Does a franchisee have to accept a new model franchise agreement?

By mr. A.W. DolphijnPublished On: 09-08-2017Categories: Dispute settlement, Franchise Agreements, Statements & current affairsTags: Formula change, franchise, franchise agreement, franchisee, franchisor, label10, tag2

On 31 March 2017, the District Court of Rotterdam, ECLI:NL:RBROT:2017:2457, ruled in interlocutory proceedings on the question whether franchisor Bram Ladage could have terminated the franchise agreement with its franchisee at the end of the term, because the franchisee has a new model. of its franchise agreement.

The franchisee was unwilling to sign the most recent standard franchise agreement and, according to Bram Ladage, was also unwilling to discuss this with the franchisor.

The franchise agreement stipulates that the franchisor is only entitled to terminate the agreement on the expiry date if it cannot reasonably be expected to continue the agreement. Bram Ladage has indicated that it can no longer be required to continue the franchise agreement beyond the expiration date.

To this end, she argued that the text in the 1997 franchise agreement is outdated and has caused major problems over the years, such as the lack of authority to monitor and monitor hygiene rules and the inability as a franchisor to make adjustments. and franchisee to address, for example, declining turnover or lagging quality of business operations.

The franchisee has indicated that the proposed new model affects its legal position vis-à-vis Bram Ladage. What also apparently played a role was that the lease agreement between the franchisee and the landlord ended in mid-March 2017, and a new lease had already been entered into in December 2016 for the same location in the shopping center to be renovated. The franchisee’s interest in continuing the cooperation with Bram Ladage was therefore great, all the more so in view of the applicable post non-compete clause with Bram Ladage.

Bram Ladage also pointed out the importance of uniform agreements with the franchisees. The court ruled that the pursuit of uniformity in all franchise contracts is not in itself a justification for termination. The fact that Bram Ladage is obliged under the franchise agreement to apply equal conditions in equal cases does not mean that the franchisee in question is automatically obliged to agree to amendments to the franchise agreement.

The court also rules that it has not been made plausible that the attitude of the franchisee has been such that Bram Ladage can no longer be expected to continue working with him. The Franchisees’ messages on the proposed changes cannot be taken as an outright refusal to discuss the new terms substantively. The fact that the franchisee wished to enlist the help of his lawyer during the negotiations is also not incomprehensible and does not justify the conclusion that fruitful cooperation between the parties is therefore excluded.

Bram Ladage is ordered to comply with the existing franchise agreement.

Franchisors would do well to go through a careful process in the event of intended unilateral changes in the franchise relationship, in which the interests of each individual franchisee are carefully weighed.

mr. AW Dolphijn – Franchise lawyer

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