January 24, 2025|Articles/Op-eds

N.A.R., Inc. v. Eastern Outdoor Furnishings: New Jersey Court Clarifies Distribution Is Not a Franchise Without a Trademark License

January 24, 2025 | Superior Court of New Jersey, Appellate Division | Published Opinion

Executive Summary
In a published opinion, Judge Sabatino of the New Jersey Appellate Division affirmed dismissal of a franchise claim under the New Jersey Franchise Practices Act (“NJFPA”) brought by Eastern Outdoor Furnishings against AMD Direct, Inc., the manufacturer of Summerset Professional Grills. Eastern Outdoor alleged that its distributorship was a franchise protected under the NJFPA. The trial court granted summary judgment for AMD, reasoning that there was no “written agreement” establishing a franchise. On appeal, the court clarified that the statute requires a “written arrangement,” not necessarily a formal contract, but still found that the documents offered by Eastern Outdoor failed to show that AMD granted a written license to use its marks. The court held that the relationship reflected a wholesale distribution model, not a franchise. While affirming summary judgment on the NJFPA claims, the panel remanded unresolved tortious interference and indemnification claims to the trial court.

Relevant Background
Eastern Outdoor Furnishings, also known as JC Partners LLC, is a New Jersey-based retailer of custom outdoor kitchens, including appliances. Beginning in 2010, Eastern Outdoor allegedly began purchasing grills manufactured by AMD Direct, Inc., doing business as Summerset Professional Grills. According to Eastern Outdoor, it displayed Summerset grills in its Totowa showroom and marketed them alongside its other outdoor kitchen products. Eastern Outdoor also allegedly collaborated with AMD in the development of new grill lines, and certain AMD marketing materials identified Eastern Outdoor as a distributor. By 2018, Eastern Outdoor allegedly generated between $600,000 and $700,000 in sales of AMD products, representing a significant portion of its $3.3 million in annual revenue.

Despite this relationship, AMD allegedly maintained at least one other distributor of Summerset products in New Jersey. AMD executives also allegedly expressed dissatisfaction with Eastern Outdoor’s sales performance relative to other distributors. Jeffrey Straubel, AMD’s chief executive officer, testified that Eastern Outdoor had struggled for years to match competitors’ sales volume.

In March 2019, AMD allegedly terminated Eastern Outdoor’s status as a wholesale distributor and shifted to a competitor. Eastern Outdoor contended that AMD justified the termination by asserting that Eastern Outdoor was not sufficiently focused on Summerset grills and devoted more attention to outdoor furniture and kitchen systems. At the time of termination, Eastern Outdoor allegedly held inventory of AMD grills that it had ordered but not yet paid for. Eastern Outdoor further alleged that AMD promised to repurchase this inventory but failed to do so.

N.A.R., Inc., a collection agency acting as assignee of the purported debt, sued Eastern Outdoor in the Superior Court, Law Division, to collect on the unpaid invoices. Eastern Outdoor, in turn, filed a third-party complaint against AMD alleging that the termination violated its rights under the NJFPA, N.J.S.A. 56:10-1 to -15. Eastern Outdoor also alleged claims for tortious interference with prospective business relations and common-law indemnification. The original collection action between N.A.R. and Eastern Outdoor was settled, leaving only the third-party claims to proceed.

Discovery allegedly included deposition testimony, production of invoices, emails, and marketing materials. Eastern Outdoor argued that these materials showed a written arrangement amounting to a franchise under the NJFPA. Specifically, Eastern Outdoor relied on: a 2009 email from Straubel describing the companies as “trusted partners in this endeavor,” invoices for product sales, AMD-owned websites listing Eastern Outdoor as a distributor or point of contact, catalogs identifying “Summerset … by Eastern Outdoor,” and a letter referencing the parties’ “distributor arrangement.” AMD countered that these documents reflected nothing more than a wholesale distribution relationship.

The Law Division granted summary judgment to AMD on March 27, 2023, holding that Eastern Outdoor could not prove the existence of a “written agreement” establishing a franchise. The court dismissed the NJFPA claim, barred Eastern Outdoor’s expert as moot, and denied later motions for reconsideration. Eastern Outdoor appealed, arguing that the NJFPA required only a “written arrangement,” not a formal agreement, and that the trial court erred by dismissing its tortious interference and indemnification claims without analysis.

Decision
The Appellate Division affirmed dismissal of Eastern Outdoor’s NJFPA claims but corrected the trial court’s analysis. The Law Division had held that no “written agreement” existed between the parties, and thus the NJFPA did not apply. On appeal, Judge Sabatino clarified that the statute requires a “written arrangement,” which is broader than a formal, integrated contract. N.J. Stat. Ann. § 56:10-3(a).

As the panel explained, “The NJFPA’s use of the term ‘written arrangement’… conveys that a fully integrated and comprehensive written franchise agreement does not have to be executed to create a franchise. Instead, a series of documents can suffice, provided they are documents in which the franchisor has granted the franchisee a license to use a trade name, trade mark, service mark, or related characteristics.” N.A.R., Inc. v. E. Outdoor Furnishings, 480 N.J. Super. 553, 561, 329 A.3d 1116, 1121 (App. Div. 2025).

However, the Appellate Division found that Eastern Outdoor’s documents did not meet this standard. Eastern Outdoor had pointed to invoices, AMD-owned websites identifying it as a distributor, catalogs labeled “Summerset … by Eastern Outdoor,” and a 2009 email in which AMD’s CEO described the parties as “trusted partners in this endeavor.” The panel rejected this evidence, reasoning that “although these documents reflect the history of the parties’ business relationship… they do not satisfy the NJFPA’s requirement of a writing in which AMD ‘grant[ed]… a license.’” Id. at 563, 329 A.3d at 1122.

The court emphasized that the NJFPA requires more than a supply relationship. Citing earlier precedent, it stated: “A distribution agreement or relationship is insufficient to establish a franchise under the NJFPA.” Finlay & Assocs., Inc. v. Borg-Warner Corp., 146 N.J. Super. 210, 219, 369 A.2d 541, 546 (Law Div. 1976), aff’d, 155 N.J. Super. 331, 382 A.2d 933 (App. Div. 1978). In Finlay, the Law Division rejected a claim that distribution plus advertising materials created a franchise, holding that “mere furnishing of advertising materials” does not constitute a license under the statute. Id. at 219, 369 A.2d at 546. By comparison, the panel in N.A.R. found that AMD allegedly never exercised control over Eastern Outdoor’s operations, never accessed its financials, and maintained at least one other distributor in New Jersey. These facts underscored that no franchise relationship existed. N.A.R., 480 N.J. Super. at 564, 329 A.3d at 1123.

The Appellate Division also noted that the “community of interest” element, often a focal point in NJFPA litigation, could be assumed arguendo but would not save Eastern Outdoor’s claim absent proof of a written license grant. Id. at 563, 329 A.3d at 1122. In other words, even if sales dependence and business integration were present, they were insufficient without a qualifying writing.

Finally, while affirming dismissal of the NJFPA claims, the panel remanded for adjudication of Eastern Outdoor’s non-statutory claims. The trial court had disposed of tortious interference and indemnification without analysis, contrary to N.J. Ct. R. 1:7-4’s requirement that a judge explain the basis for rulings. The panel held: “The court was required to issue a statement of reasons explaining why it dismissed those claims.” N.A.R., 480 N.J. Super. at 565, 329 A.3d at 1124. A successor judge was directed to consider those issues on remand.

Looking Forward
For franchisors and manufacturers, this decision underscores that distribution relationships, even when lengthy and profitable, are not automatically franchises under the NJFPA. Courts require clear evidence of a written grant of trademark rights, not just evidence of product supply, marketing cooperation, or informal expressions of partnership.

The opinion also highlights the importance of precision in drafting. While the statute allows for a “written arrangement” consisting of multiple documents, at least one writing must expressly grant a license. Invoices, emails, or catalogs that mention branding or identify a reseller as a distributor are not enough. Franchisors and manufacturers should make clear in distributor agreements that no franchise rights are created and that the relationship is limited to wholesale supply.

The court’s reasoning also reinforces the role of control in distinguishing franchises from distribution. A franchise generally requires significant oversight, shared business risk, and interdependence. In contrast, AMD allegedly exercised no control over Eastern Outdoor’s marketing or operations, did not review its financials, and had other New Jersey distributors. Those facts supported the conclusion that the relationship remained purely distributive.

The case further shows that litigation risks extend beyond franchise statutes. Even after prevailing on the NJFPA claims, AMD must return to the trial court to defend against tortious interference and indemnification allegations. Franchisors and manufacturers should recognize that misclassification disputes may spawn parallel tort theories, creating additional costs and uncertainty.

Ultimately, this decision illustrates the value of clarity. By documenting relationships carefully, using agreements that explicitly disclaim franchise rights, and avoiding ambiguous licensing language in marketing materials, franchisors and suppliers can minimize the risk that distributorships are later recast as franchises.


This article is based solely on the opinion of the Court in this matter. The author has not conducted any independent investigation into the facts. For the avoidance of doubt, each statement related to the law and facts in this article is drawn from the Court’s opinion in this case.

Thomas O’Connell is a Shareholder at Buchalter APC and Chair of the firm’s Franchise Practice Group. For questions about this article or media inquiries, you can contact Tom at toconnell@buchalter.com.

This communication is not intended to create or constitute, nor does it create or constitute, an attorney-client or any other legal relationship. No statement in this communication constitutes legal advice nor should any communication herein be construed, relied upon, or interpreted as legal advice. This communication is for general information purposes only regarding recent legal developments of interest, and is not a substitute for legal counsel on any subject matter. No reader should act or refrain from acting on the basis of any information included herein without seeking appropriate legal advice on the particular facts and circumstances affecting that reader. For more information, visit www.buchalter.com.

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