A federal district court in Puerto Rico recently granted a franchisee’s request for a temporary restraining order under the Petroleum Marketing Practices Act (PMPA), preventing its franchisor from terminating or selling the franchise. Isla Verde Serv. Station, Inc. v. Puerto Rico Energy, LLC, 2025 WL 3539149 (D.P.R. Dec. 10, 2025).
Isla Verde Service Station, Inc., a gas station, is a franchisee of Puerto Rico Energy, LLC, an importer and distributor of gasoline. Near the expiration of the original franchise agreement, Puerto Rico Energy informed Isla Verde that it planned to move to a dealer-owned, dealer-operated business model. Isla Verde would be required to purchase the premises of the gas station and continue to purchase Puerto Rico Energy’s gasoline. After franchise agreement renewal negotiations stalled, Puerto Rico Energy informed Isla Verde that the franchise relationship would expire, made an exit offer, and indicated that a third party was willing to purchase the franchise. Isla Verde sued to restrain the termination or sale of the franchise. Isla Verde alleged multiple defects in the bargaining process and contended that the exit offer was unreasonable and on worse terms than offers Puerto Rico Energy made to other similarly situated franchisees.
The court granted the temporary restraining order under the PMPA’s lower threshold, finding immediate relief appropriate to prevent Puerto Rico Energy from terminating or selling the franchise before the merits of the dispute could be litigated. The court found that Isla Verde raised sufficiently serious questions going to the merits of its claims that constituted fair grounds for litigation, and that the balance of the hardships weighed in favor of granting a temporary restraining order against Puerto Rico Energy. The court reasoned that, if proven, Isla Verde’s allegations would establish that Puerto Rico Energy’s offers to sell the gas station premises to Isla Verde were not made in good faith, were not made in the ordinary course of business, and were made in order to prevent renewal of the franchise relationship. The court also concluded that because of the relative sizes of the businesses, the potential hardships Puerto Rico Energy faced if the temporary restraining order issued were outweighed by the hardships Isla Verde faced if the order did not issue. Following the entry of the temporary restraining order, the parties reached an interim stipulation during the pendency of the litigation to avoid further proceedings on a potential preliminary injunction.