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The Franchise Memorandum

New Jersey Federal Court Finds Enough Basis for "Community of Interest" to Allow Case to Proceed

In Boyle v. Vanguard Car Rental USA, Inc., 2009 WL 3208310 (D.N.J. Sept. 30, 2009), the plaintiff, the owner of a car rental agency, sued Vanguard under the New Jersey Franchise Practices Act (NJFPA) for terminating the parties’ agreement without good cause and without the required 60-days’ notice. Vanguard moved to dismiss, contending that the NJFPA did not apply because the parties were not in a franchise relationship, there was no “community of interest” between the parties, and the plaintiff did not have $35,000 in gross sales with Vanguard to impute the NJFPA. The court, however, allowed limited discovery on the community of interest issue and allowed the case to move forward.

With respect to the $35,000 threshold, the court held that labor could arguably qualify as a “service,” and concluded that commissions plaintiff earned off rentals would be counted as “gross sales” under the NJFPA. As for “community of interest,” the court noted that the term has been broadly defined as a “complex of mutual and continuing advantages,” which can include “the development of customer goodwill.” The plaintiff’s investment of time and effort in furnishing customer service and developing a customer base for Vanguard was sufficient to raise factual issues about whether there was a community of interest.

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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