Bonuses that are not in the franchise agreement

Bonuses that are not in the franchise agreement

The Court of Appeal in The Hague 31 March 2015
(ECLI:NL:GHDHA:2015:1139) a dispute was submitted between a franchisee and franchisor regarding the settlement after termination of the franchise agreement with regard to bonuses.

The franchisor and the franchisee entered into a settlement agreement to terminate the franchise agreement. However, it has been determined that the parties are still in dispute about, among other things, bonuses paid to the franchisee. Among other things, that dispute was submitted to the court, of which the present dispute concerns the judgment on appeal.

It concerned the following: The franchisor received bonuses from providers, in particular with regard to turnovers made by the franchisee. The franchisee states that it is entitled to those bonuses and therefore that these bonuses must be paid to it.

The Court of Appeal ruled that the right to the aforementioned bonuses was not explicitly stipulated in the franchise agreement. However, the franchise agreement does provide that the franchisor may set off against such bonuses what the franchisee owes the franchisor under the franchise agreements. According to the Court of Appeal, that provision therefore assumes that there are bonuses that are received by the franchisor but accrue to the franchisee. The franchise agreement should be interpreted as meaning, or at least supplemented by application of Section 6:248 of the Dutch Civil Code, that the bonuses in question granted and received by the providers to the franchisor should be paid to the franchisee.

This judgment once again shows the need for a careful and well-thought-out franchise agreement. If and insofar as the franchisor had wanted to exclude that the franchisee would have any right to a bonus from a provider accruing to the franchisor, it would have done well to stipulate this explicitly.

Mr AW Dolphijn – Franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Mail to dolphijn@ludwigvandam.nl