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Bill

S 2920

Concerns hospitality franchise agreements.

2026-2027 Regular Session Introduced by Vin Gopal and 1 co-sponsor

Extends New Jersey consumer fraud protections to hospitality franchises, banning post-termination restrictions, undisclosed fees, supplier controls, and unilateral term changes.

Withdrawn from Consideration
0
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Bill Summary · S 2920

Summary of Bill S 2920 (Session 222) — New Jersey

Purpose and intent

  • Establishes additional protections under the New Jersey Franchise Practices Act (FPA) specifically for hospitality franchises.
  • Defines hospitality franchises as those involving a license to use a hotel/lodging-related trade name, mark, or characteristic, with a shared marketing interest in goods or services, and with accommodations provided for pay.
  • Applies to franchises where the franchisee operates a place of business in New Jersey, or where a New Jersey-resident owner/investor/guarantor is involved and at least 20% of gross sales come from the New Jersey franchise.
  • Treats hospitality franchises as “merchandise” under the New Jersey Consumer Fraud Act, broadening potential protections and enforcement.

Key provisions and prohibitions

The bill lists numerous acts by hospitality franchisors that would be unlawful as violations of the Franchise Practices Act. Major provisions include:

  • Employment restrictions after termination

    • Prohibits imposing restrictions on franchisee owners, officers, or employees that limit employment or participation in any business outside the location for more than six months after termination, cancellation, or non-renewal, outside the county where the franchise is located.

  • Relocation and capital investment limits

    • Prohibits requiring relocation or capital investments over $25,000 more than once every five years unless the franchisor can show the investment will be recouped over the remaining term of the agreement.

  • Kickbacks and undisclosed benefits

    • Prohibits the franchisor or affiliates from receiving rebates, kickbacks, or other consideration from vendors unless fully disclosed to the franchisee and promptly turned over to the franchisee.

  • Renewal/transfer releases

    • Prohibits requiring a franchisee to sign a broad release of liability as a condition for renewal or transfer unless there is a reciprocal general release from the franchisor.

  • Supplier restrictions

    • Prohibits enforcing purchase of goods/services exclusively from franchisor-designated suppliers if equivalent quality alternatives exist.
    • Requires the franchisor to license its trademarks to third-party suppliers meeting reasonable standards; protects the use of marks by qualified suppliers.
    • Prohibits the franchisor from competing with the franchisee within an exclusive or protected territory under a different name/mark.

  • Unilateral changes to terms

    • Prohibits material changes to franchise terms via unilateral changes to operations manuals or communications.

  • New or undisclosed fees

    • Prohibits imposing fees not disclosed in the franchise disclosure document (FDD) without the franchisee’s written consent.

  • Fees tied to guest reviews or complaints

    • Prohibits fees associated with guest reviews, failure to enroll guests in loyalty programs, or costs related to the franchisor resolving guest complaints (except refunds to guests that may be charged back to the franchisee).

  • Loyalty program implications

    • Prohibits selling loyalty points/credits to guests for stay at a specific franchisee without compensating the franchisee for the stay at the franchisee’s lowest advertised rate or the value of the points, whichever is less.

  • Access to franchisor services

    • Prohibits suspending or restricting access to essential franchisor services (property management systems, online listings, phone sales, use of marks, etc.) necessary for the franchisee’s operations.

  • Performance-related penalties

    • Prohibits imposing costs/charges/penalties for alleged non-performance (e.g., reinspection, loyalty program fees, rate parity fees, retraining, etc.) not clearly provided for or disclosed.

Affected parties

  • Hospitality franchisors and entities owned or controlled by them.
  • Franchisees of hospitality franchises operating in New Jersey (including owners, partners, members, investors, or guarantors).
  • Vendors/suppliers that provide goods/services to hospitality franchisees.
  • Guests and customers indirectly affected through changes to loyalty programs and guest-related charges.

Timeline and effects

  • Effective date: Immediate upon enactment.
  • Applicability: Applies to franchise agreements entered into, modified, amended, or renewed after the effective date.
  • Clarifies that violations of these provisions or section 7 of the existing Franchise Practices Act do not constitute good cause for termination of a franchise.

Practical impact

  • Strengthens protections for hospitality franchisees against post-termination employment restrictions, forced relocations, excessive capital investments, undisclosed fees, and supplier restrictions.
  • Increases transparency around financial benefits to franchisors from vendors and guest-related charges.
  • Aims to preserve franchisee profitability and autonomy within protected New Jersey markets, while maintaining franchisor rights to reasonable standards and brand integrity.
  • If enacted, enforcement could involve the New Jersey Attorney General and consumer protection authorities, given the act’s expansion of the consumer fraud framework to hospitality franchises.

Status

  • Introduced in the Senate and referred to the Senate Commerce Committee (January 13, 2026).
  • Action history shows the bill was withdrawn from consideration on June 22, 2026.

Note: The bill was sponsored with co-sponsors Vin Gopal and Raj Mukherji.

Compiled from official sources — confirm details with the bill’s official record.

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