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COURT WATCH

By ALM Staff | Law Journal Newsletters |
September 16, 2003

New Jersey Consumer Fraud Act Applies to the Acquisition of a Franchise

The Appellate Division of the Superior Court of New Jersey has recently held that the New Jersey Consumer Fraud Act (the 'Act') applied to the acquisition of a franchise from a franchisor that acquired its franchisees from general advertising over the Internet. Kavky v. Herbal Life International of America, _____ N.J. Super _____, 2003 WL 1918411 (A.D. 2003).

Steven Kavky became an Herbal Life distributor in January 2000 after he responded to Herbal Life's Internet advertisement. Herbal Life used general advertising over the Internet to solicit distributors for a variety of products that it sells in the United States. Its offer was to make anyone a distributor in return for $85 and to provide 'pre-paid retail internet customers' at $8.50 per customer.

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