Bankrupt because the franchisor refused to sell the franchise company – dated January 28, 2020 – mr. AW Dolphin

The District Court of The Hague 19 November 2019, ECLI:NL:RBDHA:2019:12288 (KFC)
handled a request from a franchisor for a franchisee
to declare bankruptcy. However, the franchisee indicates that the
franchise company could have been or would have been sold, but the
franchisor has opposed this.

The franchise agreement stipulates that in the event of an intended sale of
any interest in the franchise business, the franchisee to the
franchisor would submit the draft purchase agreement. Furthermore, it is the
franchisee prohibited from selling the franchise without the
the franchisor’s prior written approval.

The franchisee has put forward a prospective buyer on two occasions
to have found, but that the franchisor will not allow the sale of the
franchise company by refusing its permission. The
In this context, the franchisor has undisputedly argued that it has never
draft purchase agreement, for what reason it
prospective buyers has not been approved.

The franchisor has indicated its preference for a
other, third party prospective purchaser. The franchisee has indicated the by
to accept this third party offered prize. In this way the
claim can still be paid and become a bankruptcy
turned away. However, during the subsequent oral hearing
revealed that this third party has withdrawn.

Under these circumstances, according to the court, it cannot be
concluded that filing for bankruptcy by standards of
reasonableness and fairness is unacceptable. The importance of the
franchisor that its claim is paid. That is her interest
given a bankruptcy, now a bankruptcy will lead to it too
monetize the assets of the franchisee’s business with
for the purpose of paying the creditors (to the extent and as much as possible). A
further delay of payment is not justified by the interests of
defendant, now that there is no prospect of a private sale of the
assets of the franchise company out of bankruptcy within a short
term.

It is not inconceivable that a franchisor with refusing a
prospective buyer achieves that the franchisee can no longer meet his debts
to fulfil. If a franchisee believes that this right of approval from the
franchisor is abused, for example in a bankruptcy
get a new franchisee (who has had to pay less as a purchase price
payment), then it is difficult to prove.

mr. AW Dolphijn – franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice. Want
you respond?

Go to dolphijn@ludwigvandam.nl