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Franchise Practices Act Amendments Sail Through Assembly & Senate

Mar 25, 2011

Despite vigorous opposition from automakers, NJ CAR-backed amendments to the NewJersey Franchise Practices Act have sailed through the Senate and General Assembly in a series of unanimous Committee and Floor votes that have taken place in quick succession. The bill now heads to the Governor’s desk for his consideration. A-3722 was introduced January 11, 2011, reported from Committee on January 20, 2011 and passed by the General Assembly 78-0 on March 14, 2011. A nearly identical bill was introduced in the Senate February 17, 2011, reported from Committee March 3, 2011 and approved by the full Senate March 21, 2011 by another unanimous vote 36-0. NJ CAR has been working with legislators on both sides of the aisle to develop a legislative proposal that will effectively clarify and reinforce certain key provisions of existing law. The goal is to protect the investment that dealers have in their businesses, to protect local jobs and the communities that rely on neighborhood new car dealers for economic and civic support, and to protect the consumer interest in an extensive network of independent franchised auto dealerships. The legislation was specifically designed to clarify and reinforce certain key provisions of the NewJersey Franchise Practices Act in order to:? Protect dealerships against unreasonable facilities, capital or inventory requirements imposed on auto retailers by automakers. In many cases, these unreasonable demands have caused dealerships to close their doors or become economically non-viable.? Prohibit manufacturers from forcing dealers to sign side agreements or addenda, under which dealers give up essential franchise rights that protect local businesses and the jobs they provide across New Jersey.? Protect dealerships against abusive business practices, such as unreasonable charge backs levied by manufacturers against dealers in connection with the exportation of motor vehicles, sales incentive or warranty audits.? Clarify and reinforce the statue as it relates to repurchase obligations on the part of auto manufacturer in the case of a voluntary dealer termination, and a dealer’s rights in the case of an involuntary termination, in the event of a sale or transfer of a franchise, and when a manufacturer seeks to establish or relocate a new or competing franchise in the dealer’s relevant market area.NJ CAR will keep dealers apprised of further developments in the Governor’s office as they occur.