted another royalty form to
Burford which contained a month-to-date Z report for June, 2001. Again,
the report was incomplete because it was cut off before the summary of
store sales for taxable groceries. Id. at pp. 139-140
23. When asked about this incomplete Z report, Plaintiff again replied
that it was a computer error. However, Plaintiff had not re-run the
report and, once again, had not kept the daily cash register detail
journal tapes despite being specifically told to the previous month. Id.
at pp. 140-41.
24. At this point, Sunoco hired Deloitte & Touche to perform an
audit of Plaintiff's financial records. Plaintiff was notified of the
audit by letter dated July 17, 2001. Id. at p. 142; see also Def.'s Ex.
25. Deloitte & Touche observed numerous irregularities which are
set forth in a letter to Sunoco dated August 9, 2001. See Def.'s Ex. 40.
These irregularities included the Z reports being hand cut so that
certain numbers were not shown, large negative dollar entries for taxable
groceries, large amounts of cigarette carton sales, which were exempt
from royalty payments, and which far exceeded Plaintiff's documented
payments to cigarette suppliers, and incomplete financial records. Id.
26. Deloitte & Touche determined that these discrepancies resulted
in an under-payment of royalty fees. Id.
27. Deloitte & Touche performed a second evaluation of Plaintiff's
financial records on October 4 and 5, 2001.
28. On October 10, 2001, Sunoco representatives met with Plaintiff to
discuss the Deloitte & Touche findings and to seek an explanation of
the discrepancies. See N.T., 6/17/02 of M. Burford at pp. 155-56.
29. On December 13, 2001, Defendant submitted formal findings of its
investigation to Plaintiff and informed Plaintiff that it had
under-reported gross sales and deprived Defendant of $64,000 in royalties
due under the Agreement. See Def's Ex. 63.
30. On January 14, 2002, counsel for Plaintiff responded to Defendant
that it refused to pay the royalty amounts requested and that it was
impossible for Plaintiff to owe that much in royalty amounts.*fn2 See
Def.'s Ex. 70.
IV. The Notice of Nonrenewal and the Complaint
31. On January 30, 2002, Defendant sent Plaintiff a letter by certified
mail notifying Plaintiff that Defendant would only extend the Agreement
until May 6, 2002, but would not renew the Agreement after May 6, 2002.
See Def.'s Ex. 73.
I. Provisions of the PMPA
The PMPA was enacted to combat the imbalance in bargaining power that
existed between petroleum franchisors and franchisees. See Sun Refining
Company v. Rago, 741 F.2d 670, 672 (3d Cir. 1984) (quoting S.Rep. No.
731, 95th Cong., 2d Sess. 17, U.S.Code Cong. & Admin.News 1978, pp.
873, 877); see also Patel v. Sun Company, Inc., 63 F.3d 248, 250 (3d
Cir. 1995). The PMPA attempts to alter this imbalance by 1) regulating
the grounds and conditions for which a franchisor may terminate or not
renew a franchise and 2) requiring that the franchisee be given adequate
notice of the franchisor's intent to terminate the franchise. See
15 U.S.C. § 2802 and 2805; see also Rago, 741 F.2d at 672. The PMPA's
"primary goal is to provide protection to franchisees." Rodgers v. Sun
Refining and Marketing Company, 772 F.2d 1154, 1158 (3d Cir. 1985).
However, "it also provides for "the legitimate needs of a franchisor to
be able to terminate a franchise . . . based upon certain actions of the
franchisee, including certain failures to comply with contractual
obligations. . . .'" Id. (quoting Rago, 741 F.2d at 673).
The PMPA gives the franchisee a cause of action against the franchisor
for violations of the Act's provisions, including the right to seek a
preliminary injunction prior to the expiration of the franchise
agreement. See 15 U.S.C. § 2805. The standards for obtaining a
preliminary injunction under the PMPA are more lenient than the general
standards for obtaining injunctive relief. A court must grant a
preliminary injunction under the PMPA if:
(A) the franchisee shows —
(i) the franchise of which he is a party has been
terminated or the franchise relationship of which he
is a party has not been renewed, and
(ii) there exist sufficiently serious questions
going to the merits to make such questions a fair
ground for litigation; and
(B) the court determines that, on balance, the
hardships imposed upon the franchisor by the issuance
of such preliminary injunctive relief will be less
than the hardship which would be imposed upon such
franchisee if such preliminary injunctive relief were
15 U.S.C. § 2805(b)(2)(A) & (B).