STATEMENT TO

ASSEMBLY, No. 2491

with Assembly Floor Amendments

(Proposed by Assemblyman CRYAN)

ADOPTED: JANUARY 7, 2010

      Assembly Bill No. 2491 revises the definition of a “place of business” under this State’s Franchise Practices Act “(FPA),” N.J.S.A. 56:10-1 et seq., to include an office or a warehouse from which franchisee personnel visit or call upon customers or from which the franchisor’s goods are delivered to customers. 

      These Assembly amendments further clarify the definition of “place of business” to specify that the current definition of “place of business” continues to apply to persons who sell directly to consumers, including most “business format” franchises regulated under federal law by 16 C.F.R. Part 436.

      However, if the majority of sales are not made directly to consumers, "place of business" is defined under these amendments as a fixed geographical location at which the franchisee displays for sale and sells the franchisor’s goods or offers for sale and sells the franchisor’s services or an office or a warehouse from which franchisee personnel visit or call upon customers or from which the franchisor's goods are delivered to customers. 

      These Assembly amendments afford wholesale distribution businesses the protections of the New Jersey Franchise Practices Act, rectifying the anomaly that exists under current law, where a distribution business that requires its customers to come to its place of business to buy goods is treated as a franchise, while one that incurs the extra burden of providing the service of going to its customers to deliver its products and make sales does not receive the act’s protections. 

      Under these amendments, mobile “business format” franchises selling to consumers will continue to be subject to the regulation of the Federal Trade Commission, while “bricks-and-mortar” franchises will continue to be subject to the New Jersey Franchise Practices Act as they have been since 1971.