New Jersey Statutes 56:10-6.1. Violations of the “Franchise Practices Act.”
Terms Used In New Jersey Statutes 56:10-6.1
- Contract: A legal written agreement that becomes binding when signed.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
- person: includes corporations, companies, associations, societies, firms, partnerships and joint stock companies as well as individuals, unless restricted by the context to an individual as distinguished from a corporate entity or specifically restricted to one or some of the above enumerated synonyms and, when used to designate the owner of property which may be the subject of an offense, includes this State, the United States, any other State of the United States as defined infra and any foreign country or government lawfully owning or possessing property within this State. See New Jersey Statutes 1:1-2
a. For a franchisor to transfer, assign, or sell an interest in one or more franchise premises which a franchisee who purchases motor fuels and engages in the retail sale thereof has occupied under a lease agreement or agreements for a period of at least three consecutive years, or occupies under a lease agreement for a term of at least three years, unless the franchisor:
(1) makes a bona fide offer to transfer, assign, or sell to the franchisee all of the franchisor’s interest in the franchise premises, which offer the franchisee shall have 60 days to accept or reject; and
(2) if applicable, offers the franchisee a right of first refusal on any offer for the transfer, assignment, or sale of the franchise premises presented by another person acceptable to the franchisor as a successor to the franchisor’s interest, which offer the franchisee shall have 60 days to accept or reject. If the franchisee accepts an offer by the franchisor made pursuant to this paragraph, the franchisor, as a condition for entering into the contract for the accepted offer, may request as a good faith acknowledgement of the contract, a deposit by the franchisee of up to 10% of the total amount payable under the terms of the contract, which shall be non-refundable if the franchisee willfully defaults on the contract. A franchisor shall not be prohibited from exercising other contractual provisions, and nothing in this paragraph shall be construed to hinder the rights of the franchisor to recover additional damages as provided under the law. Any modification of the offer presented to the franchisor by the other person acceptable to the franchisor as a successor shall require that offer, as modified, to be resubmitted to the franchisee in accordance with the foregoing provisions of this paragraph; except that nothing contained herein shall require the franchisor, having made a bona fide offer or offer under a right of first refusal to transfer, assign, or sell to the franchisee the franchisor’s interest in the premises pursuant to paragraph (1) or paragraph (2), respectively, of this subsection, which offer the franchisee has rejected or failed to accept timely, to make a new offer upon the occurrence of a legitimate subsequent change at closing.
b. For any successor owner, following a transfer, assignment, or sale subsequent to the franchisee’s rejection of, or failure to accept timely, an offer made by the franchisor pursuant to paragraph (1) or paragraph (2) of subsection a. of this section:
(1) not to maintain the requirements of the franchise arrangement in effect at the time of the transfer, assignment, or sale for each premises, unless that arrangement is changed only by mutual agreement of the franchisee and the successor owner;
(2) not to renew, at the expiration of the franchise arrangement in effect at the time of the transfer, assignment, or sale, the franchise arrangement of the franchisee for the same number of years as the franchise arrangement in effect at the time of the transfer, assignment, or sale, provided the renewal shall not exceed five years; and
(3) to require the franchisee to:
(a) participate in promotional campaigns of the successor owner’s products;
(b) meet sales quotas;
(c) sell any product at a price suggested by the successor owner or successor owner’s supplier;
(d) keep the premises open and operating during hours which are documented by the franchisee to be unprofitable to the franchisee; or
(e) disclose to the successor owner or successor owner’s supplier any financial records of the operation of the franchisee’s premises which are not related or necessary to the franchisee’s obligations under the franchise arrangement.
Nothing in this subsection shall affect the successor owner’s ability to terminate, cancel, or fail to renew a franchise arrangement for good cause shown in accordance with the provisions of the “Franchise Practices Act,” P.L.1971, c.356 (C. 56:10-1 et seq.).
c. For any successor owner, as set forth in subsection b. of this section, to transfer, assign, or sell an interest in a single franchise premises where a franchisee has engaged in the retail sale of motor fuel that is not part of two or more franchise premises, presented by the successor owner as a package to transfer, assign, or sell, and that the franchisee has occupied under a lease agreement or agreements for a period of three consecutive years, or occupies under a lease agreement for a term of at least three years, unless the successor owner makes an offer to transfer, assign, or sell to the franchisee the successor owner’s interest, or offers the franchisee a right of first refusal on an offer presented by another person acceptable to the successor owner as a new successor to the interest, in accordance with the provisions of subsection a. of this section.
L.2009, c.63, s.1.