Acquisition fraud vs. error in franchise forecasting
Who has to prove that the franchisor’s forecast is unsound? In principle, this is the franchisee. If the franchisee invokes the Acquisition Fraud Act, the burden of proof may be reversed. In that case, the franchisor, and therefore not the franchisee, will have to prove that the prognosis issued was not misleading.
The Amsterdam Court of Appeal ruled that the reversal of the burden of proof under the Acquisition Fraude Act does not also apply to an appeal by the franchisee on the basis of error. See Amsterdam Court of Appeal 16 January 2018, ECLI:NL:GHAMS:2018:123. In the first instance, the franchisee had only invoked error to no avail. See District Court of Noord-Holland 27 February 2017, ECLI:NL:RBNHO:2017:1590.
If there is a mistake, there does not have to be an unlawful act on the part of the franchisor. In error, the franchisee claims that he entered into the franchise agreement in the event of a misrepresentation. It is important that the franchisor is involved in the occurrence of that mistake or misunderstanding. A wrongful act occurs when an error has been committed. Acting by the franchisor in violation of the Acquisition Fraud Act constitutes an unlawful act.
A franchisee who believes that the prognosis presented is unsound, should think carefully about how to approach this.
mr. AW Dolphijn – franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl .
Other messages
A recurring problem in operation: Forecasts not achieved
A recurring problem in operation: Forecasts not achieved
Franchisee sentenced to pay fine after violation of non-competition clause
The parties have entered into a franchise agreement which relates to assisting divorces. The franchise agreement is terminated by the franchisee.
Non-competition clause unreasonably onerous
Non-competition clause unreasonably onerous
Ludwig & Van Dam main sponsor partner National Franchise Congress 4 October 2012
The world goes on. And it seems to be getting faster and faster. It took 130,000 years before we invented the steam engine around 1750.
Failure to provide the data underlying the forecasts will justify dissolution
Failure to provide information on which the forecasts are based is possible
Non-competition clause in the franchise agreement should not be lightly brushed aside due to (alleged) incorrect forecasting and non-performance and/or reasonableness and fairness
The Court of Appeal of 's-Hertogenbosch recently ruled on the question whether a franchisee is