New Jersey Supreme Court Limits Standing Under Franchise Practices Act

In a unanimous decision, the New Jersey Supreme Court ruled that only individual franchisees — not trade associations — have standing to sue franchisors under the state’s Franchise Practices Act (FPA) according to a recent article on Wolters Kluwer’s VitalLaw website. The decision reverses an appellate court’s earlier finding that the New Jersey Coalition of Automotive Retailers (NJCAR) could pursue claims on behalf of its members against Ford Motor Co.

The dispute centered around Ford’s Lincoln Commitment Program, which NJCAR alleged violated the FPA’s prohibition on differential allowance, credit or bonus pricing. NJCAR, a nonprofit trade association representing more than 500 dealerships, including 18 Lincoln franchisees, claimed the program created an uneven playing field. However, the Supreme Court concluded that the FPA’s language is clear — only “any franchisee may bring an action against its franchisor” (N.J.S.A. 56:10-10). Because NJCAR is not itself a franchisee, the association was deemed to lack standing.

The ruling reinstates a trial court’s summary judgment in favor of Ford, which had been overturned by the Appellate Division. The appellate court had previously cited liberal standing principles and allowed NJCAR to proceed under a three-part test for associational standing. However, the Supreme Court determined that, based on the FPA's deliberate choice of language, any cause of action must remain strictly between franchisor and franchisee.

Impact on Franchisees and the Industry

This ruling could have a major ripple effect on franchisees and associations throughout New Jersey. Smaller franchisees can no longer rely on the collective bargaining power provided by trade associations and will now have to file lawsuits individually. This costly and time-consuming process may discourage legal action altogether.

For franchisors, the decision provides clarity and limits exposure to broad, association-driven litigation. That said, the ruling may invite legislative scrutiny, as policymakers consider whether the FPA needs updates to account for collective representation in today’s franchise landscape.

The case, New Jersey Coalition of Automotive Retailers Inc. v. Ford Motor Co., No. 089378 (D.N.J. July 29, 2025), underscores the importance of statutory interpretation in franchise law — and the challenges franchisees face when relying on collective advocacy in disputes.

Read the original article here.

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