Dive Brief:

• One of TravelCenters of America’s franchise groups is suing the retailer for damages that are “currently estimated to be in excess of [$300 million],” according to a June 12 filing in the U.S. District Court for the Northern District of Ohio.
• The franchise group, DG Gas LLC, had planned to build and run 25 TA Express locations across several states after becoming a franchisee in 2021. TA terminated the franchise agreement in 2023 “without warning or explanation” after the opening of DG’s first location was delayed, leaving DG with “millions in unrecoverable development costs,” according to the filing.
• TA terminated the franchise agreement about a month after being acquired by BP, and the combined companies are not continuing a business relationship with DG for undisclosed reasons, according to the filing.

Dive Insight:

DG’s first TA Express was expected to open in Cordele, Georgia, about 140 miles south of Atlanta. DG acquired the undeveloped piece of land from TA for $1.25 million in 2019, which led to DG becoming an official TA Express franchisee in April 2021.

TA’s franchise disclosure statement (FDD) stated that DG had roughly 18 months after it became a franchisee to build the location in Cordele. In December 2022 — 20 months later — TA notified DG that an extension to that deadline was needed. The FDD noted that any opening deadline could be extended with or without payment of an extension fee.

That estimated opening date was moved to “no earlier than April 2024,” according to the filing.

DG claims that the opening delay was the result of “TA’s conduct,” as the travel center company had never worked with a ground-up franchisee before. Despite the franchise agreement saying TA would furnish “standards, specifications and operating procedures and methods,” the company did not offer DG any archetype for building the TA Express, including no structural, mechanical, plumbing or electrical, or exterior design drawings, the filing says.

DG also claims that it was required by TA to delay its Cordele store to allow time for TA to develop a store in Walton, Kentucky, that TA was holding out to be the prototype for a TA Express Center. Despite giving DG 18 months to build their store, the Walton site took TA over three years to open, according to the suit.

Representatives from both TA and BP did not respond by press time to comment on the lawsuit.

By early 2023, DG had purchased or entered into purchase contracts for six more TA Express locations across Georgia, South Carolina, Nevada, Arkansas and Kentucky. It continued to work on the Cordele site during this time.

About four weeks after BP officially acquired TA in May 2023, the combined company not only terminated DG’s franchise agreement, but also shared that it would not move forward with any business relationship with DG. According to the filing, DG’s delayed opening for the Cordele site was TA’s reason for ending the partnership.

According to the court filing, each truckstop DG purchased or entered into purchase contracts for was worth more than $26 million. Additionally, it notes that the Cordele property has a deed restriction that prevents DG from using that land for anything but a TA travel center for 15 years.

DG is suing TA to prohibit the enforcement of the 15-year covenant and to recover damages caused by the termination of its franchise agreement. The filing notes that DG “will prove the precise amount of the damages caused by TA at trial, but those damages are currently estimated to be in excess of [$300 million].”

Westlake, Ohio-based TA currently has about 50 TA Express locations in its network, according to the company’s location data. The court filing notes that TA Express centers are “smaller, more limited” versions of traditional TA truck stops.