Disclosure obligation versus obligation to investigate when purchasing a franchise company, Who bears the risk?
Court of Amsterdam
In a judgment of 27 January 2015 (ECLI:GHAMS:2015:195), the Amsterdam Court of Appeal confirmed that the tenant of a snack bar, when entering into the lease agreements for the business space and the inventory, must in principle be able to rely on statements from the prospective landlord regarding the historical turnover and that the tenant is not under any obligation to investigate if there was no special reason to doubt its correctness. If those turnovers are incorrect afterwards, this is therefore reason to annul the agreements entered into on the basis of error.
In the present case, a snack bar and inventory relating to a snack bar acquired by the lessor from a bankruptcy estate were already (sub)let to a successor operator after a short period of time. The turnovers of both the bankrupt entrepreneur and his successor/landlord, who had only recently taken up the operation, were reported. After the start by the successor entrepreneur, it turned out that the reported turnovers were not correct, or at least could not be correct because they did not correspond with the purchase invoices. Although the subdistrict court still believed that the successive entrepreneur should have done his homework better by verifying the reported turnovers himself in advance and therefore rejected the claims, the Court of Appeal, on the other hand, is of the opinion that if no special circumstances give rise to this, it may in principle be relies on the bids of the prospective contracting party. In franchise and prognosis cases, this ruling once again indicates that judges have different views on the responsibilities of contracting parties in these types of situations. In order not to be dependent on this, it is therefore important to agree in advance who will take what responsibility and who will or will not guarantee the correctness of communications. In any case, further investigations can then be carried out in advance if necessary.
Mr J. Sterk – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Mail to Sterk@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