Distribution over the franchisor’s trade name

Court of Appeal of The Hague; November 3, 2015

A franchisor’s trade name is one of the most important elements of the formula. Which of the partners may use the trade name if the franchisor is a general partnership and the general partnership is dissolved? The Court of Appeal of The Hague ruled on this question on 3 November 2015 (ECLI:NL:RBAMS:2010:BO2865).

Four people start a franchising organization under the name SOED Bouwadvies as a general partnership. The name, an abbreviation for Samen Onder Een Dak, had already been devised by one of the founders, who introduced the name into the partnership. This partner also founded SOED BV. One of the other partners founded SOED AVD BV. As such, all partners were entitled to use the trade name SOED. After some time it is decided to dissolve the general partnership.

SOED BV and its owner request the subdistrict court judge to order SOED AVD to stop using the trade name. SOED BV bases its request on the ground that SOED AVD BV is acting contrary to SOED BV’s trade name law. According to the applicants, SOED AVD BV’s right would also have ended with the termination of the partnership

The question at hand is whether SOED BV has an older or stronger trade name right than SOED AVD BV (Article 5 of the Trade Names Act). It is considered that the partnership was the (first) owner of the trade name SOED. After all, SOED BV and its owner did not use the trade name as such prior to the establishment of the general partnership Thinking up the name and, for example, registering a name as a domain name or as a trade name does not constitute use as a trade name.

Furthermore, as long as no liquidation of the dissolved vof has taken place, which is the case, the rights of use granted by the partnership with regard to the letter combination SOED, so also the right of use granted to SOED AVD, have not expired. There is therefore no question of an older or stronger trade name right of SOED BV and/or its owner. The request of SOED BV and its owner is rejected, which the Court upholds.

The mere registration of a trade name does not automatically mean protection against use by another person. It is about who actually uses the name (first) in trade. If a franchise organization is given as a general partnership, it is important to make clear agreements about who contributes what and also who is entitled to what when the partnership is terminated.

mr. AW Dolphijn – Franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Mail to dolphijn@ludwigvandam.nl