124 N.J. NING in any New Jersey financial institu- 130 NJ. 324 _ydINSTRUCTIONAL SYSTEMS, INC, a ‘Corporation of the State of New Jersey, Plaintiff-Appellant and Cross-Respon- dent, COMPUTER CURRICULUM CORPORA- TION, a Corporation of the State of Delaware, Defendant-Respondent and Cross-Appellant. Supreme Court of New Jersey. Argued May 4, 1992. Decided Oct. 19, 1992. Exclusive distributor of computerized educationaHlearningy system brought suit under New Jersey Franchise Practices Act alleging that producer imposed unreason- able standards of performance after pro- ducer failed to renew contract for entire region. ‘The Superior Court, Chancery Di- vision, Passaic County, issued declaratory judgment ruling that’ earlier agreement constituted franchise under Act. Producer appealed. ‘The Superior Court, Appellate Division, 248 N.JSuper. 58, 578 A.2d 876, reversed. On certification, the Supreme Court, O’Hern, J., held that: (1) contractual relationship between producer and distribu- tor was “franchise” under Act, and (2) com- ‘munity of interest existed under Act to establish a franchise. Reversed. D’Annunzio, J.A-D. (temporarily as- signed), dissented and filed opinion in which Clifford, J., joined. ysl. Contracts €129(1) Contractual choice of law provisions will generally be upheld if provision does not violate state's public poliey. 614 ATLANTIC REPORTER, 2d SERIES 2, Trade Regulation €871.2 New Jersey Franchise Practices Act applied to dispute concerning termination of agreement between producer of compu terized educational-learning system in its exclusive regional distributor because of overriding interest in fair treatment of state's franchisees, even though choice of law provision of agreement provided that California law governed, where franchi- see's principal place of business was in ‘New Jersey, New Jersey had strong policy in favor of protecting its franchisees, New Jersey had significant contacts with trans- action in that franchise-specifie invest- ‘ments related to assets in New Jersey and goodwill developed by New Jersey resi- dents. NJS.A. 56:10-1 to 56:10-18. 3. Contracts 29 Proposition that existence of franchise {is question of law to be decided by court applies only when entire relationship be- ‘tween parties may be deduced from their written arrangements. =, 4, Trade Regulation 6871 New Jersey Franchise Practices Act applies if performance of franchisee’sactv- ites either contemplates or requires New Jersey place of business. N.IS.A. 56:10- 40), 5, Trade Regulation 871 Franchise relationship between produc- ex of computerized educational-Jearning system and its exclusive regional distribu- tor “contemplated” that distributor would have “fixed business location” in state, as required for New Jersey Franchise Practi- es Act to apply, since distributor had its marketing facility in New Jersey for nearly 20 years, distributor constructed its facility 0 that franchisor’s products could be dis- played and jyademonstrated to prospective customers, and distributor used its market ing facilities to conduct produet demonstra- tions, NJIS.A. 56:10-8, subd. f, 5610-4(1). See publication Words and Phrases for ether judiial constructions and definitions. 6. Trade Regulation 871 Regional distributor of computerized educationalearning system satisfyingINSTRUCTIONAL SYSTEMS v. CCC Ned 125 ‘liens 614 Ad 124 ONS. 1992) “place of business” requirement needed for ‘New Jersey Franchise Practices Act to ap- ply since distributor established marketing facility in New Jersey where its customers could inspect product and receive sales demonstration of product's operation. NJS.A. 56:10-8, subd. f. See publication Words and Phrases for other judicial constructions and definitions, 1. Trade Regulation 2871 jcense” under New Jersey Franchise Practices Act means that alleged franchi- ‘see must. use name of franchisor in sueh manner as to create reasonable belief on part of consuming public that there is eon- nection between licensor and licensee by which licensor vouches for activity of lieen- see, NJS.A. 56:10-8, subd. a. definitions 8, Trade Regulation 871 Exclusive regional distributor for com- puterized educationablearning system was ““jeensed” under New Jersey Franchise Practices Act where distributorship was ex- clusive, training of customers on produc- er's products occurred through distributor, and any purchaser could have reasonably perceived special relationship between dis- teibutor and producer. NJS.A. 56:10-8, subd. 2, 9, Trade Regulation 871 “Community of interest” between ex: clusive regional distributor and producer of ‘computerized educationallearning system justified application of New Jersey Fran- ‘chise Practices Act sinee distributor made franchise-specific investments, distributor had no alternative lines of product, and interdependence made distributor vuinera- ble to producer's opportunistic behavior. NJS.A. 5610-48). _Lyrl0. Trade Regulation €=871 Developing goodwill for product is generally not enough to create “community of interest” needed for New Jersey Fran- chise Practices Act to apply. NISA. 56:10-40). 11. Trade Regulation ¢=871 New Jersey Franchise Practices Act had extraterritorial reach to franchise ac tivities by exclusive distributor of compu- terized educational-learning system for out- of-state producer since distributor Lad built base of customers over 20-year pe-iod and termination of franchise arranzements could allow franchisor unconseiorably to take advantage of franchisee’s long years of effort. NULS.A. 56:10-5, Peter N. Perretti, Jr, Morristown, for plaintiff-appellant and " eross-respondent, (Riker, Danzig, Scherer, Hyland & Perretti, Morristown, and Dunn, Pashman, Sponailli, Swick & Finnerty, Hackensack, atcorneys; David W. Garland, Jeanne M. Bratsafolis, Morristown, Robert E. Rochford, Warren S. Robins, Joseph Dunn, Hackensack, Anne M. Patterson, and Jeffrey J. Miler, Morris- town, on the briefs). Jay Greenfield, New York City, 2 mem- ber of the New York bar, for de’endant- respondent and crossappellant (WeCarter and English, Newark, attorneys, Mr. Greenfield, New York City, Andrew . Ber- zy, Teresa L. Moore, Rosanne C. Kemmet, Newark, Debra Ann Livingston, a member of the New York bar, and Michael E. Ger- ber, New York City, a member of the New ‘York bar, of counsel; Ms. Moore, Newark, ‘Ms. Livingston, and Mr. Gerber, New York City, on the briefs). Michael J, Ferrara, Hackensack, submit- ted a brief on behalf of amicus curiae Fair Franchising Coalition (Greenberg, Ferrara, Covitz, Turitz, Harraka & Goldbens, Hack: ensack, attorneys; Jere W. Glover, Wash- ington, D.C, a member of the District of Columbia bar, of counsel). ‘The opinion of the Court was cetivered by O'HERN, J. ‘This appeal requires us to adapt legisla- tion enacted over twenty years ag on the ‘model of franchise stereotypes, stich as a fast-food outlet, an automobile dealership, ‘or a gasoline service station, to the rapidly- evolving complexities of the computeris in-126 N. dustry and its various distribution chan- nels. We hold that the contractual rela- tionship between the producer of a compu- terized educational-learning system and its exclusive regional distributor, a business incorporated in New Jersey, sustains a finding of a “franchise” within the mean- ing of the New Jersey Franchise Practices Act, N.J.S.A. 56:10-1 to ~15 (the Act). ‘The ‘Appellate Division held that the relation- ship between the producer and the New ‘Jersey entity did not constitute a franchise because the producer had not granted the New Jersey entity a “license to use” its trade name or trademark within the mean- ing of the Act. N.J.S.A. 56:10-8a. Howev- er, the contract documents expressly eon- ferred on the New Jersey entity both the right to use the producer's “name, trade- mark and logo in its advertising, exhibits, trade shows, publie relations materials and manuals,” and the duty to use its “best efforts” to promote the producer's prod- ucts. Although our second determination wolves a much closer question, we hold that the evidence sustains the finding of a “community of interest” required under the Act to establish a franchise. N.LS.A. 56:10-Ba. We thus reverse the judgment of the Appellate Division, I-BACKGROUND A. Facts and Procedural History For purposes of this appeal, we adopt generally the procedural history and the facts of the case as set forth in the brief of defendant, Computer Curriculum Corpora- tion (C00), OCC is a Delaware corporation headquar- tered in Palo Alto, California. Tt produces and markets an integrated learning system that uses computer technology to teach and monitor a students progress in such sub- jects as mathematics, reading, language skills, and computerseience "education. From 1974 to 1989, plaintiff, Instructional Systems, Inc. (SI), a New Jersey corp tion with its primary place of business in New Jersey, has served as the exclusive distributor of produets sold by COC in the Northeast. ISI has done so pursuant to a series of written contracts negotiated be- ‘tween the principals of the two companies. 1yn0n July 12, 1984, CCC and ISI entered ito the contract at issue, entitled “Reseller 614 ATLANTIC REPORTER, 24 SERIES Agreement.” Under that contract, COC appointed IST as the exclusive “reseller” of, CCC products to certain categories of cus tomers in Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, ‘New Jersey, New York, Rhode Island, Ver- mont, and Washington D.C. The contract provided that the agreement “shall * * * continue in effect until July 81, 1989.” In the fall of 1988, ISI proposed that ‘OCC extend the 1984 Reseller Agreement for one more year. COC declined to do so. CCC believed that IST was spending a dis- proportionate amount of its efforts selling in three states—New Jersey, New York, and Massachusetts—and was practically ig. noring the rest of its sales territory. From 1985 to 1967, ISTs sles outside those three states accounted for only eleven percent of its total sales, notwithstanding the fact that thirty percent of the student popula- tion in IST's territory resided there. In two states, Vermont and New Hampshire, IST made ‘no sales during that period.” In Maine, ISI made no sales in either 1986 or 1987. In the District of Columbia, one of the principal population conters in ISI’ tor ritory, ISI's sales for the 1985-1987 time period were less than one percent of ISI's total revenues. ‘When CCC approached ISI about its al- legedly poor sales performance in those states, ISI claimed that its only obligation was to meet certain territory-wide sale quo- tas. In CCC's view, IST had told CCC “that it was none of CCC's business” within which territory ISI concentrated its sale efforts, Instead of allowing the 1984 Reseller Agreement to lapse when it expired, COC offered ISI a new two-year contrat for the three states in which ISI had its major sales activity—New Jersey, New York, and Massachusetts. OCC decided to take over the marketing of its products in the former ISI territory. Following lengthy discus- sions, ISI and CCC entered into a new contract on January 30, 1989, On August 1, 1989, CCC began to distribute its prod- ucts in the former ISI territory. ISI con- tinues to sell CCC produets in New Jersey, New York, and Massachusetts.