On July 30, Gov. Mikie Sherrill signed into law new legislation that gives franchised new car dealers significantly more flexibility in where and how they operate their service facilities — including the ability to establish off-site service locations within the dealer’s relevant market area.
The common-sense law (A4050/S1423) passed both the New Jersey State Senate and General Assembly unanimously and took effect immediately.
Here are three key points of the law:
Franchise auto dealerships have greater flexibility: The law, which passed unanimously, takes effect immediately;
Dealers with pending license applications should act now: The law applies retroactively to all initial and renewal applications, including those in pending administrative proceedings;
Off-site and separate-building service facilities are officially permitted: Dealers can now locate service operations in a separate building on the same property or at an off-site location within their relevant market area.
This is a significant development for franchised new car dealers across New Jersey. This legislation expands the options for dealers in terms of how they structure their service operations.
Simply put, this law isn’t just good news for dealers — it’s good news for New Jersey consumers and the broader economy. More service locations mean greater convenience and shorter wait times for customers who need their vehicles serviced. And by removing barriers to service facility expansion, we’re likely to see new construction, more automotive jobs, and increased tax revenue across the state.
For a market where real estate constraints have long limited dealer growth, this opens the door to meaningful economic development in communities throughout New Jersey.
Here are the main provisions of the law:
It separates servicing from display: Under current law, a new motor vehicle dealer’s place of business must be used for both the servicing and display of motor vehicles. This bill changes “and” to “or” — meaning your dealership facility can now be used principally for servicing or display. That single word makes a real difference in how dealers can configure their operations.
It creates flexibility for service facility locations: The bill gives dealers three options for where they maintain their service operations:
- Utilize space attached to the dealer’s established place of business (the traditional model)
- Utilize a separate space on the same property as the dealership
- Establish an off-site service facility within the dealer’s relevant market area (RMA).
For a state as densely populated as New Jersey, where real estate is scarce and expensive, this flexibility is a game-changer. Dealers who have been constrained by space limitations now have real options for structuring their service operations.
It applies immediately — including pending applications: The bill doesn’t just apply to future license applications. It applies to all initial and renewal new motor vehicle dealer license applications, including those currently subject to a pending administrative proceeding before the Chief Administrator, the Office of Administrative Law, or on appeal. If you have a pending application that has been held up over service facility issues, this law may provide immediate relief.
It updates key definitions: The bill modernizes the definition of “new motor vehicle dealer” to mean an authorized dealer of a motor vehicle franchisor — a newly defined term — rather than the outdated “agent, distributor, or authorized dealer of the manufacturer.” This better reflects the modern franchise relationship.
Here are practical next steps for dealers:
Review pending license applications: If you have an application that has been held up over service facility issues, this law may provide immediate relief. Contact your legal counsel to evaluate whether the new provisions change the posture of your pending matter.
Evaluate your facility strategy: Dealers constrained by space limitations now have real options. Whether you are considering a separate service building on your existing property or an off-site facility within your relevant market area, now is the time to begin evaluating locations, lease arrangements, and any applicable zoning requirements.
Watch for regulatory guidance: While the law is effective immediately, dealers should monitor for any guidance or rulemaking from the New Jersey Motor Vehicle Commission regarding implementation — particularly around off-site facility approvals and the temporary licensing pathway.
Consider the national landscape: New Jersey is not the only state where facility-flexibility issues are being debated.
One last thought:
Dealers in other states should watch how this law is implemented, as it may serve as a model for similar reforms elsewhere.
Seth Dobbs is a partner at Fox Rothschild, where he serves as the chair of its automotive practice. He is based in Princeton.
