New Jersey Franchising Laws
New Jersey provides robust laws/protections for franchisees through a combination of federal oversight and strong state-level legislation governing the franchise relationship. That said, if you’re going to start a franchise in New Jersey, you need to hire New Jersey Franchise Attorneys.
And even though it’s not a franchise registration state, its laws create a more regulated environment for the ongoing operation of a franchise compared to non-registration states.
Specifically, the sale of franchises is governed by the Federal Trade Commission’s (FTC) Franchise Rule, which requires franchisors to provide prospective franchisees with a Franchise Disclosure Document (FDD). There is no requirement to file this document with the state of New Jersey.
With that in mind, the most significant piece of legislation is the New Jersey Franchise Practices Act (NJFPA), a powerful “relationship law” that governs the contract between the franchisor and franchisee after the sale is complete. The primary purpose of the NJFPA is to prevent franchisors from exercising their often superior bargaining power unfairly.
Accordingly, it mandates that a franchisor can only terminate, cancel, or fail to renew a franchise for “good cause,” which is narrowly defined as the franchisee’s failure to substantially comply with the requirements of the agreement. This provides a substantial layer of security for franchisees against arbitrary or unreasonable contract termination.
Furthermore, the NJFPA requires franchisors to provide at least 60 days’ written notice before any termination, cancellation, or non-renewal. This notice must clearly state all the reasons for the intended action, and it typically gives the franchisee a 60-day period to rectify the alleged defaults and “cure” the breach.
Additionally, the Act places restrictions on a franchisor’s ability to prohibit the transfer or sale of the franchise to a qualified buyer and imposes a standard of reasonableness on many of the franchisor’s actions, making New Jersey one of the states with the strongest post-sale protections for franchisees in the country.
Here is a list of franchise lawyers you can hire in New Jersey
Charles Internicola
The Internicola Law Firm, PC
115 Maple Avenue, Red Bank, NJ
Justin M. Klein / Marks & Klein, LLP
63-65 North Broad Street
Red Bank, New Jersey
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Joel Libava, President.
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