"Hotel Franchisee Fairness and Market Access Act."

A5050

ASSEMBLY, No. 5050

STATE OF NEW JERSEY

222nd LEGISLATURE

�

INTRODUCED MAY 11, 2026

Sponsored by:

Assemblyman� ROBERT J. KARABINCHAK

District 18 (Middlesex)

Assemblyman� STERLEY S. STANLEY

District 18 (Middlesex)

Co-Sponsored by:

Assemblyman Spearman

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.