Article Franchise+: “With our franchise formula you will earn mountains of gold.” dated 10 July 2019 – mr. AW Dolphin

By Published On: 12-07-2019Categories: Columns
According to jurisprudence, recommendations of a franchise formula in purely general terms are not easily impermissible. Even if the information provided by the franchisor about the results to be achieved is unrealistic, it is conceivable that prospective franchisees cannot simply rely on the factual accuracy if the information does not go beyond promoting the franchise formula in general terms. After all, the average public acting commercially should be aware of, and therefore not be influenced by, the fact that advertising often has a certain exaggeration. 

For example, the Amsterdam District Court ruled that a franchisor merely praised the franchise formula in general terms by stating that a certain average turnover is achieved by the franchisees. The fact that this average turnover is not achieved by a particular franchisee does not mean that the franchisor should not have made the announcement. Also, in another case, it was held that there were only general promotions with the statement that the franchise formula was “the best price level!” and is able “to achieve this best price level because you benefit from international purchasing advantage because you buy from the source.” 

Promotions are not always permissible. After all, advertising can go further  than an endorsement and may contain information, such as omissions, that is misleading  are. It will not always be obvious when there are generalized praise and the provision or withholding of inadmissible information.  information on the acquisition of franchisees by franchisors. The legislator  has provided more clarity about the impermissible with the introduction of the  Acquisition Fraud Act. Under acquisition fraud be deceptive  commercial practices involving the use of certain sales techniques  aimed at gaining trust and arousing expectations  in order to induce the other to enter into an agreement, whereby the  consideration is not or hardly properly provided. The law  Acquisition fraud explicitly refers to misleading statements such as ten  regarding “statistical data”. It is also worth considering in this context  historical data or forecasts. Of commendation in general terms will  then not soon. With franchising in particular, the franchise formula will be promoted by the franchisor with historical data or forecasts. The  the question then is whether that commendation takes place in “general terms”. The distinction between permissible promotions and misleading information remains a gray area, despite the relevant legislation. Each individual case will always have to be judged on its own.

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mr. AW Dolphijn – franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice.

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