Pub. 12 2013-2014 Issue 3

N E W J E R S E Y C O A L I T I O N O F A U T O M O T I V E R E T A I L E R S 21 new jersey auto retailer W W W . N J C A R . O R G quirements on their dealers. Amplifying on what an unreasonable requirement is, another Franchise Practices Act provi- sion specifically prohibits a franchisor from compelling franchise relocations or facilities modifications, except in limited circumstances dealing with new vehicle technologies, unless the franchisor can demonstrate that: (1) Funds are generally available to the dealer for the relocation or modifica- tion on reasonable terms; and (2) The dealer will be able, in the ordi- nary course of business as conducted by that dealer, to earn a reasonable return on his total investment in such new facility or facility modifi- cation and the full return of his total investment within 10 years. In other words, unless relocation or fa- cility remodeling can be shown to make financial sense from the dealer’s perspec- tive, it cannot be compelled. Further, the Franchise Practices Act bars franchisors from taking or withholding or threaten- ing to take or withhold any action. It also bars franchisors from imposing or threatening to impose any penalty, or denying or threatening to deny any benefit if a dealer refuses to relocate or modify his or her facility because it does not make financial sense. Other provisions in the Franchise Practices Act further prohibit franchisors from implementing programs or incentives that result in price differentials among dealers in the ultimate cost to the dealer to purchase a vehicle based on compli- ance with facilities programs or branding and image requirements. In the buy-sell context, the Franchise Practices Act bars a franchisor from conditioning its ap- proval of a transfer on the buyer agreeing to relocate the dealership or complete facilities modifications. The Franchise Practices Act bars fran- chisors from compelling relocations and facilities modifications unless it makes financial sense for the dealer and it pro- hibits imposition of any type of sanction or penalty if the dealer refuses to do something that does not make sense. The Franchise Practices Act provisions are there to lessen the effectiveness of the psychological pressure franchisors bring to bear, as well as to create leverage for a dealer who decides to resist an unreason- able demand. These Franchise Practices Act provisions are available and should be relied on to level the playing field in any discussion of relocations and facili- ties modifications. Marvin J. Brauth, Esq. is a shareholder with Wilentz, Goldman & Spitzer, Woodbridge, New Jersey. He has been representing automotive retailers for over 30 years. He can be reached at 732-855-6084 or mbrauth@wilentz.com. Automotive HR Solutions provides quality outsourced hu- man resource services to automo- tive dealerships across the tri-state region. We specialize in a variety of services designed to help dealerships maximize their time, profits and em- ployee retention without the worry of maintaining an in-house HR department. Outsourcing HR services allows the auto- motive dealership to focus on its core busi- ness – the sales and service of automobiles. We will develop a customized human re- source solution that will meet the unique needs of your dealership! CALLSandyShectman for a free consultation. Labor relations negotiations and strategies | Wage and hour compliance | Recordkeeping compliance and system development | Turnover monitoring | ESI surveys | Enhance employee morale | Compensation planning and analysis | And much more….. Fully Insured | www.autohrsolutions.com TRUSTED STRATEGIC PARTNERS FOR: