The New Jersey Franchise Reform Law And The AAHOA’s Support

The Thirty members of the Asian American Hotel Owners Association attended a hearing on March 22nd when the committee passed the New Jersey Assembly Bill 1958. At the NJ Assembly Commerce and Economic Development Committee hearing, several members of the AAHOA testified. They supported the Bill, which proposes changing the NJ Franchise Practices Act.

The support of the AAHOA for certain parts of the bill centers on the division between two major hotel companies and AAHOA over franchise reform. The association mentioned that its members own 45.4 percent of New Jersey hotels, equal to 46.24 rooms. Furthermore, speaking to attorney Jonathan N. Barber of  Franchise Law can help grant more intel on the topic.

What the Franchise Reform Changes Entail

The franchise reform changes proposed by the committee and supported by the AAHOA entail several things. First, they include the restriction of non-competes for more than six months. Second, it includes prohibiting the requirement for a location or capital investment above $25,000 more than once in five years. The number can only go higher if hotel franchisers can establish an ROI. Additionally, the proposed Bill requires that a franchiser who gets any rebate, commission, service, kickback, or anything of value must disclose them to the franchisee. More than disclosing them, they should turn them over to the franchisee. Furthermore, the changes proposed restrictions on the mandatory sourcing of goods or resources. Finally, they prohibit suspending, restricting, and preventing access to franchise services.

All Those in Favor

Choice Hotels International recently paused its relationship with the AAHOA while citing its support for the Bill and its 12 points. Other companies that have publicly endorsed the 12 points include the G6 Hospitality, Red Roof, and BWH Hotel Group. A significant number of major hotel franchises are assisting in paving the way for fair and free franchising. In the modern age, franchising is becoming a very common trend, and people are opting for it as a viable entrepreneurial option.

The goal is franchising free from arbitrary and undisclosed fees, anti-competitive procurement rules, and one-sided terms and conditions. New Jersey is home to thousands of dynamic entrepreneurs and can be an example of supporting profitable franchising practices. The market is overflowing with such entrepreneurs who are looking for new opportunities.

More so, there is a strong show of support from the local members of the AAHOA concerning the Bill’s most vital principles. The AAHOA vice chairman, Bharat Patel, appreciated the New Jersey Assembly members for understanding their concerns and implementing the changes identified.

All Those Not in Favor

The American Hotel & Lodging Association’s head, does not support the new Bill, calling for unity instead. Chip Rogers, the AHLA president, hopes for a solution to the impasse between supporters of the Bill and its opposers. According to Rogers, the hospitality industry is at its best when all its stakeholders and members are united. Franchising makes this possible, as entrepreneurs can, to some extent, personalize their user’s experiences.

He maintains that a division is bad for everyone, hoping everyone can work together and become stronger. He clarifies that he does not support the New Jersey bill as it is written, stating different issues. He says it is not properly written, and a section of the Bill prevents franchisors from enforcing any brand standard.

Conclusion

The New Jersey ACEDC proposed the NJ Assembly Bill 1958, which could benefit the hospital industry. Several members of the AAHOA testified their agreement with and support for the Bill, which proposes changes to the NJ Franchise Practices Act. However, while several major franchises show their support, some are still against it. He believes everyone in the industry should work together, making them stronger.

While there is a division of opinions among major hotel franchises, the goal of unity within the hospitality industry remains essential for its overall growth and success.