A New Jersey appellate court affirmed a state trial court's ruling that a terminated retailer of custom outdoor kitchens was not in a franchise relationship with a manufacturer of outdoor grills and that the New Jersey Franchise Practices Act (NJFPA) did not apply to their termination. N.A.R, Inc. v. E. Outdoor Furnishings, 2025 WL 287497 (N.J. Super. Ct. App. Div. Jan. 24, 2025). In 2010, Eastern Outdoor Furnishings, a retailer of custom outdoor kitchens, began selling grills by AMD Direct, a manufacturer of outdoor grills. Eastern Outdoor purchased the grills and other products from AMD on a wholesale distributorship basis. In 2019, AMD terminated Eastern Outdoor's wholesale distributorship in favor of a competitor. At the time of the termination, Eastern Outdoor was in possession of AMD grills that it had ordered but had not yet paid for. N.A.R., a collection agency and assignee of the purported debt, filed suit against Eastern Outdoor to collect on the amount owed. In turn, Eastern Outdoor filed a third-party complaint against AMD alleging a violation of its franchise rights under the NJFPA. AMD moved for summary judgment and sought dismissal of the third-party complaint. The trial court granted AMD summary judgment, concluding that Eastern Outdoor could not prove the existence of a "written agreement" to satisfy the first element of the NJFPA test to establish a franchise. Eastern Outdoor appealed.
The appellate court affirmed, concluding that Eastern Outdoor failed to establish a written arrangement evidencing a franchise. Eastern Outdoor argued that the NJFPA does not require an agreement or contract, and that one or multiple writings could constitute a written arrangement under the statute. The appellate court agreed that the NJFPA does not require a fully integrated and comprehensive written franchise agreement in order to create a franchise, and held that a series of documents can create a franchise if they are documents in which the franchisor has granted the franchisee "a license to use a trade name, trade mark, service mark, or related characteristics" and in which there is a "community of interest in the marketing of goods or services." Eastern Outdoor provided various documents in an attempt to demonstrate the existence of a franchise, including (i) invoices; (ii) an email describing AMD and Eastern Outdoor as "trusted partners"; (iii) AMD websites referring to Eastern Outdoor as the "point of contact, distributor, Director of Sales, or the like"; (iv) catalogs designed by AMD entitled "Summerset...by Eastern Outdoor"; and (v) a letter referencing the "distributor arrangement" between the parties. The appellate court held that although the documents reflected the history of the parties' business relationship, they did not satisfy the NJFPA's requirement of a writing in which AMD "grant[ed]...a license to [Eastern Outdoor] to use [its] trade name, trade mark, service mark, or related characteristics." Eastern Outdoor used AMD's logos and other intellectual property in selling the AMD grills as a wholesale distributor but AMD never granted Eastern Outdoor a license to do so in writing. As such, the appellate court affirmed the trial court's dismissal of Eastern Outdoor's franchise claims under the NJFPA.
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