Buying and Operating a Franchise in NJ: The NJ Franchise Practices Act
If you operate a franchise in the State of New Jersey or are considering the purchase of a franchise in New Jersey the New Jersey Franchise Practices Act (NJFPA) affords you additional rights that you might not be aware of. The New Jersey Franchise Practices Act was established to provide supplemental rights to franchisees in situations involving the termination and sale of their franchise.
In particular‚ among the various protections afforded to new Jersey franchisees‚ the NJFPA restricts a franchisors ability to terminate a franchise relationship. Irrespective of the contractual terms of the franchise agreement‚ in the State of New Jersey a franchise relationship may not be terminated unless:
- (a) it is for "good cause" – such as a franchisees substantial failure to perform its contractual obligations; and
- (b) the franchisee is provided with at least 60 days prior notice by the franchisor of the franchisor's intent to terminate the franchise relationship or refuse the renewal of such relationship. Said notice must also set forth the reasons for the franchisor's decision.
As such‚ the NJFPA provides supplemental protections to New Jersey franchisees and imposes additional obligations on a franchisor. If you are considering the purchase of a franchise or facing the termination of your franchise rights you must discuss with your franchise lawyer the protections that may be available to you. If you are a franchisor considering the sale of a franchise in the State of New Jersey‚ you must insure that your franchise agreement and FDD are consistent with your obligations under the NJFPA.
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By Charles Internicola July 11, 2009
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