New Jersey Distributor Not Considered a Franchise

A federal district court in New Jersey ruled that an exclusive distribution arrangement did not qualify as a franchise relationship under the New Jersey Franchise Practices Act (“NJFPA”) because it did not include a license to use the manufacturer’s trademark or trade name. Therefore, the court ruled that the manufacturer’s termination of the distributor did not violate the NJFPA.

Under New Jersey law, a franchise relationship may exist where a party uses another’s trade name in such a manner as to create a reasonable belief among the public that there is a connection between the trade name licensor and the licensee by which the licensor vouches for the licensee’s activity.  Here, although the distributor alleged facts suggesting that the public recognized a symbiotic relationship between the manufacturer and the distributor, the court held that the mere fact that the distributor had an exclusive arrangement with the manufacturer, or that the manufacturer allowed the distributor to use its trademarks in some circumstances, did not itself create a license.

McPeak v. S-L Distribution Co., Inc., CV No. 12-00348, D. N.J. (December 19, 2012).

Leave a Reply

Share via
Copy link
Powered by Social Snap