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Bill

S 4202

"Hotel Franchisee Fairness and Market Access Act."

2026-2027 Regular Session Introduced by Tony Bucco and 2 co-sponsors

The act strengthens hotel franchisee protections by ensuring fair sourcing, full disclosure of vendor rebates, protected territories, fair loyalty program compensation, and limits

Reported from Senate Committee, 2nd Reading
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Bill Summary · S 4202

Overview

  • Bill: S 4202 (New Jersey)
  • Session: 222nd Legislature
  • Introduced: May 11, 2026
  • Sponsors: Sen. Raj Mukherji (Hudson), Sen. Tony Bucco (Morris and Passaic)
  • Co-Sponsor: Sen. Britnee Timberlake
  • Title: Hotel Franchisee Fairness and Market Access Act
  • Status: Reported from Senate Committee (2nd Reading) on June 8, 2026

Purpose and Intent

The bill creates the Hotel Franchisee Fairness and Market Access Act to promote fairness, transparency, and market access in the hotel franchising system. It recognizes that hotel franchisees make substantial capital investments and contribute significantly to employment, tourism, and state tax revenues. The act aims to curb coercive practices, improve disclosure around vendor relationships, protect franchisee rights to list on third-party platforms, and prevent unreasonable restrictions that affect a franchisee’s profitability and operations while preserving core brand standards related to health, safety, and consumer protection.

Key Provisions and Changes

  • Purchase Requirements and Sourcing (Section 4)

    • Franchisors may not require franchisees to purchase goods or services unrelated to the guest experience as a condition of entry, renewal, extension, or continuation of the franchise agreement without prior written consent.
    • Franchisees may choose non-guest facing suppliers, provided goods/services meet reasonable operational standards.
    • Penalties, fees, termination, or non-renewal cannot be imposed solely because a franchisee declines such non-guest purchases.

  • Vendor Rebates/Disclosures (Section 5)

    • Franchisors must fully disclose any rebate, commission, or fee received from vendors based on franchisee purchases.
    • Amounts attributable to a franchisee must be returned via itemized adjustments to franchise fees or direct payment within 60 days.
    • Disclosures must be made annually and retained for at least five years.

  • Protected Territory (Section 6)

    • Franchisors cannot authorize hotels of the same brand/chain scale within a protected territory without written consent or reasonable compensation.
    • If no protected territory is specified in the agreement, a default 5-mile radius applies unless a court determines otherwise.

  • Loyalty Program and Guest Compensation (Section 7)

    • Franchisees must be compensated for guest stays booked using loyalty points.
    • Compensation must be at least the lower of the lowest publicly available room rate for the dates or the loyalty program’s published redemption value.
    • Franchisors cannot punish franchisees for not enrolling guests in a loyalty program.

  • Material Changes and Health/Safety Exceptions (Section 8)

    • Franchisors may not impose material changes to franchise agreements through manuals, policies, or standards without franchisee consent, except changes directly related to health or safety.
    • Health/safety exceptions must be documented in writing with justification.

  • Material Capital Expenditures (Section 9)

    • Franchisors cannot require substantial capital expenditures unless: 1) the expense is reasonably necessary to protect health, safety, sanitation, or legal compliance; or 2) the franchisor provides a written analysis showing the expenditure will likely allow cost recovery and a positive net return within the remaining term or a reasonable amortization period.
    • Burden of proof lies with the franchisor; splitting projects into phases cannot evade this requirement.
    • Defines material capital expenditure as one that materially affects profitability, cash flow, or financing.

  • Third-Party Lodging Platforms (Section 10)

    • Franchisors cannot prohibit or retaliate against listing or selling guest rooms on legitimate third-party platforms (OTAs, metasearch, etc.).
    • Prohibited actions include fees/penalties for listings, reducing brand benefits, threats of termination, or using policies to restrict lawful distribution.
    • Narrow, non-discriminatory restrictions may be allowed to prevent fraud, protect trademarks, or comply with law.
    • Any restriction that materially impairs listing on legitimate platforms is a violation.

  • Post-Term Restrictions (Section 11)

    • Prohibits post-term restrictions longer than six months on franchisees or owners/employees from engaging in lawful business activities after termination, with exceptions to protect trademarks, confidential information, trade secrets, or customer relationships.

  • Enforceability and Disclosure (Section 12)

    • Provisions attempting to waive rights under the act are void.
    • Franchise agreements must conspicuously disclose franchisee rights under the act.

  • Enforcement and Remedies (Section 13)

    • Franchisees may file civil actions in Superior Court for injunctive relief, damages, and attorney’s fees; statewide enforcement by the Attorney General is authorized.
    • Exercise of rights under the act does not constitute good cause for termination or non-renewal.

  • Effective Date (Section 14)

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

Who/What Is Affected

  • Affects hotel franchisors operating in New Jersey under brand/chain franchise agreements.
  • Affects current and prospective hotel franchisees (owners/operators) entering into or renewing franchise agreements after enactment.
  • Impacts relationships involving vendor rebates/fees, loyalty programs, protected territories, third-party platforms, capital expenditure decisions, and post-term restrictions.

Procedural and Timeline Aspects

  • Effective date: 90 days after enactment.
  • Application: Applies to agreements entered into, renewed, extended, or materially amended after the effective date.
  • Enforcement: Civil actions available in Superior Court; potential State enforcement by the Attorney General.

Potential Impact (Summary)

  • Increases transparency around vendor relationships and rebates.
  • Strengthens franchisee negotiating leverage on sourcing, territory, and contract changes.
  • Provides explicit protections for franchisees against coercive or anti-competitive practices, particularly related to loyalty programs and third-party distribution.
  • Establishes standards for material capital expenditures and requires cost recovery analyses.
  • Safeguards franchisees from post-term non-compete-like restrictions beyond six months.
  • Creates a statutory framework for remedies and consumer protections while preserving health and safety standards.

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

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