Key Points

• Franchise auto dealerships have greater flexibility under the new law, which passed unanimously and 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.

On  July 30, 2026, 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 law (A4050/S1423) passed both the New Jersey Senate and Assembly unanimously on June 30, 2026, and takes effect immediately.

In our prior alert, we broke down in detail how this legislation expands the options for franchised new car dealers in terms of how they structure their service operations.

With the bill now signed, here is what dealers should focus on.

Practical Next Steps

Review Pending License Applications
The law 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 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. Dealers in other states should watch how this law is implemented, as it may serve as a model for similar reforms elsewhere.

For more information, contact Seth L. Dobbs at sdobbs@foxrothschild.com or any member of Fox Rothschild’s Automotive Practice Group.

This information is intended to inform firm clients and friends about legal developments, including the decisions of courts and administrative bodies. Nothing in this alert should be construed as legal advice or a legal opinion. Readers should not act upon the information contained in this alert without seeking the advice of legal counsel. Views expressed are those of the author(s) and not necessarily this law firm or its clients. Prior results do not guarantee a similar outcome.