New Jersey § 56:10-7

§ 56:10-7.

It shall be a violation of P.L.1971, c. 356 ( C.56:10-1 et seq. ) for any motor vehicle franchisor, directly or indirectly, through any officer, agent

or employee, to engage in any of the following practices: a. To impose unreasonable standards of performance or unreasonable facilities, financial,

operating or other requirements upon a motor vehicle franchisee. b. To base the disapproval of the transfer, sale or assignment of a motor vehicle

franchise, or any interest therein, on the ground that the proposed transferee is

not a natural person. c. To fail to compensate a motor vehicle franchisee for all reasonable costs incurred

by the franchisee in complying with the requirements imposed on the franchisee by

the franchisor relating to a product recall. d. To utilize an arbitrary or unreasonable formula or other calculation or process

intended to gauge performance as a basis for making any decision or taking any action

governed by P.L.1971, c. 356 ( C.56:10-1 et seq. ). e. Except as provided pursuant to section 6 of P.L.2015, c. 24 ( C.56:10-27.1 ), to own or operate or enter into an agreement with a person, other than an existing motor

vehicle franchisee, to operate a retail facility for the servicing of motor vehicles,

which is authorized to perform warranty service on motor vehicles manufactured or

distributed by the motor vehicle franchisor. The establishment, relocation, reopening or reactivation of such a facility pursuant

to an agreement with a motor vehicle franchisee shall be subject to the provisions

of P.L.1982, c. 156 ( C.56:10-16 et seq. ), except that paragraph (3) of subsection b. of section 8 of that act ( C.56:10-23 ) shall not be applicable. Notice shall be given to motor vehicle franchisees in the same line make or makes

within six miles of the proposed retail facility for the servicing of motor vehicles

which is authorized to perform warranty service on motor vehicles manufactured or

distributed by the motor vehicle franchisor. f. To require an unconditional release from a motor vehicle franchisee without permitting

the franchisee to except from the release any claims for outstanding financial obligations

of the motor vehicle franchisor to the motor vehicle franchisee for which payment

will not be made at or before the giving of the release. g. (1) To require or attempt to require a motor vehicle franchisee to order or purchase

a new or used motor vehicle, or any accessory or equipment thereof not required by

law; or (2) to require or attempt to require a motor vehicle franchise to accept

delivery of any motor vehicle, or any accessory or equipment thereof not required

by law, which is not as ordered by the motor vehicle franchisee; or (3) to take or

withhold or threaten to take or withhold any action, impose or threaten to impose

any penalty, or deny or threaten to deny any benefit, as a result of the motor vehicle

franchisee's failure or refusal to purchase, order or accept delivery of any such

motor vehicle, accessory or equipment. This subsection shall not prevent a motor vehicle franchisor from requiring that

a motor vehicle franchisee carry a representative inventory of models offered for

sale by the motor vehicle franchisor. h. To fail or refuse to sell or offer to sell to all motor vehicle franchisees in

a line make every motor vehicle sold or offered for sale to any motor vehicle franchisee

of the same line make, or to fail or refuse to sell or offer to sell such motor vehicles

to all motor vehicle franchisees at the same price for a comparably equipped motor

vehicle, on the same terms, with no differential in discount, allowance, credit or

bonus, and on reasonable, good faith and non-discriminatory allocation and availability

terms. However, the failure to deliver any such motor vehicle shall not be considered a

violation of this section if the failure is not arbitrary and is due to a lack of

manufacturing capacity or to a strike or labor difficulty, a shortage of materials,

a freight embargo or other cause over which the franchisor has no control. A motor vehicle franchisor shall not require a motor vehicle franchisee to purchase

unreasonable quantities of advertising materials, purchase special tools not required

to properly service a motor vehicle or undertake sales person or service person training

unrelated to the motor vehicle or meet unreasonable display requirements as a condition

of receiving a motor vehicle. i. Unless compelled by law or legal process, (1) if the customer has objected thereto

in writing, to require a motor vehicle franchisee to publish, release, convey or otherwise

provide information obtained with respect to any customers, contracts, products, services

or other transactions of the motor vehicle franchisee which is not necessary for the

motor vehicle franchisor to meet its obligations to consumers or the motor vehicle

franchisee, including vehicle recalls or other requirements imposed by State or federal

law, or for complying with the duties or obligations of the respective parties under

the franchise; or (2) to release such information which has been provided to it by

the motor vehicle franchisees to any third party. j. To impose or attempt to impose any requirement, limitation or regulation on, or

interfere or attempt to interfere with, the manner in which a motor vehicle franchisee

utilizes the facilities at which a motor vehicle franchise is operated, including,

but not limited to, requirements, limitations or regulations as to the line makes

of motor vehicles that may be sold or offered for sale at the facility, or to take

or withhold or threaten to take or withhold any action, impose or threaten to impose

any penalty, or deny or threaten to deny any benefit, as a result of the manner in

which the motor vehicle franchisee utilizes his facilities, except that the motor

vehicle franchisor may require that the portion of the facilities allocated to or

used for the motor vehicle franchise meets the motor vehicle franchisor's reasonable,

written space and volume requirements as uniformly applied by the motor vehicle franchisor. The provisions of this subsection shall not apply if the motor vehicle franchisor

and the motor vehicle franchisee voluntarily agree to the requirement and separate

and valuable consideration therefor is paid. k. To require or attempt to require a motor vehicle franchisee, or the owner or landlord

of property on which a motor vehicle franchise is operated, to give a motor vehicle

franchisor or any person under the control of the motor vehicle franchisor an interest

in or option with respect to the real property on which the motor vehicle franchise

is operated, to restrict the uses to which the facility at which the motor vehicle

franchise is operated may be put during or after the term of the franchise, or to

take or withhold or threaten to take or withhold any action, impose or threaten to

impose any penalty, or deny or threaten to deny any benefit, as a result of the failure

or refusal of a motor vehicle franchisee, property owner, or landlord to agree to

or comply with any such demand or restriction. Nothing in this subsection shall be deemed to bar a voluntary agreement between

a motor vehicle franchisor and a motor vehicle franchisee, or the owner or landlord

of property on which a motor vehicle franchise is operated, to give the motor vehicle

franchisor or the person under the control of the motor vehicle franchisor an interest

in or option with respect to the real property on which a motor vehicle franchise

is operated, or to restrict the uses to which the facility at which the motor vehicle

franchise is operated is put, provided that separate and valuable consideration is

paid for such interest, option or restriction. l . To require or attempt to require a motor vehicle franchisee to relocate his franchise

or to implement any facility or operational modification or to take or withhold or

threaten to take or withhold any action, impose or threaten to impose any penalty,

or deny or threaten to deny any benefit as a result of the failure or refusal of such

motor vehicle franchisee to agree to any such relocation or modification, unless the

motor vehicle franchisor can demonstrate that: (1) funds are generally available

to the franchisee for the relocation or modification on reasonable terms; and (2)

the motor vehicle franchisee will be able, in the ordinary course of business as conducted

by such motor vehicle franchisee, to earn a reasonable return on his total investment

in such facility or from such operational modification, and the full return of his

total investment in such facility or from such operational modifications within 10

years; or (3) the modification is required so that the motor vehicle franchisee can

effectively sell and service a motor vehicle offered by the motor vehicle franchisor

based on the specific technology of the motor vehicle. This subsection shall not be construed as requiring a motor vehicle franchisor to

guarantee that the return as provided in paragraph (2) of this subsection will be

realized. m. Directly, or through any financial institution having any commonality of ownership

with the motor vehicle franchisor, to require or attempt to require, or to take or

withhold or threaten to take or withhold any action, impose or threaten to impose

any penalty, or deny or threaten to deny any benefit, as a result of the failure or

refusal of a motor vehicle franchisee to maintain working capital, equity, floor plan

financing or other indications of financial condition, greater than the lesser of

(1) the minimum required to operate the motor vehicle franchise based on the operations

of the franchise over the prior 12-month period; or (2) an increase of no more than

5% over the prior calendar year, unless the motor vehicle franchisor, or the financial

institution having any commonality of ownership with a motor vehicle franchisor, can

establish that such failure or refusal prevents the franchisee from operating the

franchise in the ordinary course of business. This subsection shall not apply if the working capital, equity, floor plan financing

or other indication of financial condition is the result of an accommodation by the

motor vehicle franchisor, or financial institution with a commonality of ownership

with the motor vehicle franchisor, to the motor vehicle franchisee, containing specific

terms and deadlines for the restoration of the motor vehicle franchisee's working

capital, inventory, floor plan financing or other indication of financial condition,

which accommodation is agreed to in writing by the motor vehicle franchisee. n. To impose or attempt to impose any conditions on the approval of the transfer of

a motor vehicle franchise, except as provided in section 6 of P.L.1971, c. 356 ( C.56:10-6 ). o . To amend or modify the franchise of a motor vehicle franchisee, or any lease or

agreement ancillary or collateral to such franchise, including in connection with

the renewal of a franchise, if such amendment or modification is not in good faith,

is not for good cause, or would adversely and substantially alter the rights, obligations,

investment or return on investment of the motor vehicle franchisee. p. To take or withhold or threaten to take or withhold any action, impose or threaten

to impose any penalty, or deny or threaten to deny any benefit, because the motor

vehicle franchisee sold or leased a motor vehicle to a customer who exported the vehicle

to a foreign country or who resold the vehicle, unless the motor vehicle franchisor

can establish that the motor vehicle franchisee knew or reasonably should have known,

prior to the sale or lease, that the customer intended to export or resell the motor

vehicle; provided, however, that it shall be presumed that the motor vehicle franchisee

did not know or should not have reasonably known that the vehicle would be exported

if the vehicle is titled or registered in any state or the District of Columbia. q. To require a motor vehicle franchisee, at the time of entering into a franchise

arrangement, any lease or agreement ancillary or collateral to a motor vehicle franchise,

or any amendment, modification, renewal or termination thereof, to assent to a release,

assignment, novation, waiver or estoppel, which would relieve any person from liability

imposed by P.L.1971, c. 356 ( C.56:10-1 et seq. ); provided that nothing in this subsection shall be deemed to prohibit a voluntary

agreement between the motor vehicle franchisor and the motor vehicle franchisee which

contains a release, assignment, novation, waiver or estoppel for which separate and

valuable consideration is paid by the motor vehicle franchisor to the motor vehicle

franchisee. r. To provide any term or condition in any motor vehicle franchise, in any lease or

other agreement ancillary or collateral to a motor vehicle franchise or in any renewal,

amendment or modification thereof, which term or condition directly or indirectly

violates P.L.1971, c. 356 ( C.56:10-1 et seq. ). s. To allocate vehicles to or evaluate the performance of a motor vehicle franchise

based on, or offer any discount, incentive, bonus, program, allowance or credit that

differentiates between vehicle sales by a motor vehicle franchisee within a territory

or geographic area assigned to the motor vehicle franchisee and vehicle sales outside

of such territory or geographic area.