Bill Text: NJ S4202 | 2026-2027 | Regular Session | Introduced
Bill Title: "Hotel Franchisee Fairness and Market Access Act."
Sponsorship: Partisan Bill (Democrat 2)
Status: (Introduced) 2026-06-08 - Reported from Senate Committee, 2nd Reading [S4202 Detail]
Download: New_Jersey-2026-S4202-Introduced.html
Sponsored by:
Senator RAJ MUKHERJI
District 32 (Hudson)
SYNOPSIS
"Hotel Franchisee Fairness and Market Access Act."
CURRENT VERSION OF TEXT
As introduced.
An Act concerning hotel franchisees and supplementing P.L.1971, c.356 (C.56:10-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. This act shall be known as and may be cited as the "Hotel Franchisee Fairness and Market Access Act."
2. The Legislature finds and declares that:
a. Hotel franchisees make substantial capital investments and contribute significantly to employment, tourism, and tax revenues in the State of New Jersey.
b. Certain hotel franchising practices may impose unreasonable costs, risks, or operational constraints on franchisees, including coercive purchasing requirements; lack of transparency in vendor rebates; uncompensated loyalty program redemptions; unilateral material changes to franchise agreements; territorial encroachment; and restrictions on lawful distribution channels.
c. It is in the public interest to ensure fairness, transparency, and market access in hotel franchising while preserving legitimate brand standards related to health, safety, and consumer protection.
3. As used in this act:
"Franchise agreement" means any written contract, including amendments, renewals, and extensions, governing the franchise relationship between hotel franchisor and franchisee.
"Franchisee" means any person or entity that operates a hotel pursuant to a franchise agreement with a hotel franchisor.
"Guest experience" means services, amenities, and conditions directly experienced by hotel guests, including lodging, safety, cleanliness, and guest-facing brand standards.
"Hotel franchisor" means any person or entity that grants a franchise to operate a hotel under a brand, trademark, trade name, or service mark.
"Legitimate third-party lodging platform" means a lawfully operating online travel agency, marketplace, metasearch service, channel manager, or similar platform that employs commercially reasonable consumer protection and fraud prevention practices.
"Loyalty program" means any guest rewards program operated or controlled by a hotel franchisor.
"Material change" means any modification that materially alters a franchisee's financial obligations, operational requirements, or contractual rights.
"Protected territory" means the geographic area in which a franchisee is granted exclusive rights to operate a hotel of a particular brand or chain sale.
"Rebate, commission, or fee" means any payment, discount, credit, or other financial benefit received by a hotel franchisor from a vendor arising from franchisee purchases.
"Vendor" means any person or entity that provides goods or services to a franchisee pursuant to a franchise agreement or at the direction of a hotel franchisor.
4. a. A hotel franchisor shall not require a franchisee to purchase goods or services that are not directly related to the guest experience as a condition of entering into, renewing, extending, or continuing a franchise agreement, unless the franchisee provides prior written consent.
b. A franchisee may choose the source of its non-guest facing goods or services, provided that the goods and services meet reasonable, operational standards.
c. A hotel franchisor shall not impose penalties, fees, termination, or non-renewal for a franchisee's refusal to purchase goods or services prohibited under this section.
5. a. A hotel franchisor shall fully disclose to franchisees any rebate, commission, or fee received from vendors based on franchisee purchases.
b. Any amounts attributable to a franchisee shall be returned through an itemized reduction in franchise fees or direct payment within 60 days.
c. Required disclosures shall be provided annually and maintained for no less than five years.
6. a. A hotel franchisor shall not authorize a hotel of the same brand or chain scale within a franchisee's protected territory without written consent or reasonable compensation.
b. If a franchise agreement does not specify a protected territory, a default radius of five miles shall apply unless otherwise determined by a court.
7. a. A franchisee shall be compensated for guest stays booked using points from a loyalty program.
b. Compensation shall be no less than the lowest publicly available room rate for the applicable room and dates or the published redemption value, whichever is greater.
c. A hotel franchisor shall not penalize a franchisee for failing to enroll guests in a loyalty program.
8. a. A hotel franchisor shall not impose a material change to a franchise agreement through manuals, policies, or standards without franchisee consent, except where directly related to health or safety.
b. Any health or safety exception shall be documented in writing with supporting justification.
9. a. A hotel franchisor shall not require or attempt to require a franchisee to undertake a material capital expenditure, renovation, improvement, equipment replacement, or relocation unless:
(1) the expenditure is reasonably necessary to protect public health, safety, sanitation, or compliance with applicable federal, State, or local law; or
(2) the hotel franchisor provides the franchisee with a written analysis, based on reasonable and supportable assumptions, demonstrating that the expenditure is reasonably expected to enable the franchisee to recover the cost of the expenditure and realize a positive net return within the remaining term of the franchise agreement or within a commercially reasonable amortization period, whichever is shorter.
b. For purposes of this section, a material capital expenditure includes any required expenditure that materially affects the franchisee's profitability, cash flow, or financing obligations.
c. The written analysis shall include:
(1) the nature and purpose of the expenditure;
(2) the estimated total cost to the franchisee;
(3) the principal assumptions supporting the projected return; and
(4) any reimbursement, fee credit, financing assistance, or extension of term offered by the hotel franchisor in connection with the expenditure.
d. In any dispute under this section, the hotel franchisor shall bear the burden of showing that the required expenditure complies with this section.
e. A hotel franchisor shall not avoid the requirements of this section by dividing a single capital project into multiple phases or directives.
10. a. A hotel franchisor shall not prohibit, restrict, penalize, or retaliate against a franchisee for listing or selling guest rooms through a legitimate third-party lodging platform.
b. Prohibited conduct includes, but is not limited to:
(1) imposing fees, penalties, or chargebacks due to listings;
(2) reducing brand benefits, system access, or marketing support;
(3) threatening termination or non-renewal; or
(4) using manuals, policies, or technical controls to indirectly restrict lawful distribution.
c. A hotel franchisor may impose narrowly tailored, non-discriminatory requirements solely to prevent consumer fraud, protect lawful trademark usage, or comply with applicable law.
d. Any restriction that has the purpose or effect of materially impairing a franchisee's ability to list rooms on legitimate third-party platforms shall be deemed a violation of this section.
11. A hotel franchisor shall not impose or enforce any post-term restriction on the franchisee, or on any owner; officer; director; member; manager; partner; or employee of the franchisee, that prohibits or materially restricts the person, for more than six months after termination, cancellation, or non-renewal of the franchise agreement, from owning; operating; being employed by; providing services to; or participating in any lawful business or commercial activity; provided, however, that nothing in this section shall prohibit reasonable restrictions protecting trademarks, confidential information, trade secrets, or customer relationships.
12. a. Any contractual provisions purporting to waive rights under this act shall be void and unenforceable.
b. A franchise agreement shall conspicuously disclose franchisee rights under this act.
13. a. A franchisee aggrieved by a violation of this act may bring a civil action in the Superior Court for appropriate relief including, injunctive relief, damages, and reasonable attorneys' fees and costs.
b. A franchisee's exercise of rights under this act shall not constitute good cause for termination or non-renewal.
c. The Attorney General may enforce the provisions of this act on behalf of the State. The Superior Court shall have jurisdiction over a State action brought pursuant to this act.
14. This act shall take effect on the 90th day after enactment and shall apply to franchise agreements that are entered into, renewed, extended, or materially amended after the date of enactment.
STATEMENT
This bill establishes the "Hotel Franchisee Fairness and Market Access Act." Specifically, the bill aims to establish a more fair and transparent relationship between a hotel franchisor and a franchisee.
In the bill, a hotel franchisor cannot require a franchisee to purchase goods or services that are not directly related to the guest experience as a condition of entering into, renewing, extending, or continuing a franchise agreement, unless the franchisee provides prior written consent. A franchisee may also choose the source of non-guest facing goods or services, provided that the goods and services meet reasonable, operational standards. A hotel franchisor is not to impose penalties, fees, termination, or non-renewal for a franchisee's refusal to purchase goods or services.
Additionally, a hotel franchisor is to fully disclose to franchisees any rebate, commission, or fee received from vendors based on franchisee purchases. Any amounts attributable to a franchisee are to be returned through an itemized reduction in franchise fees or direct payment within 60 days. The required disclosures are to be provided annually and maintained for no less than five years.
Under the bill, a hotel franchisor is not to authorize a hotel of the same brand or chain scale within a franchisee's protected territory without written consent or reasonable compensation. Additionally, a franchisee is to be compensated for guest stays booked using loyalty points. The compensation is to be no less than the lowest publicly available room rate for the applicable room and dates or the published redemption value, whichever is greater. A hotel franchisor is also not impose a material change to a franchise agreement through manuals, policies, or standards without franchisee consent, except where directly related to health or safety. Moreover, a hotel franchisor cannot require or attempt to require a franchisee to undertake a material capital expenditure, renovation, improvement, equipment replacement, or relocation unless certain circumstances arise.
A hotel franchisor also cannot, under the bill, (1) prohibit, restrict, penalize, or retaliate against a franchisee for listing or selling guest rooms through a legitimate third-party lodging platform; or (2) impose or enforce any post-term restriction on the franchisee, or on any owner; officer; director; member; manager; partner; or employee of the franchisee, that prohibits or materially restricts the person, for more than six months after termination, cancellation, or non-renewal of the franchise agreement, from owning; operating; being employed by; providing services to; or participating in any lawful business or commercial activity.
Lastly, a franchisee may bring a civil action for violations of the bill and seek injunctive relief, damages, attorneys' fees, and costs. The Attorney General may enforce the provisions of the bill on behalf of the State.
