The New Jersey Appellate Division recently held that insurance agents were not considered “franchises” under the New Jersey Franchise Practices Act (Mario DeLuca v. Allstate New Jersey Insurance Company (Superior Court of New Jersey, Appellate Division No. A-2724-11T4 (2014)).
The Plaintiff insurance agents were independent insurance agents for Allstate. The court noted that “relationship between Allstate and plaintiffs did not constitute a franchise under the Act because there was no “community of interest” and plaintiffs did not maintain a “place of business” as those terms are used under the Act.”
Under the Act, a franchisee must maintain a fixed geographical location to offer or sell the franchisor’s goods or services in order to establish a “place of business” under the New Jersey Franchise Practices Act (the “NJFPA”). In concluding that the plaintiff’s did not maintain a “place of business,” the court reasoned that the plaintiffs were merely agents and not insurers, authorized to sell insurance in the State of New Jersey. Since the plaintiff agents were not permitted to sell the insurance product themselves, they could not meet the “place of business” requirement under the NJFPA.