The New Jersey Franchise Practices Act, N.J.S.A. 56:10-1, et seq. (NJFPA) is a powerful tool for those businesses that qualify for its protections. Under the NJFPA, a franchisor cannot terminate a franchisee without good cause, even where terminating the franchisee would be perfectly acceptable under the parties’ contract. N.J.S.A. 56:10-5. The NJFPA also prohibits a franchisor from imposing “unreasonable standards of performance” on a franchisee. Id. at 56:10-7. These prohibitions stem from the overriding purpose of the NJFPA—to protect otherwise vulnerable franchisees, who make substantial investments in a franchise and build a franchisor’s brand, yet retain little bargaining power with the franchisor.
Who, then, qualifies as a “franchisee” protected by the act? In some circumstances, a business that looks nothing like a stereotypical franchise.
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