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  • NJ A1744
  • Revises law concerning the rights and responsibilities of motor vehicle franchisees and franchisors.
Introduced
(1/27/2016)
In Committee
(1/27/2016)
Crossed OverPassedSignedDead/Failed/Vetoed
2016-2017 Regular Session
This bill, revises New Jersey's "Franchise Practices Act," P.L.1971, c.356 (C.56:10-1 et seq.), which serves to protect consumers, motor vehicle franchisees (dealers) and the public from arbitrary conduct by motor vehicle franchisors (manufacturers). The bill also allows a manufacturer, or a "franchisor" as defined in the "Franchise Practices Act," to buy from or sell directly to consumers a zero emission vehicle (ZEV) at a maximum of four locations in New Jersey. The "Franchise Practices Act" prohibits motor vehicle franchisors from engaging in various business practices in their dealings with their motor vehicle franchisees. The bill prohibits a franchisor from utilizing any device including sales promotion plans or programs that result in a lesser actual price to franchisees. The bill clarifies that this provision shall not prohibit the offering of any incentive, sales promotion plan or program, discount, allowance, credit or bonus that is: (1) available to all franchisees of the same line make in this State on a proportionally equal basis; (2) based on objective criteria that are reasonably achievable by the franchisee; (3) if based in whole or in part on the franchisee's new vehicle sales, is offered on a per vehicle basis or determined by the franchisee's actual or reasonably achievable sales volume; and (4) calculated based on a criteria that, upon written request to the franchisor, is made available to the franchisee. In regard to a transfer of a motor vehicle franchise, the bill clarifies that the franchisor is prohibited from imposing or attempting to impose any conditions on the approval of the transfer of a motor vehicle franchise, except to require the written agreement of the transferee to comply with all requirements of the franchise then in effect as provided in section 6 of P.L.1971, c.356 (C.56:10-6). The bill also prohibits the franchisor from refusing to approve a transfer on the basis of a statistical comparison of the proposed transferee with other franchisees, which statistical comparison is arbitrary or unreasonable. The bill prohibits a motor vehicle franchisor from: (1) requiring or attempting to require a motor vehicle franchisee to offer any finance, insurance, warranty, service or repair plan or other product of the motor vehicle franchisor or of a financial institution or other person having any commonality of ownership with the motor vehicle franchisor; (2) prohibiting or attempting to prohibit a motor vehicle franchisee from offering a finance, insurance, warranty, service or repair plan or other product of a person other than the motor vehicle franchisor or a financial institution or other person having any commonality of ownership with the motor vehicle franchisor; (3) taking or withholding or threatening to take or withhold any action, impose or threaten to impose any penalty, or deny or threaten to deny any benefit to a motor vehicle franchisee that offers to consumers a finance, insurance, warranty, service or repair plan or other product of a person other than the motor vehicle franchisor or financial institution or other person having any commonality of ownership with the motor vehicle franchisor, either exclusively or along with a similar product offered by the motor vehicle franchisor or financial institution or other person having any commonality of ownership with the motor vehicle franchisor; (4) offering any finance terms to a consumer for an insurance, warranty, service or repair plan or other product offered by the motor vehicle franchisor or financial institution or other person having any commonality of ownership with the motor vehicle franchisor, that is not offered for, or is different from, any finance terms available from such motor vehicle franchisor or financial institution or other person having any commonality of ownership with the motor vehicle franchisor at the same time for a similar product of a person other than the motor vehicle franchisor or financial institution or other person with any commonality of ownership with the motor vehicle franchisor; or (5) failing to prevent any person, other than a motor vehicle franchisee or a bona fide employee of a motor vehicle franchisee employed at the franchisee's licensed business premises, from selling, offering to sell, or participating in the sale or offer to sell of the motor vehicle franchisor's new motor vehicles. Under current law, a franchisor may, under certain circumstances, exercise a right of first refusal for a motor vehicle dealer to acquire a motor vehicle franchise. This bill revises current law and specifies that the only circumstance under which a franchisor may exercise a right of first refusal is if the motor vehicle franchisor has a formal written program to increase the number of minority franchisees and a minority will obtain over 51% ownership and control of the motor vehicle franchise over a reasonable period of time, not to exceed 10 years, upon the exercise of the right of first refusal or other right to acquire a motor vehicle franchise by the motor vehicle franchisor. The bill prohibits a franchisor from charging back monies to a franchisee without first notifying the franchisee of its intent by giving at least 30 days written notice of that intent, and by giving the franchisee an opportunity to contest the proposed charge back. The bill provides that, upon the termination, cancellation or nonrenewal of a motor vehicle franchise, the franchisor is required to buy back new vehicles held by the franchisee for all prior years. Under current law, the franchisee is required to buy back such vehicles only for the current model year and one prior year. This bill revises situations in which a franchisee may protest a new or relocated dealership facility within or adjacent to the franchisee's market area. Current law allows a dealer to protest a new or relocated facility within 8 miles or, if there is no franchisee in the same line make within 8 miles, the closest franchisee within 14 miles has a right of protest. The bill provides that, if such franchisee within 14 miles files a protest, or has any commonality of ownership with the franchise to be relocated, then the relevant market area includes the two closest existing franchisees in the same line make within such 14-mile radius. The bill provides for a cause of action in the Superior Court to prevent, restrain or enjoin a violation of R.S. 39:10-19, or any regulation promulgated thereunder, by any person who is engaged in the business of buying, selling or dealing in motor vehicles in this State, including engaging in brokering or activity as a leasing dealer. The bill clarifies that a court may award damages to a motor vehicle franchisee in an action instituted by the franchisee against a franchisor for violation of the "Franchise Practices Act" in the Superior Court of the State of New Jersey. The bill further revises the circumstances in which treble damages may be awarded to a franchisee to allow treble damages when: (1) the motor vehicle franchisee has given pre-action notice of the violation to its franchisor and a period of not less than 30 days to cure or cease the violation; (2) the franchisor fails to cease the violation and effectuate a cure within that period of time without good cause; and (3) the violation results in injury to the business or competitiveness of the motor vehicle franchisee. The effective date specifies that the bill's provisions will not apply retroactively to any cause of action that arose prior to the effective date.
Commerce and Economic Development
Introduced, Referred to Assembly Commerce and Economic Development Committee  (on 1/27/2016)
 
 

Date Chamber Action Description
1/27/2016 A Introduced, Referred to Assembly Commerce and Economic Development Committee
Date Motion Yea Nay Other
None specified