56:10-13.3 Violations related to termination, cancellation or nonrenewal.
4. a. It shall be a violation of the "Franchise Practices Act," 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 terminate, cancel or fail to renew a motor vehicle franchise as the result of:
(1)any change in the ownership, operation or control of all or any part of the franchisor's business, whether by sale or transfer of the assets, corporate stock or other equity interest; assignment; merger; consolidation; combination; reorganization; restructuring; redemption; operation of law or otherwise; or
(2)the termination, suspension or cessation of all or any part of the franchisor's business operations due to the discontinuance of a line make or otherwise, unless the franchisor complies with the provisions of subsections b., c., d. and e. of this section or unless the franchisor, or another motor vehicle franchisor, pursuant to an agreement with the franchisor, offers the franchisee a replacement motor vehicle franchise which takes effect no later than the date of the termination, cancellation or nonrenewal of the franchisee's existing motor vehicle franchise.
b.Within 90 days of the effective date of the termination, cancellation or nonrenewal, the motor vehicle franchisor shall compensate the motor vehicle franchisee in an amount at least equivalent to the fair market value of the motor vehicle franchise on
(1)the day before the date the franchisor announces the action which results in the termination, cancellation or nonrenewal; or
(2)the date on which the notice of termination, cancellation or nonrenewal is issued, whichever amount is higher.
c.The franchisor shall authorize the franchisee to continue servicing and supplying parts, including service and parts pursuant to a warranty issued by the franchisor, for any goods or services marketed by the franchisee pursuant to the motor vehicle franchise for a period of not less than five years from the effective date of the termination, cancellation or nonrenewal and shall continue to reimburse the franchisee for warranty parts and service in an amount and on terms no less favorable than those in effect prior to the termination, cancellation or nonrenewal and in accordance with section 3 of P.L.1977, c.84 (C.56:10-15).
d.The franchisor shall continue to supply the franchisee with replacement parts for any goods or services marketed by the franchisee pursuant to the motor vehicle franchise for a period of not less than five years from the effective date of the termination, cancellation or nonrenewal, at the same price and terms as the franchisor supplied them to the remaining franchisees of the franchisor, or if there are no such remaining franchisees, at a price and on terms no less favorable than those in effect prior to the termination, cancellation or nonrenewal.
e.If the franchisee continues to service motor vehicles and sell parts after the termination, cancellation or nonrenewal, as provided for in subsections c. and d. of this section, the compensation paid to the franchisee pursuant to subsection b. of this section shall be reduced to the extent, if any, of the fair market value of such rights as of the effective date of the termination, cancellation or nonrenewal.
L.1991, c.459, s.4; amended 2011, c.66, s.4.
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Last modified: October 11, 2016