It often happens that franchisor and franchisee want to link their existing (sub)lease agreement and franchise agreement by means of stipulations that deviate from semi-mandatory tenancy law. In practice, it is then agreed that if the franchise agreement is terminated, the sublease agreement between franchisor and franchisee is also terminated. If the parties want to include such a deviating clause in their sublease agreement and then pass this clause on to their franchise agreement, judicial approval of that clause can be requested. If that approval is granted, the clause is no longer voidable on the basis of its deviating character, which is after all contrary to the law.
The court can only approve stipulations in which the disadvantages of the franchisee, also subtenant, are deviated from the specific provisions in this context. It is therefore useless to seek approval of other legal provisions that provide protection to the franchisee in his capacity as lessee, such as the prevention of abrupt price increase provisions.
In practice, there is usually a joint request from the franchisor and franchisee to obtain approval of the deviating clause. Approval is then granted to allow a different term of the sublease agreement to run parallel to that of the franchise agreement, so that both agreements can be terminated simultaneously for both parties.
In practice, this means that various subdistrict court judges give different judgments on the same applications. Usually, however, a clause as desired by the franchisor and franchisee is approved, provided it is accompanied by a good motivation. A proper clause in this context states that the franchisor, in its capacity as lessor, agrees with the franchisee in the (sublease) agreement that the franchise agreement can be terminated with immediate effect by means of a single written notification from the franchisor to the franchisee, whereby the franchisee will not object to the simultaneous termination of the sublease agreement following the franchise agreement – without further notice and judicial review, the sublease agreement will then also be terminated.
It goes without saying that a nuanced formulation and motivation of the said clause and underlying regulation is a requirement if the approval is to actually have a chance of success.
Franchisor and franchisee must therefore jointly choose to invest in such a clause. Please note: in practice this does not mean that there is no longer any security of tenure for the franchisee / subtenant in that situation. However, the position of the parties is very clearly – pre-marked.
Ludwig & Van Dam franchise attorneys, franchise legal advice