Competing without a non-competition clause?
The franchise non-compete obligation remains a source of dispute. The Court of Appeal of ‘s-Hertogenbosch ruled on 27 May 2014 (ECLI:NL:GHSHE:2014:1502) on a matter that raised the question whether competing activities were permitted because no non-compete clause had been agreed.
A franchise entrepreneur of a funeral company sells his company to another. The buyer enters into a franchise agreement with the franchisor. After some time it turns out that the seller arranges funerals in the area where he was also active before the sale of his company.
The court, like the court, is of the opinion that the seller was not allowed to arrange funerals and was allowed to keep the profit. After all, the seller had sold that part of the company to the buyer for good money. It follows from the requirements of reasonableness and fairness that the seller must refrain from competing with the company that he has sold. This also applies if, as here, the parties have not included a non-competition clause in the purchase agreement.
The selling party is itself one of the partners of the franchisor. The franchisor is a general partnership. The franchise agreement prohibits the franchisor from entering into franchise agreements with other franchisees for a particular territory. It was therefore all the more true that the seller’s competitive activities within the territory were unacceptable.
This issue once again shows the importance of clear agreements. When transferring franchise companies, it is always wise to agree on the subject of competition. Even if it is agreed that no restriction of competition applies, it is also important to record that.
Mr AW Dolphijn – Franchise lawyer
Ludwig & Van Dam Franchise attorneys,franchise legal advice. Do you want to respond? Mail to dolphijn@ludwigvandam.nl
Other messages
Column Snack courier no. 8: “With 7 steps you comply with the privacy law”
Much has already been written about the General Data Protection Regulation (GDPR). The law has been applicable since 25 May, but many companies have not yet had their privacy policy in order.
Forced to switch to a different franchise formula at the existing location?
If a franchise formula ceases to exist, for example if it is incorporated into another organization, the question may be whether the franchisee is also obliged to be incorporated into
Column Franchise+ – 50 percent more franchise lawsuits
The 2018 Legal Franchise Statistics published by Ludwig & Van Dam Advocaten shows that there has been a 50% increase in the number of judgments in court cases rendered in 2017 compared to
A closer look at the intention to introduce franchising legislation
On May 23rd, State Secretary Mona Keijzer informed the House of Representatives about the imminent franchise legislation. The National Franchise Guide previously published this article.
Consumer Protection Applies to Franchisee
The consumer enjoys broad protection on the basis of the Civil Code.
Update Franchise Law
On 23 May 2018, the government indicated that it would prepare a legal regulation that creates a framework for four sub-areas of cooperation between franchisors and franchisees that are crucial