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 31 new jersey auto retailer W W W . N J C A R . O R G BY THEODORE “TED” SCHILLER, ESQ. AND THOMAS G. RUSSOMANO, ESQ. “Site Control” Factory, If You Like The New Jersey Franchise Practices Act, (the “FPA”), recognizes the vital role franchised motor vehicle dealers play in our economy and to the public at large. That recognition is set forth in Section 2 of the FPA which provides, in relevant part, as follows: The Legislature finds and declares that distribution and sales through franchise ar- rangements in the State of New Jersey vitally affects the general economy of the State, the public interest and the public welfare.... To that end, the FPA was designed to define the scope of the relationship between the manufacturer and dealers, to identify special rights of dealers and to establish certain pro- tections which are to be afforded to dealers in recognition of their vital role. The purpose of the FPA is also recognized in Section 2 of the Act, as follows: ... It is therefore necessary in the public interest to define the relationship and responsibilities of franchisors and franchisees in connection with franchise arrangements and to protect franchisees from unreasonable termination by franchisors that may result from a dispar- ity of bargaining power between national and regional franchisors and small franchisees. The Legislature finds that these protections are necessary to protect not only retail busi- nesses, but alsowholesaledistribution franchi- sees that, through their efforts, enhance the reputation and goodwill of franchisors in this State. Further, the Legislature declares that the courts have in some cases more narrowly construed the Franchise Practices Act than was intended by the Legislature. Today, the New Jersey FPA is regarded by many to be the most comprehensive and protective franchise act in the Country. The FPA maintains its lofty perch because our State legislature continues to amend the FPA to address dealers’ rights in an ever-changing world, market and economy. TheFPAwas last amended inMay 2011 and, as usual, the amendments addressed the changing world faced by franchised dealers. Significantly, the last amendments identi- fied two rights of dealers (i.e., the right to dual competing brands and the right to reject site control) which were heretofore unaddressed by the FPA and thereby left many dealers exposed to the arbitrary acts and unreasonable demands of overzealous manufacturers. A. The Necessity of the Amendments Since the FPA was first enacted, dealers have witnessed a confluence of events which have forever altered the world in which they conduct their dealership operations. Over the years, the manner in which dealers and manufacturers interact is often the result of the economic conditions, positive or negative, present at the time. In good times, manufac- turers attempt to require significant financial investments by dealers. In bad times, as most recently experiencedby the financial catastro- phe of 2008-2010, manufacturers attempt to reduce dealers through various methods, in- cluding consolidation, merger, attrition and/ SITE CONTROL  continued on page 32 You Can Keep It...Provided You Pay for It