New Jersey Franchise Registration
Despite being one of the smaller states geography-wise, New Jersey is one of the most urbanized states in the United States. Located along the Eastern Seaboard, where there are other heavily populated and industrialized states, New Jersey has significant political, social, and economic force in its own right. The state has one of the densest populations, from the neighboring states of Pennsylvania and New York. With the most extensive and busiest transportation system globally, the states funnel hundreds of thousands of people for tourism and business. In addition, with a population of 8,882,190, the state offers a sufficient workforce for enterprises moving to the state.
If you intend to offer or sell a franchise in New Jersey, you are not required to register your Franchise Disclosure Documents (FDD) with the State regulator since it is not a franchise registration state. However, although FDD registration is not mandatory, it is essential to ensure that your franchise complies with the Federal Franchise Laws. This will require you to maintain an updated FDD disclosed to a New Jersey franchise if you intend to offer or sell a franchise. In addition, the state has enacted the New Jersey Franchise Practices Act to protect the rights of franchisees and prohibit specific franchise agreement actions and provisions about the franchisor-franchisee relationship.
Since franchise laws in New Jersey are non-existent, FDD disclosure is governed by the Federal Trade Commission (FTC) Franchise Rule, which requires a franchisor to disclose an updated and valid FDD to a prospective franchisee within 14 days before paying money to the franchisor or signing any franchise agreement. In addition, the New Jersey Practices Act is a statute that governs the relationship between franchisees and franchisors by informing franchisees about the rights they have and the compliance and obligations of franchisors.
The New Jersey Franchise Practices Act stipulates a franchisor is required to give franchisees 60 days’ notice before canceling, terminating, or failing to renew a franchise and a reason for such action. For example, suppose the franchisee intends to sell or transfer the franchise. In that case, the franchisor should respond within 60 days to the franchisee if the franchisor objects or approves and provide the basis for the decision. Failure to respond within 60 days will automatically be considered as approval. A franchisor should not require a franchisee to sign a general release as a prerequisite for entering into a franchise agreement.
The prohibitions contained in the New Jersey Practices Act are meant to balance the franchisee-franchisor relationship by preventing any interference from the franchisors in the management of franchisees by imposing the “unreasonable standards of performance. Therefore, whether a franchisor is selling or offering a franchise in New Jersey or a new business, it is essential to be aware of the New Jersey Franchise Practice Act requirements. In addition, you need to ensure that your FDD and franchise disclosure process is by the Federal Franchise Laws by visiting the Franchise Counsel Program page.
For more information on how to register your franchise in (New Jersey), visit the Franchise Marketing Systems site: https://www.fmsfranchise.com/learn/resources/state-guidelines/