New Jersey A 3945: Concerns hospitality franchise agreements.

Bill Text

A3945 

ASSEMBLY, No. 3945 

STATE OF NEW JERSEY

222nd LEGISLATURE

� 

PRE-FILED FOR INTRODUCTION IN THE 2026 SESSION

Sponsored by:

Assemblyman ROBERT J. KARABINCHAK

District 18 (Middlesex)

Assemblyman WILLIAM W. SPEARMAN

District 5 (Camden and Gloucester)

Assemblyman STERLEY S. STANLEY

District 18 (Middlesex)

Co-Sponsored by:

Assemblywoman McCoy

SYNOPSIS

���� Concerns hospitality franchise agreements.

CURRENT VERSION OF TEXT 

���� Introduced Pending Technical Review by Legislative 
Counsel.

�� 

An Act concerning hospitality franchises and supplementing 
P.L.1971, c.356 (C.56:10-1 et seq.).

���� Be It 
Enacted by the Senate and General Assembly of 
the State of New Jersey:

���� 1.��� a.� For the purposes 
this act, a franchise, as defined in 16 C.F.R. 436 and 437, that is a 
hospitality franchise, shall be considered merchandise for the purposes of 
P.L.1960, c.39 

(C.56:8-1 et seq.). 

���� b.��� Notwithstanding any 
provision of section 4 of P.L.1971, c.356 (C.56:10-4) to the contrary, this act 
shall apply only to a hospitality franchise, the performance of which requires 
the franchisee to establish and maintain a place of business within the State 
of New Jersey.

���� c.���� For the purposes of 
this act:

���� �Consideration� means a 
rebate, commission, licensing fee, marketing fee, transaction fee, system fee, 
system activity fee, services, or any other thing of value;

���� �Franchisee advisory 
committee� means a committee, council, board, or other body elected by the 
franchisees and independent from the franchisor, and charged with enhancing 
communication, working together to improve the system, and helping to resolve 
challenges that impact the franchise system as a whole;

���� �Hospitality� franchise� means 
a written arrangement for a definite or indefinite period, in which a person 
grants to another person a license to use a trade name, trade mark, service 
mark, or related characteristic, and in which there is a community of interest 
in the marketing of goods or services at wholesale, retail, by lease, 
agreement, or otherwise, where the goods include any hotel, motel, inn, tourist 
camp, tourist cabin, tourist home, rooming house or similar establishment where 
sleeping accommodations are supplied for pay to transient or permanent guests.

���� 2.��� It shall be a violation 
of the �Franchise Practices Act,� P.L.1971, c.356 (C.56:10-1 et seq.) for a 
hospitality franchisor or an entity owned or controlled by the franchisor or 
affiliated under common ownership by the franchisor to:

���� a.���� Receive, directly or 
indirectly, any consideration from any vendor, or affiliate of a vendor, that 
sells goods or services to a franchisee of the hospitality franchisor unless 
the consideration received from such vendor, or affiliate of a vendor, is: 

���� (1)� fully disclosed to the 
franchisee or is disclosed in the franchise disclosure document; and 

���� (2)�� promptly turned over to 
the franchisee or is placed into a dedicated expenditure fund, of which the 
disbursements are approved by the Franchisee Advisory Committee, that benefits 
the franchisee.� 

���� As used in this section, 
�disclose� means the individual itemized reporting on a per-vendor basis of any 
consideration from any vendor, or affiliate of a vendor, that sells 
goods or services to a franchisee of the hospitality franchisor and reporting 
of the material terms of any agreement with the vendor or vendor affiliate to 
share revenue or provide consideration to the franchisor;

���� b.� Require a franchisee to 
purchase goods, services, supplies or inventories exclusively from the 
hospitality franchisor or sources designated by the franchisor where goods, 
services, supplies or inventories of comparable quality are available from 
sources other than those designated by the franchisor.� However, the 
publication by the franchisor of a list of approved suppliers of goods, 
supplies, inventories, or services or the requirement that goods, supplies, 
inventories, or services comply with specifications and standards prescribed by 
the franchisor shall not constitute designation of a source, and a reasonable 
right of the franchisor to disapprove a supplier shall not constitute a 
designation.� In the case of goods, supplies or inventories that carry a 
trademark, trade name or other identifying characteristic of the franchisor, 
the hospitality franchisor shall not unreasonably refuse to license the 
identifying characteristics to a vendor or supplier who meets the franchisor�s 
reasonable specifications and standards for quality of goods, financial 
soundness and capacity to meet the business requirements of the franchise;

���� c.���� Establish, directly or 
indirectly, a franchisor-owned or franchised outlet engaged in a substantially 
identical business to that of the franchisee within the franchisee�s exclusive 
or protected territory, if the franchise agreement provides for either. For the 
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