Pub. 17 2018-2019 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 17 new jersey auto retailer W W W . N J C A R . O R G vehicle franchisor can demonstrate that: (1) funds are generally available to the franchisee for the relocation or modification on reasonable terms; and (2) the motor vehicle franchisee will be able, in the ordinary course of business as conducted by such motor vehicle franchisee, to earn a reason- able return on his total investment in such facility or from such operational modification, and the full return of his total investment in such facility or from such operational modifications within 10 years; or (3) the modifica- tion is required so that the motor vehicle franchisee can effectively sell and service a motor vehicle offered by the motor vehicle franchisor based on the specific technology of the motor vehicle. This subsection shall not be con- strued as requiring a motor vehicle franchisor to guarantee that the return as provide in paragraph (2) of this subsection will be realized.” A further amendment made to N.J.S.A. 56: 10-7.4 (also in 2011) prohibits automakers from requiring their dealers to use their facilities exclusively for the franchisor’s brand. Specifically, P.L. 2011, c. 66, Section 2 [N.J.S.A. 56:10-7.4(j)] makes it unlawful for a motor vehicle manufacturer: “To impose or attempt to impose any requirement, limitation or regu- lation on, or interfere or attempt to interfere with, the manner in which a motor vehicle franchisee utilizes the facilities at which a motor vehicle franchise is operated, including, but not limited to, requirements, lim- itations or regulations as to the line makes of motor vehicles that may be sold or offered for sale at the facility, or to take or withhold or threaten to take or withhold any action, impose or threaten to impose any penalty, or deny or threaten to deny any benefit, as a result of the manner in which the motor vehicle franchisee utilizes his facilities, except that the motor vehicle franchisor may require that the portion of the facilities FACTORY DEMANDS  continued on page 20 allocated to or used for the motor vehicle franchise meets the motor ve- hicle franchisor’s reasonable, written space and volume requirements as uniformly applied by the motor vehicle franchisor. The provisions of this subsection shall not apply if the motor vehicle franchisor and the motor vehicle franchisee voluntarily agree to the requirement and separate and valuable consideration therefore is paid.” NJ CAR has filed a lawsuit against Mazda claiming that its “Brand Experience” program violates the FPA because it’s a form of two-tier pricing and because of the facility mandates (exclusive facility, etc.) that are required for a dealer to receive maximum incentives for the sale of its vehicles. Factory Direct Sales. New Jersey’s FPA, with one excep- tion, requires auto manufacturers to sell their new vehicles through designated local franchisees (N.J.S.A. 56:10-27). The exception (enacted in March 2015) provides that only Tesla “… may buy from and sell, offer to sell, or deal to a consumer a zero-emission vehicle, provided that…[it] owns or operates, directly or indirectly… no more than four places of business in the State …” (id.) (emphasis added). The law defines “a place of business” as “[a] fixed geographical location at which the motor vehicle franchisor’s motor vehicles are offered for sale and sold, but shall not include an office, a warehouse, a place of storage, a residence or a vehicle.” (N.J.S.A. 56:10-26.) With the exception of this limited exemption made for Tesla, no other manufacturer can sell its new vehicles directly to consumers. REAL SOLUTIONS FOR YOUR BUSINESS CALL US TODAY. 800.601.0816 BENEFITS & INSURANCE Our understanding of your business and your insurance needs is the basis for designing a benefits strategy that works.