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 .