Can a franchisee cohabit with a competing entrepreneur?
Can a franchisee violate a non-compete clause by cohabiting with someone who runs a competing business? On 12 January 2018, the Court of Central Netherlands, ECLI:NL:RBMNE:2018:1641, rendered a judgment on this question.
A franchisor had entered into a franchise agreement with a franchisee. The collaboration was then cast in a different legal construction, whereby the formula was made available to the franchisee as part of the collaboration in a limited partnership. The new agreement included a non-compete clause.
According to that clause, the franchisee was prohibited, among other things, during the term of the agreement, from working directly or indirectly, independently or in employment or in the form of a company, or from having financial or business interests in activities or from working. be in a company that is competitive or similar.
The court ruled that the franchisee had directly and indirectly violated the non-compete clause, including by interfering with another company that performs activities that are virtually identical to those of the clinics according to the franchisor’s formula. This interference was apparent, for example, from the fact that the franchisee had until recently cohabited with the owner behind the aforementioned competing company. This person had also responded on behalf of himself and on behalf of the franchisee (in the “we” form) to the letters that the franchisor had written to the franchisee about the collaboration.
A non-compete clause can stretch further than might at first sight be the case.
mr. AW Dolphijn – franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl .
Other messages
Article Mr. C. Damen – “When does the obligation to provide proof apply for the submission of the franchise agreement?” dated August 17, 2020
Does the obligation to produce information apply to showing a (franchise) agreement in proceedings if the parties to the proceedings do not have a legal relationship to the (franchise) agreement?
Article Mr. AW Dolphijn – “How do you value a franchise company with a discharge loan?” – dated August 14, 2020
A discharge loan is a proven means of franchisors to find long-term franchisees.
Article De Nationale Franchise Gids: “Information obligations of the intended franchisee under the Franchise Act” – dated August 7, 2020 – mr. AW Dolphin
Although the purpose of the Franchise Act is to protect franchisees against franchisors, a number of obligations have also been laid down for franchisees.
Legislative text of the Franchise Act – dated July 24, 2020 – mr. AW Dolphin
The legal text of the Franchise Act was published in the Staatsblad on 1 July 2020. The full legal text reads as follows:
Law Franchise – dated July 23, 2020 – mr. AW Dolphin
The Franchise Act will have a considerable impact on both franchisors and franchisees.
Contractual dissolution requirements not observed? No legal dissolution of the franchise agreement – dated July 23, 2020 – mr. C. Damen
Can a franchisor terminate the franchise agreement if it has failed to comply with its own contractual requirements?