S4750

An Act concerning motor vehicle galleries and manufacturer sales of zero emission vehicles, amending various parts of the statutory law, and repealing section 6 of P.L.2015, c.24.

Be It Enacted by the Senate and General Assembly of the State of New Jersey:

1. This act shall be known and may be cited as the “New Jersey Franchised Automobile Industry Retail (FAIR) Sales Act.”

2. R.S.39:10-2 is amended to read as follows:

39:10-2. As used in this chapter unless other meaning is clearly apparent from the language or context, or unless inconsistent with the manifest intention of the Legislature:

"Authorized signatory" means a dealer or leasing dealer and any employee, officer, director, partner, or other holder of an ownership interest in the licensed business authorized to execute documents on behalf of the dealer or leasing dealer, but shall not include any attorney-in-fact who is not an employee, officer, director, partner, or holder of an ownership interest.

"New motor vehicle" means only a newly manufactured motor vehicle, except a nonconventional type motor vehicle, and includes all such vehicles propelled otherwise than by muscular power, and motorcycles, motorized bicycles, trailers and tractors, and manufactured homes not subject to real property taxation pursuant to P.L.1983, c.400 (C.54:4-1.2 et al.), excepting such vehicles as run only upon rails or tracks and manufactured homes subject to real property taxation.

"Used motor vehicle" means every motor vehicle and motorized bicycle, except a nonconventional type motor vehicle, title to, or possession of, which has been transferred from the person who first acquired it from the manufacturer or dealer, and so used as to become what is commonly known as "secondhand" within the ordinary meaning thereof, and includes every motor vehicle and motorized bicycle other than a "new motor vehicle," a "nonconventional type motor vehicle," or a manufactured home subject to real property taxation.

"Any motor vehicle," "every motor vehicle," or similar term, means both new and used motor vehicles, except a "nonconventional type motor vehicle."

"Nonconventional type motor vehicle" means every vehicle not designed or used primarily for the transportation of persons or property and only incidentally operated or moved over a highway, including, but not limited to, ditch-digging apparatus, well-boring apparatus, road and general purpose construction and maintenance machinery, asphalt spreaders, bituminous mixers, bucket loaders, ditchers, leveling graders, finishing machines, motor graders, road rollers, scarifiers, earth-moving carryalls, scrapers, power shovels, drag lines, self-propelled cranes, earth-moving equipment, trailers and semitrailers which weigh less than 2,500 pounds, except that no mobile or manufactured home or travel trailer shall be classified as a nonconventional type motor vehicle, motorized wheelchairs, motorized lawn mowers, bogies, farm equipment having a factory shipping weight of less than 1,500 pounds, whether or not motorized, including farm tractors within said weight limitation, industrial tractors, scooters, go-carts, gas buggies and golf carts. The Chief Administrator of the New Jersey Motor Vehicle Commission shall have power to make, amend, and repeal regulations, not inconsistent with the provisions of this paragraph, prescribing what further vehicles or types of vehicles, not specified in this paragraph, shall be included in the category of nonconventional type motor vehicles.

"Motor vehicles which constitute inventory held for sale" means: new motor vehicles and used motor vehicles held for the purpose of sale by new motor vehicle dealers which can be identified by a manufacturer's vehicle identification number (VIN) and have been invoiced to, allocated to, or reserved by a new motor vehicle dealer licensed to do business in New Jersey, and such vehicle can be shipped by the manufacturer or distributor within a reasonable period of time and used motor vehicles held for the purpose of sale by new or used motor vehicle dealers which can be identified by a manufacturer's VIN and title papers or right to title is held by the used motor vehicle dealer. This term shall exclude motor vehicles held for the purpose of lease or rental by a person engaged in the motor vehicle leasing or rental business.

"Manufacturer's or importer's certificate of origin" means the original written instrument or document required to be executed and delivered by the manufacturer to [his] the manufacturer’s agent or a dealer, or a person purchasing [direct] directly from the manufacturer, certifying the origin of the vehicle.

"Certificate of ownership" means the document issued in conformance with this chapter, certifying ownership of a motor vehicle, other than manufacturer's or importer's certificate of origin.

"Assignment" means the execution of a prescribed form transferring ownership of a motor vehicle from the person named therein to the purchaser.

"Contract" means conditional sale agreement, bailment, lease, chattel mortgage, trust receipt, or any other form of security or possession agreement executed prior to January 1, 1963, wherein and whereby possession of a motor vehicle is delivered to the buyer and title therein is to vest in the buyer at a subsequent time upon the payment of part or all of the price, or upon the performance of any other condition or happening of any contingency, or upon the payment of a sum substantially equivalent to the value of the motor vehicle, by which contract it is agreed that the buyer is bound to become, or has the option of becoming, the owner of the motor vehicle upon full compliance with the terms of the contract.

"Abstract" means the duplicate copy of the original certificate of ownership recording any encumbrance or upon which the existence of a security interest is noted.

"Title papers" means any instrument or document that is evidence of ownership of a vehicle.

"Chief Administrator" means the Chief Administrator of the New Jersey Motor Vehicle Commission.

"Manufacturer" means the person who originally manufactured the motor vehicle.

"Licensee" means any person that is licensed to buy, sell or deal in, or lease motor vehicles pursuant to R.S.39:10-19.

"Established place of business" means a permanent, properly identified location within the State where the books, records, and files necessary to buy, sell, or deal in motor vehicles are kept and maintained, including, but not limited to, all documents required by R.S.39:10-6, title papers, manufacturers' or importers' certificates of origin, motor vehicle registration records, contracts, security agreements, all payroll records, including, but not limited to, IRS Form W-2 and IRS Form W-4 records, checkbooks, ledgers for business accounts and trust accounts, corporate authorities and licenses, dealer plates, ledgers listing all issued and unissued dealer assignments, and dealer plates.

"New motor vehicle dealer" means [the agent, distributor, or] an authorized dealer of [the manufacturer] a motor vehicle franchisor, as defined in section 1 of P.L.1985, c.361 (C.56:10-26), of [the] a new motor vehicle who has an established place of business. A new motor vehicle dealer shall sell a minimum of four or more new motor vehicles within a 12-month timeframe and may engage in the business of buying, selling, or dealing in used motor vehicles in this State under the provisions of this chapter.

"Used motor vehicle dealer" means a person engaged in the business of selling, buying, or dealing in four or more used motor vehicles per year at an established place of business, but who is not a licensed new motor vehicle dealer. A used motor vehicle dealer shall engage only in the business of buying, selling, or dealing in used motor vehicles in this State under the provisions of this chapter and shall not engage in the business of buying, selling, or dealing in new motor vehicles in this State.

"Person" includes natural persons, firms or copartnerships, corporations, associations, or other artificial bodies, receivers, trustees, common law or statutory assignees, executors, administrators, sheriffs, constables, marshals, or other persons in representative or official capacity, and members, officers, agents, employees, or other representatives of those hereinbefore enumerated.

"Buyer" includes purchaser, debtor, lessee, bailee, transferee, and any person buying, attempting to buy, or receiving a motor vehicle subject to a security interest, lease, bailment or transfer agreement, and their legal successors in interest.

"Seller" means manufacturer, dealer, lessor, bailor, transferor with or without a security interest, and any other person selling, attempting to sell, or delivering a motor vehicle, and their legal successors in interest.

The terms "sell," "sale," "buy," or "purchase" and any form thereof include absolute or voluntary sales and purchases, agreements to sell and purchase, bailments, leases, security agreements whereby any motor vehicles are sold and purchased, or agreed to be sold and purchased, involuntary, statutory and judicial sales, inheritance, devise, or bequest, gift or any other form or manner of sale or agreement of sale thereof, or the giving or transferring possession of a motor vehicle to a person for a permanent use; continued possession for 60 days or more is to be construed as permanent use.

"Online sale" means buying, selling, or dealing in motor vehicles in this State over the Internet using electronic means.

"Electronic" means relating to technology having electrical, digital, magnetic, optical, electromagnetic, or similar capabilities.

"Manufacturer's number" means the original manufacturer's vehicle identification number die stamped upon the body, or frame, or either or both of them, of a motor vehicle or the original manufacturer's number die stamped upon the engine or motor of a motor vehicle.

"Purchaser" means a person who takes possession of a motor vehicle by transfer of ownership, either for use or resale, except a dealer when the dealer takes possession through a certificate of origin.

"Debtor" means the person who owes payment or other performance of the obligation secured by a security interest in a motor vehicle.

"Security interest" means an interest in a motor vehicle which secures payment or other performance of an obligation.

"Security agreement" means an agreement which creates or provides for a security interest in a motor vehicle.

"Secured party" means a lender, seller, or other person in whose favor there is a security interest.

"Gross vehicle weight rating" means the value specified by the manufacturer as the loaded weight of the single or combination vehicle and, if the manufacturer has not specified a value for a towed vehicle, means the value specified for the towing vehicle plus the loaded weight of the towed unit.

"Motor vehicle gallery or studio” means an establishment that showcases, demonstrates, offers test drives of, or otherwise exhibits motor vehicles but where motor vehicles are not sold or that, on behalf of another, offers or displays motor vehicles for sale; attempts to make sales directly or indirectly; or participates in any transaction, including the brokering or auctioning of motor vehicles, that may result, or is intended to result, in the transfer of title or legal or beneficial ownership of a motor vehicle.

(cf: P.L.2026, c.63, s.1)

3. R.S.39:10-19 is amended to read as follows:

39:10-19. a. No person shall engage in the business of buying, selling, or dealing in motor vehicles in this State, nor shall a person engage in activity that would qualify the person as a leasing dealer, as defined in section 2 of P.L.1994, c.190 (C.56:12-61), unless:

(1) the person is a licensed real estate broker acting as an agent or broker in the sale of mobile homes without their own motor power other than recreation vehicles, as defined in section 3 of P.L.1990, c.103 (C.39:3-10.11), or manufactured homes, as defined in section 3 of P.L.1983, c.400 (C.54:4-1.4); or

(2) the person is authorized to do so under the provisions of this chapter [and P.L.1985, c.361 (C.56:10-26 et seq.)].

The chief administrator shall not permit a motor vehicle franchisor, as defined in section 1 of P.L.1985, c.361 (C.56:10-26), or a manufacturer through license or other agreement to operate a motor vehicle gallery or studio or any similar establishment in this State.

b. The chief administrator may, upon application in [such] the form [as] the chief administrator prescribes, license any proper person as a new motor vehicle dealer, used motor vehicle dealer, or leasing dealer. A licensed real estate broker shall be entitled to act as an agent or broker in the sale of a mobile or manufactured home, as [defined] set forth in paragraph (1) of subsection a. of this section, without obtaining a license from the chief administrator. For the purposes of this chapter, a "licensed real estate broker" means a real estate broker licensed by the New Jersey Real Estate Commission pursuant to the provisions of chapter 15 of Title 45 of the Revised Statutes. Any sale or transfer of a mobile or manufactured home, in which a licensed real estate broker acts as a broker or agent pursuant to this subsection, which sale or transfer is subject to any other requirements of R.S.39:10-1 et seq., shall comply with all of those requirements.

c. No person who has been convicted of a crime, arising out of fraud or misrepresentation in the sale, leasing, or financing of a motor vehicle, shall be eligible to receive a license pursuant to subsection b. of this section. For the purposes of this section, each applicant for a license shall submit to the chief administrator the applicant's name, address, fingerprints, and written consent for a criminal history record background check to be performed. The chief administrator is hereby authorized to exchange fingerprint data with and receive criminal history record information from the State Bureau of Identification in the Division of State Police and the Federal Bureau of Investigation, consistent with applicable State and federal laws, rules, and regulations, for purposes of facilitating determinations concerning licensure eligibility. The applicant shall bear the cost for the criminal history record background check, including all costs of administering and processing the check. The Division of State Police shall promptly notify the chief administrator in the event a current holder of a license or prospective applicant, who was the subject of a criminal history record background check pursuant to this section, is arrested for a crime or offense in this State after the date the background check was performed.

d. Each applicant for a new motor vehicle dealer license shall, at the time [such] the license is issued, have established and maintained, or by that application shall agree to establish and maintain, within 90 days after the issuance thereof, a place of business consisting of a permanent building not less than 1,000 square feet in floor space located in the State of New Jersey to be used principally for the servicing or display of motor vehicles. For the purpose of servicing motor vehicles, the applicant’s place of business shall have equipment therein as shall be requisite for the servicing of motor vehicles [in such manner as to make] so the motor vehicles comply with the laws of this State and with any rules and regulations made by the board governing the equipment, use, and operation of motor vehicles within the State. Each applicant shall have the choice to:

(1) utilize the space attached to the applicant’s place of business for the servicing of motor vehicles;

(2) utilize a separate space on the same property as the applicant’s place of business for the servicing of motor vehicles; or

(3) establish an off-site facility within the relevant market area of the applicant’s place of business, as defined by section 1 of P.L.1982, c.156 (C.56:10-16). The off-site facility shall be used solely for the servicing of motor vehicles, shall be located within the State, and shall be subject to the provisions of P.L.1982, c.156 (C.56:10-16 et seq.).

However, a leasing dealer who is not engaged in the business of buying, selling, or dealing in motor vehicles in the State shall not be required to maintain a place of business with floor space available for the servicing or display of motor vehicles or to have an exterior sign at the lessor's place of business.

e. (1) Any person who possesses a used motor vehicle dealer license at the time of enactment of P.L.2021, c.484 shall maintain an established place of business consisting of a minimum office space of 72 square feet within a permanent, enclosed building located in the State of New Jersey, in addition to complying with all other applicable regulations prescribed by the chief administrator.

(2) Each applicant for a used motor vehicle dealer license, or any licensee who relocates its place of business on or after the effective date of P.L.2021, c.484, shall meet the requirements for an established place of business for a used motor vehicle dealer, which shall be established by the chief administrator by regulation adopted pursuant to the "Administrative Procedure Act," P.L.1968, c.410 (C.52:14B-1 et seq.).

f. An established place of business of a new motor vehicle dealer or a used motor vehicle dealer shall display an exterior sign permanently affixed to the land or building, which sign is consistent with local ordinances and has letters easily readable from the major avenues of traffic. The sign shall include the dealer name or trade name, provided [such] the trade name has been previously disclosed to the chief administrator.

g. A license fee of $200 shall be paid by an applicant upon the applicant's initial application for a license. The chief administrator may renew an applicant's license upon application for renewal on a form prescribed by the chief administrator and accompanied by a renewal fee of $200. Every license shall expire 24 months from the date on which it is issued. The chief administrator may, at the chief administrator's discretion and for good cause shown, extend an applicant's license for an additional period not to exceed 12 months from the date on which it is scheduled to expire. The chief administrator may, at the chief administrator's discretion and for good cause shown, issue a license which shall expire on a date fixed by the chief administrator. The fee for licenses with an expiration date fixed by the chief administrator shall be fixed by the chief administrator in an amount proportionately less or greater than the fee established herein.

h. For the purposes of this section, a leasing dealer or an assignee of a leasing dealer whose leasing activities are limited to buying motor vehicles for the purpose of leasing them and selling motor vehicles at the termination of a lease to the lessee shall not be deemed to be engaged in the business of buying, selling, or dealing in motor vehicles in this State. However, a leasing dealer who wishes to engage in the business of buying, selling, or dealing in motor vehicles in this State by selling any vehicle at the end of the lease term to a consumer other than the lessee, shall be required to obtain a used car dealer license pursuant to this section.

(cf: P.L.2026, c.63, s.2)

4. Section 5 of P.L.1999, c.45 (C.56:10-7.4) is amended to read as follows:

5. 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] to impose unreasonable standards of performance or unreasonable facilities, financial, operating or other requirements upon a motor vehicle franchisee[.];

b. [To] 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] 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] 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] 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] 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] a 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] 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] the 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] 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] 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] 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] the 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] the interest, option, or restriction[.];

l. [To] 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] the motor vehicle franchisee to agree to [any such] the 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] the motor vehicle franchisee, to earn a reasonable return on his total investment in [such] the facility or from [such] operational modification, and the full return of his total investment in [such] the 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] 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% ] five percent 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] 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] to amend or modify the franchise of a motor vehicle franchisee, or any lease or agreement ancillary or collateral to [such] the franchise, including in connection with the renewal of a franchise, if [such] the 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] 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] 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] 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.)[.]; or

s. [To] 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] the territory or geographic area.

(cf: P.L.2015, c.24, s.2)

5. Section 1 of P.L.1985, c.361 (C.56:10-26) is amended to read as follows:

1. As used in this act:

"Consumer" means the purchaser, other than for resale, of a motor vehicle.

"Franchise" means a written arrangement for a definite or indefinite period in which a motor vehicle franchisor grants a right or license to use a trade name, trademark, service mark or related characteristics and in which there is a community of interest in the marketing of new motor vehicles at retail, by lease, agreement or otherwise.

"Motor vehicle" means and includes all vehicles propelled otherwise than by muscular power, and motorcycles, trailers and tractors, excepting: (1) those vehicles as run only upon rails or tracks, motorized bicycles, and buses, including school buses; and (2) those motor vehicles not designed or used primarily for the transportation of persons or property and only incidentally operated or moved over a highway.

"Motor vehicle franchisee" means a person to whom a franchise is granted by a motor vehicle franchisor and who or which holds a current valid motor vehicle dealer's license issued pursuant to R.S.39:10-19 and has an established place of business.

"Motor vehicle franchisor" means a person engaged in the business of manufacturing, assembling or distributing new motor vehicles, or importing into the United States new motor vehicles manufactured or assembled in a foreign country, who will under normal business conditions during the year, manufacture, assemble, distribute or import at least 10 new motor vehicles.

"New motor vehicle" means a newly manufactured motor vehicle.

"Person" means a natural person, corporation, partnership, trust, or other entity and, in the case of an entity, it shall include any other entity which has a majority interest in that entity or effectively controls that other entity as well as the individual officers, directors, and other persons in active control of the activities of each such entity.

"Place of business" means a fixed geographical location at which the motor vehicle franchisor's motor vehicles are offered for sale and sold, but shall not include an office, a warehouse, a place of storage, a residence or a vehicle.

"Zero emission vehicle" means a motor vehicle certified as a zero emission vehicle pursuant to the California Air Resources Board zero emission vehicle standards for the applicable model year, but shall not include an advanced technology partial zero emission vehicle, a partial zero emission vehicle, or a hybrid electric vehicle.

(cf: P.L.2015, c.24, s.3)

6. Section 2 of P.L.1985, c.361 (C.56:10-27) is amended to read as follows:

2. a. [Except as provided pursuant to section 6 of P.L.2015, c.24 (C.56:10-27.1), it] (1) It shall be a violation of [this act] P.L.1985, c.361 (C.56:10-26 et seq.), for any motor vehicle franchisor, directly or indirectly, through any officer, agent, employee, broker, or any shareholder of the franchisor, except a shareholder of one percent or less of the outstanding shares of any class of securities of a franchisor which is a publicly traded corporation, or other person, to offer to sell or sell motor vehicles to a consumer, other than an employee of the franchisor, except through a motor vehicle franchisee.

(2) It shall be a violation of P.L.1985, c.361 (C.56:10-26 et seq.), for a motor vehicle franchisor to directly or indirectly, through an officer, agent, employee, broker, or any shareholder of a franchisor or business, establish a motor vehicle gallery or studio or any similar establishment in this State.

b. Subsection a. of this section shall not be construed to prohibit the leasing or assigning of vehicles by a franchisor to its employees or to employees of an affiliate or subsidiary of the franchisor. [Such] Any leased or assigned vehicles shall be titled and registered with the New Jersey Motor Vehicle Commission and shall therefore be eligible to receive a standard issue license plate. A franchisor may elect to title and register the vehicles with the New Jersey Motor Vehicle Commission or to designate a third party approved by the New Jersey Motor Vehicle Commission to do so on behalf of the franchisor.

c. A franchisor that has its headquarters in this State may assign, or otherwise lend for use and operation, vehicles to individuals or entities for promotional, testing, marketing, or product familiarity purposes. Any [such] assigned or loaned vehicle that is titled, registered, and insured in the name of the franchisor or its affiliate or subsidiary and shall therefore be eligible to receive a standard issue license plate up to an aggregate of 50 vehicles at any given time for [such] the plate. A franchisor may elect to title and register the vehicles with the New Jersey Motor Vehicle Commission or to designate a third party approved by the New Jersey Motor Vehicle Commission to do so on its behalf.

d. A franchisor that has its headquarters in this State may perform service, including, but not limited to, warranty, routine, and recall maintenance, on vehicles leased or assigned pursuant to this section, including ordering parts, components, accessories, or any other item needed for the servicing of [such] motor vehicles. Except as otherwise provided in this section, this subsection shall not be construed to permit a franchisor to perform retail service on motor vehicles sold, leased, or assigned to a consumer by a franchisee or another franchisor.

[Such] A franchisor shall operate [such servicing] services and the servicing facility with the equipment installed therein as shall be requisite for the servicing of motor vehicles in a manner as to make them comply with the laws of this State and with any rules and regulations governing the equipment, use, and operation of motor vehicles within the State. However, [such] a franchisor shall not be required to comply with the provisions of R.S.39:10-19 requiring the maintaining of a place of business with a permanent building of not less than 1,000 square feet in floor space to be used principally for the servicing and display of motor vehicles or to have an exterior sign at the franchisor’s servicing facility.

e. Nothing in P.L. , c. (C. ) (pending before the Legislature as this bill) shall be construed to restrict the right of a motor vehicle franchisor who exclusively manufacturers zero emission vehicles; was authorized to buy from and directly sell, offer to sell, or deal to a consumer zero emission vehicles pursuant to P.L.2015, c.24; and was licensed pursuant to R.S.39:10-19 from maintaining a retail facility that was established before the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill) for the servicing, including warranty servicing, of zero emission vehicles sold, offered for sale, or otherwise distributed in this State as long as the retail facility is not also operated as a motor vehicle gallery or studio.

(cf: P.L.2025, c.176, s.1)

7. Section 3 of P.L.1985, c.361 (C.56:10-28) is amended to read as follows:

3. [Except as provided pursuant to section 6 of P.L.2015, c.24 (C.56:10-27.1), it] It shall be a violation of this act for a motor vehicle franchisor, directly or indirectly, through any officer, agent, employee, broker or any shareholder of the franchisor, except a shareholder of [1%] one percent or less of the outstanding shares of any class of securities of a franchisor which is a publicly traded corporation, or other person, to own or operate a place of business as a motor vehicle franchisee, except that this section shall not prohibit the ownership or operation of a place of business by a motor vehicle franchisor for a period, not to exceed 24 consecutive months, during the transition from one motor vehicle franchisee to another; or the investment in a motor vehicle franchisee by a motor vehicle franchisor if the investment is for the sole purpose of enabling a partner or shareholder in that motor vehicle franchisee to acquire an interest in that motor vehicle franchisee and that partner or shareholder is not otherwise employed by or associated with the motor vehicle franchisor and would not otherwise have the requisite capital investment funds to invest in the motor vehicle franchisee, and has the right to purchase the entire equity interest of the motor vehicle franchisor in the motor vehicle franchisee within a reasonable period of time not to exceed 10 years.

(cf: P.L.2015, c.24, s.5)

8. Section 6 of P.L.2015, c.24 (C.56:10-27.1) is repealed.

9. (New section) Notwithstanding the repeal of section 6 of P.L.2015, c.24 (C.56:10-27.1) and any other law, rule, or regulation to the contrary, a motor vehicle franchisor who exclusively manufacturers zero emission vehicles; was authorized to buy from and directly sell, offer to sell, or deal to a consumer zero emission vehicles pursuant to P.L.2015, c.24; and was licensed pursuant to R.S.39:10-19 shall comply with the provisions of, and any rules and regulations adopted pursuant to, P.L.1985, c.361 (C.56:10-26 et seq.), within two years of the effective date of P.L. , c. (C. ) (pending before the Legislature as this bill).

10. This act shall take effect immediately.

STATEMENT

This bill, the “New Jersey Franchised Automobile Industry Retail (FAIR) Sales Act,” repeals the law that allows a manufacturer of zero emission vehicles, including Tesla, to directly buy zero emission vehicles from or sell zero emission vehicles to a consumer. A motor vehicle manufacturer is generally prohibited from selling motor vehicles to a consumer unless the sale is made through a franchisee. However, current statutory law allows a franchisor that exclusively manufactures zero emission vehicles, and meets other criteria, to sell motor vehicles directly to consumers. Under this bill, a manufacturer of zero emission vehicles has two years from the effective date of the bill to begin buying and selling motor vehicles through a franchisee like all other manufacturers in the State.

The bill also prohibits a motor vehicle franchisor from operating a motor vehicle gallery or studio and the Chief Administrator of the New Jersey Motor Vehicle Commission in the Department of Transportation from permitting the operation of a motor vehicle gallery or studio through license or other agreement. Under the bill, “motor vehicle gallery or studio” means an establishment that showcases, demonstrates, offers test drives of, or otherwise exhibits motor vehicles but where motor vehicles are not sold or that, on behalf of another, offers or displays motor vehicles for sale; attempts to make sales directly or indirectly; or participates in any transaction, including the brokering or auctioning of motor vehicles, that may result, or is intended to result, in the transfer of title or legal or beneficial ownership of a motor vehicle.

Under the bill, a motor vehicle franchisor currently operating a retail facility for the servicing of zero emission vehicles sold in this State is permitted to continue operating the retail facility as long as the facility is not also operated as a motor vehicle gallery or studio.

It is the sponsor’s understanding that this bill requires each motor vehicle manufacturer to operate pursuant to the same rules, which were designed to promote competition, protect consumers, and ensure consumers have access to qualified repair facilities for warranty repairs, recall services, and safety fixes.