The New Jersey Franchise Practices Act (NJFPA) contains various provisions protecting the rights of franchisees in New Jersey. Among other things, the NJFPA includes some of the strongest language in any state statute nationwide regarding the circumstances under which a franchisor may terminate a franchisee or decide not to renew a franchise agreement. In this article, we discuss the standard for termination or non-renewal as well as factual circumstances in which courts have upheld those decisions. We then discuss whether a franchisee faced with the termination or non-renewal can preempt same by curing any identified violations. Finally, we present some best practices a franchisor should implement to strengthen a termination or non-renewal decision.

The standards for termination and non-renewal of a franchise under the NJFPA are identical.  The NJFPA provides that:

[I]t shall be a violation of this act for a franchisor to terminate, cancel or fail to renew a franchise without good cause. For the purpose of this act, good cause for terminating, canceling, or failing to renew a franchise shall be limited to failure by the franchisee to substantially comply with those requirements imposed upon him by the franchise.

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