Change of the revenue model for franchisees

In a ruling by the provisional relief judge of the Zeeland-West-Brabant District Court, 20 November 2024, ECLI:NL:RBZWB:2024:8592, it was held that the franchisor was not allowed to change the revenue model for the franchisees. Several franchisees objected to the change in the revenue model by the franchisor. The various versions of the franchise agreement clearly state that the revenue model is determined by the franchisor. Immediately invoking that provision, the franchisor changed the revenue model. The franchisees substantiated in the summons that the first change roughly leads to a 50% drop in turnover and the later amended change leads to a drop in turnover of approximately 30%. The provisional relief judge rules that the franchisor did not behave as may be expected of a good franchisor, which constitutes a violation of Article 7:912 of the Dutch Civil Code. The interim relief judge criticizes the lack of motivation for the change by the franchisor and that the franchisor assumes that not only changed market conditions, but also the interests of its own shareholder are paramount in the reorganization of the revenue model. In addition, the strategy seems to be aimed at acquiring the largest possible market share for its shareholder’s brand. No considerations in this judgment are devoted to the right of consent as referred to in Article 7:921 of the Dutch Civil Code. In short, the right of consent means that in certain cases the franchisor needs the explicit consent of (a majority of) the franchisees before certain changes can be implemented. The interim relief judge apparently does not get around to this now that it has already been ruled that the franchisor is acting in violation of Article 7:912 of the Dutch Civil Code.