The relationship between a franchisor and a franchisee in New Jersey is governed by the New Jersey Franchise Practices Act.
In New Jersey, franchisees enjoy considerable protection. However, before a franchisee can enjoy these protections, it must prove that it meets the definition of franchisee. Our statutes set forth specific requirements that must be met before a company selling the products of another will be deemed its franchisee.
However, when this definition can be satisfied, franchisees will find themselves in a strong legal position when litigating against franchisors.
Beyond our New Jersey’s statutes, in almost every instance of a franchise relationship, the parties have executed a franchise agreement. This agreement will spell out the operating obligations of each of the parties. However, if any franchise agreement attempts to include a provision that runs afoul of the protections afforded by the New Jersey Franchise Practices Act, the franchisor runs the risk of having that provision deemed unenforceable.
In short, once a franchisee has satisfied the definition of franchisee in New Jersey, the statutes and case law of our State grant considerable protections. Isolated or insignificant instances of a franchisee failing to satisfy franchisor requirements or violating the franchise agreement will likely be insufficient cause for terminating a relationship.
If your business is a party to a franchise agreement or relationship and you have questions regarding your rights, we encourage you to contact our attorneys for a consultation.