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IFA submitted formal comments this week urging New Jersey lawmakers to reject A5708, a bill that would impose a sweeping ban on non-compete agreements — including those affecting franchise owners.
Why It Matters: The bill’s broad definition of “senior executives” risks sweeping in franchisee principals, undermining contract certainty and enabling departing owners to immediately open competing businesses — a “free-rider” problem that threatens local franchisees who play by the rules.
Dig Deeper: The letter warns that trade-secret laws alone can’t protect brand systems, territory integrity, or the operational know-how franchisees gain through franchisor training. Without clear post-term protections, systems face costly litigation and destabilized markets — and growth could slow if franchise agreements lose enforceability.
What’s Next: The Assembly Labor Committee will take up A5708 at tomorrow’s hearing, where IFA will continue pushing for amendments that distinguish franchise ownership from employment and preserve long-standing protections for local small-business investors.
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