New Jersey Assembly Bill A1288

New Jersey 2022-2023 Regular Session

• Introduced: 1/11/22
• Refer: 1/11/22

Caption

Revises law concerning the rights and responsibilities of motor vehicle franchisees and franchisors.

Summary

Assembly Bill A1288 aims to revise New Jersey's law concerning the rights and responsibilities of motor vehicle franchisees and franchisors, specifically amending parts of the Franchise Practices Act. The bill seeks to address ongoing concerns about the inherent inequalities in bargaining power between franchisors and franchisees, ensuring better protections for franchisees when entering agreements or dealing with franchisors. It introduces measures that prevent franchisors from imposing unfair terms on franchisees and promotes fair business practices in this sector. One of the notable provisions of A1288 permits motor vehicle manufacturers (franchisors) to directly sell zero-emission vehicles (ZEVs) at a limited number of locations in New Jersey. This provision aims to facilitate the availability of environmentally friendly vehicles while navigating the traditional franchising structure that usually limits direct sales to consumers. The bill emphasizes consumer protection and aims to create a more competitive market for zero-emission vehicles in the state. A further significant change proposed in the bill is the clarification of conditions under which franchisors can impose restrictions or conditions on franchisees, particularly regarding the transfer and sale of dealerships. This change is intended to limit franchisors’ control over franchisee operations and promote fair conditions under which franchisees can sell their businesses or transfer ownership to suitable candidates. The bill establishes that any refusal to approve transfers must not be based on arbitrary comparisons to other franchisees. In terms of contention, the bill is likely to face scrutiny on the grounds of its interpretation of the franchisor-franchisee relationship. Franchisors may argue that the bill imposes excessive restrictions that could hinder their operational flexibility and business strategies. Conversely, advocates for the bill assert that these changes are necessary to ensure the survival and success of franchisees who contribute significantly to the economy. A1288 highlights the ongoing debate about the role of legislation in moderating relationships within franchise systems to enhance equity and consumer welfare.