Pub. 12 2013-2014 Issue 4

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 W I N T E R 2 0 1 4 22 new jersey auto retailer Amendments To New Jersey’s Franchise Practices Act Are Going Before The New Jersey Legislature By Marvin J. Brauth, Esq. Late last year, amendments to New Jersey’s Franchise Practice Act were introduced in the Legislature. Among the enhancements to the Franchise Practices Act included in the Bill were provisions to: • Give dealers an effective remedy in Court if franchisors violate the law; • Clarify the purpose of the law so that Court’s do not narrow its scope; • Make it harder for franchisors to interfere with buy-sell trans- actions; • Prevent manufacturers from unilaterally taking dealer funds in advance of resolution of certain disputes such as warranty or incentive audits. Not unexpectedly, the Bill created a firestorm, with vehicle manufacturers and distributors, and any allies they could recruit, lining up against dealers and the proposed legisla- tion. At a legislative hearing in January 2014, virtually every manufacturer and distributor with a presence in New Jersey testified in opposition to the Bill. The United Auto Workers, now an owner of General Motors, was also active in opposition. One manufacturer even went so far as to threaten to take previ- ously earned bonus monies away from its New Jersey dealers. Despite the opposition, the Bill was unanimously approved by the Assembly Budget Committee and sent to the full Assembly. However, there was insufficient time in the lame duck legisla- tive session to secure passage of the Bill, so similar legislation has been introduced in the current legislative session. The opposition from the manufacturers, distributors and their allies results from the important provisions in the Bill which will further level the playing field between dealers and their franchisors and which further the public interest in a vibrant system of franchised motor vehicle retailers that provide con- venient and expert sales and service for consumers. The Franchise Practices Act amendment legislation is impor- tant to every dealer in the State. Absent the provisions in the Bill, manufacturers and distributors will be able to continue their heavy-handed micromanagement of dealerships, control the buy-sell process, and leave dealers without a fully-effective remedy to resist oppressive conduct. Its passage should be a priority for all dealers. Marvin J. Brauth is a shareholder with Wilentz, Goldman & Spitzer, Woodbridge, New Jersey. He has been representing automotive retailers for over 30 years in connection with issues affecting their dealerships. Mr. Brauth can be reached at 732-855-6084 or mbrauth@wilentz.com.