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Bill

A 5050

"Hotel Franchisee Fairness and Market Access Act."

2026-2027 Regular Session Introduced by Robert Karabinchak and 1 co-sponsor

Strengthens hotel franchisee fairness by limiting coercive purchasing, widening sourcing choices, guaranteeing vendor rebate disclosures, and protecting territorial rights.

Introduced, Referred to Assembly Commerce and Economic Development Committee
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WeVote Research Nonpartisan
Bill Summary · A 5050

Summary of Assembly Bill A-5050 (2026, New Jersey)

Purpose and intent

  • Establishes the Hotel Franchisee Fairness and Market Access Act to improve fairness, transparency, and market access in hotel franchising.
  • Seeks to reduce costly or coercive franchise practices while preserving brand health, safety, and consumer protection standards.

Key definitions (used throughout the bill)

  • Franchisor: entity granting the hotel franchise.
  • Franchisee: entity operating a hotel under a franchise.
  • Franchise agreement: written contract governing the franchisor-franchisee relationship (including amendments, renewals, extensions).
  • Guest experience: services and standards directly experienced by guests (e.g., lodging, safety, cleanliness).
  • Protected territory: geographic area where a franchisee has exclusive brand rights.
  • Rebate/fee: monetary benefits to the franchisor tied to franchisee purchases.
  • Vendor: supplier providing goods/services to a franchisee or via the franchisor.
  • Material change: a modification that materially alters financial obligations, operational requirements, or rights.
  • Legitimate third-party lodging platforms: legal OTAs or similar platforms with consumer protections.

Major provisions and prohibitions

1) Purchases and sourcing
- Franchisor cannot require a franchisee to buy non-guest-facing goods/services as a condition of entering, renewing, extending, or continuing a franchise agreement, unless the franchisee gives prior written consent.
- Franchisee may choose the source of non-guest-facing goods/services, provided they meet reasonable standards.
- Franchisor cannot penalize, fine, terminate, or not renew a franchise due to a franchisee’s refusal to purchase such goods/services.

2) Disclosure of financial incentives from vendors
- Franchisor must fully disclose any rebate, commission, or fee received from vendors related to franchisee purchases.
- Any amounts attributable to a franchisee must be returned via an itemized reduction in franchise fees or direct payment within 60 days.
- Disclosures must be provided annually and kept for at least five years.

3) Territory protections
- Franchisor cannot authorize another hotel of the same brand/scale within a franchisee’s protected territory without consent or reasonable compensation.
- If a protected territory is not defined in the franchise agreement, a default radius of five miles applies unless a court determines otherwise.

4) Loyalty program guest stays
- Franchisee must be compensated for guest stays booked using loyalty program points.
- Compensation must be at least the lower of: (a) the lowest publicly available room rate for the specific room and dates, or (b) the loyalty program’s published redemption value.
- Franchisors cannot penalize a franchisee for not enrolling guests in a loyalty program.

5) Material changes to franchise agreements
- Franchisor cannot impose material changes via manuals, policies, or standards without franchisee consent, except to address health or safety.
- Health and safety exceptions must be documented in writing with justification.

6) Material capital expenditures and improvements
- Franchisor cannot require a material capital expenditure unless:
- the expenditure is necessary to protect health, safety, sanitation, or compliance with law; or
- the franchisor provides a written analysis showing the investment is reasonably expected to yield a positive net return within the remaining term or a reasonable amortization period.
- A “material capital expenditure” is one that significantly affects profitability, cash flow, or financing.
- The analysis must include purpose, total cost, key assumptions, and any available reimbursement/financing/term-extension options.
- Franchisor bears the burden of proving compliance; breaking up a project into phases cannot circumvent these requirements.

7) Third-party listing and distribution
- Franchisor cannot prohibit or retaliate against listing/selling guest rooms on legitimate third-party platforms.
- Prohibited actions include imposing fees or chargebacks for listings, reducing brand benefits, threatening termination/non-renewal, or using policies to indirectly restrict lawful distribution.
- Narrow, non-discriminatory restrictions may exist to prevent fraud, protect trademark usage, or comply with law.
- Any restriction aimed at impairing a franchisee’s ability to list rooms on legitimate platforms is a violation.

8) Post-term restrictions
- Franchisor cannot impose post-term restrictions lasting more than six months after termination/non-renewal on owners, employees, or affiliates from engaging in lawful business activities, with exceptions to protect trademarks, confidential information, or customer relationships.

9) Waiver and disclosure requirements
- Waivers of rights under the act are void and unenforceable.
- Franchise agreements must conspicuously disclose rights under the act.

Enforcement and remedies

  • Civil action: Franchisees may sue in Superior Court for injunctive relief, damages, and reasonable attorneys’ fees and costs.
  • Good-cause termination: Exercising rights under the act is not considered good cause for termination or non-renewal.
  • State enforcement: Attorney General may enforce the act on behalf of the State.
  • Jurisdiction: State courts have authority over these actions.

Effective date and applicability

  • Effective 90 days after enactment.
  • Applies to franchise agreements entered into, renewed, extended, or materially amended after enactment.

Potential impact

  • Strengthens protections for hotel franchisees against coercive purchasing, opaque vendor rebates, and aggressive post-term restrictions.
  • Improves transparency around vendor relationships and financial incentives received by franchisors.
  • Enhances franchisee control over supplier sourcing, loyalty program economics, and territorial rights.
  • Provides a clear framework for dispute resolution and state-level enforcement.

This bill would primarily affect hotel franchisors and their franchisees in New Jersey, with implications for vendors, loyalty programs, and third-party distribution platforms.

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

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