Article De Nationale Franchisegids: “The interim termination of the franchise agreement” – August 12, 2019 – mr. JAJ Devilee

By mr. J.A.J. DevileePublished On: 23-08-2019Categories: Franchise Knowledge Center / National Franchise and Formula Letter Publications

How can the early termination of a franchise agreement be properly designed?

A franchise agreement can end prematurely in many ways. For example, parties can decide by mutual consent to part ways and jointly make further agreements about this. Often, however, it is one of the parties that is not at all waiting for an interim farewell. In such a case may, for example, include dissolution or cancellation of the franchising agreement. In the event of (extrajudicial) dissolution of the franchise agreement usually becomes the franchise agreement effective immediately terminated and upon termination of the franchise agreement, a certain notice period must be observed.

The District Court of Gelderland recently considered a termination issue between a franchisor and a franchisee. The issue was how the franchise agreement had ended prematurely. At some point, problems arose in the collaboration and the parties held talks to end the collaboration. Initially, the parties talked about termination by mutual consent, but later also about dissolution and cancellation. The franchisee then informed its customers of her departure from the franchise organization and the franchisor disconnected the franchisee from the franchise organization’s digital work system a few days later. With this state of affairs, the franchisor will then start summary proceedings in March 2019. Briefly, the franchisee claims from the franchisee, among other things, the return of a number of business items such as a laptop and (damage) compensation. It therefore appears from the franchisor’s claim that he assumes that the cooperation with the franchisee has now ended.

However, the court begins in its judgment with it assessing the termination of the franchise agreement. The court has first contemplated that there is no termination by mutual consent occurred, as the parties have not reached agreement on the (core) conditions on which the collaboration would be terminated. In the context of the court considers that the extrajudicial dissolution does not exist of such serious failure on the part of the franchisee that would justify dissolution of the franchise agreement. Therefore considering the court that the franchise agreement has not been legally dissolved by the franchisor. With regard to the termination, the court considers that there is has been validly canceled by the franchisor and that the contractual notice period expires. This entails that the franchisor is the must enable the franchisee until June 1, 2019 to make the agreed to perform work during the period that the notice period is still valid continues. This means that the franchisor does not (yet) have access to should have denied the digital work system. Basically, the franchisor gets the lid on the nose, because in fact he acted too early as if the cooperation had already ended.

There are several roads that lead to Rome, but be aware always make sure you are on the right route. If you would like advice on this, please feel free to contact us.

Click here for the published article.

mr. JAJ Devilee – Franchise Attorney

Ludwig & Van Dam Advocaten, franchise legal advice

Do you want to respond? Go to devilee@ludwigvandam.nl