This bill revises the Franchise Practices Act to enhance protections for franchisees in New Jersey. Notably, it removes the previous requirement that gross sales between franchisors and franchisees must exceed $35,000 in the 12 months prior to a lawsuit for the Act to apply, thereby broadening the scope of the Act to include more franchise arrangements. The bill establishes that franchisors cannot restrict franchisees from terminating or not renewing a franchise, provided the franchisee gives at least 60 days' notice. It also prohibits franchisors from imposing excessive damages, requiring personal guarantees for debts, or enforcing employment restrictions that exceed six months after termination.

Additionally, the bill introduces several new protections for franchisees, including restrictions on unreasonable demands from franchisors regarding facilities and operational modifications, and it prohibits franchisors from receiving commissions from vendors selling to franchisees. It also ensures that franchisors cannot compete in exclusive territories granted to franchisees and cannot dictate the court in which disputes must be resolved. Furthermore, the bill imposes a fiduciary duty on franchisors regarding advertising funds collected from franchisees, requiring annual reports on the use of these funds. Overall, the bill aims to create a more equitable relationship between franchisors and franchisees.

Statutes affected:
Introduced: 56:10-4, 56:10-5, 56:10-7