Formula Business Restriction — Jersey City, NJ

In May 2015, Jersey City’s City Council passed an ordinance restricting formula businesses in the downtown area. The ordinance limits formula businesses to a maximum of 30 percent of ground floor commercial area on any single lot in sections of the downtown area. The restriction applies to retailers, restaurants, bars, and banks, though there is an exception for grocery stores.

In the ordinance, the council notes that it is taking action “in order to preserve Downtown’s distinctive sense of place and unique neighborhood character.” Jersey City is the second most-populous city in the state of New Jersey, with more than 260,000 residents. The City Council voted to uphold the restrictions in June 2017.

Excerpts from Jersey City, NJ Ordinance No. 15.052 [PDF], which defines a formula business, and amends Jersey City Land Development Ordinance, Article 1 — Section 345-6:

“Whereas, City Council has determined that formula businesses that are easily recognized as offering the same merchandise or menu items and having the same branding and styling as many other locations throughout the region and therefore may detract from established community character and instill a sense of sameness to our commercial areas causing neighborhoods to feel less unique; and

“Whereas, downtown Jersey City supports a great variety of small, unique local businesses while most national chains have been located within enclosed shopping malls, strip shopping centers, or along the waterfront. The Jersey City Municipal Council has determined that this pattern of retail development remain in order to preserve Downtown’s distinctive sense of place and unique neighborhood character;”

Formula Business:

A type of business establishment that is contractually obligated to maintain two or more standardized characteristics such as: array of merchandise, menu items, facade design, decor, color scheme, uniform apparel, signage, trademark, or servicemark; and where 10 or more other establishments that are similarly contractually obligated to the same corporate entity are in operation within 300 miles of Jersey City.

  1. Standardized array of merchandise and menu items shall be defined as 50% or more of items from a single distributor bearing uniform markings.
  2. Trademark or Servicemark shall be defined as a word, phrase, symbol or design, or a combination of words, phrases, symbols or designs that identifies and distinguishes the source of the goods or service from one party from those of others.
  3. Decor shall be defined as the style of interior furnishings, which may include but is not limited to, style of furniture, wall coverings or permanent fixtures.
  4. Color Scheme shall be defined as selection of colors used throughout, such as on the furnishings, permanent fixtures, and wall coverings, or as used on the facade.
  5. Uniform Apparel shall be defined as standardized items of clothing including but not limited to standardized aprons, pants, shirts, smocks or dresses, hats, and pins (other than name tags) as well as standardized colors of clothing.

Excerpts from Jersey City, NJ Ordinance No. 15.053, which amends the Jersey City Land Development Ordinance:

“All commercial retail areas within each structure or within a single tax lot shall limit formula business establishments, as defined by the Land Development Ordinance, to a maximum of 30% of ground floor gross leasable commercial area. For the purposes of this area restriction, the formula business definition shall apply to the following uses, whether functioning as a principal or accessory use:

  1. Retail sales of goods and services.
  2. Restaurants, all categories.
  3. Bars.
  4. Financial service facilities and banks.

Grocery stores greater than 15,000 square feet may exceed 30% of gross leasable commercial area, but shall be the only formula business within such structure or lot.”

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Olivia LaVecchia

Olivia LaVecchia is a former senior researcher with ILSR’s Independent Business Initiative. Her work focused on building awareness and support for public policy tools that strengthen locally owned businesses and check concentrated economic power.