Franchise agreement with free PLUS entrepreneur canceled – mr. AW Dolphijn – dated January 19, 2022

It is not often that a supermarket organization terminates an agreement with an independent entrepreneur and then does not wish to take over the operation. Yet it occurs and can be a seed from which a considerable legal dispute arises. The Court of Central Netherlands ruled on such a matter on December 19, 2021, ECLI:NL:RBMNE:2021:6284.

An entrepreneur had concluded a lease agreement with his BV for the use of a supermarket business space. The entrepreneur in question was also the indirect owner of the real estate and, through group companies, was therefore also the lessor of the same business premises. He had also entered into a cooperation agreement with PLUS Retail on behalf of his BV to operate a PLUS supermarket there.

According to the cooperation agreement, PLUS Retail could terminate the cooperation with immediate effect if, for example, the BV does not fulfill its obligations under this agreement, or Mr.[naam ondernemer] is no longer actively involved in the business activities on a daily basis.

Unfortunately, the operating results were disappointing and the entrepreneur was also (partially) incapacitated for work. In view of this, PLUS Retail had terminated the cooperation agreement with the entrepreneur. Several attempts had been made to get the turnover of the supermarket up to the required level, but they were always unsuccessful. PLUS Retail has also indicated that it will not take over the lease and operation from the entrepreneur.

The entrepreneur applied to the court for an order against PLUS Retail to pay the damage. The entrepreneur stated that the cooperation agreement is inextricably linked to the rental agreement, and that PLUS Retail had neglected the interests of the entrepreneur as lessor in proper compliance with the cooperation agreement when the cooperation agreement was terminated. According to the entrepreneur, PLUS Retail should therefore, under the given circumstances, have allowed its behavior to be partly determined by the interests of the entrepreneur as lessor. PLUS Retail must therefore compensate for the damage.

In this context, the entrepreneur had argued that, as a lessor, it has three interests. In the first place, her income from the lease. Secondly, the possibility of earning back the investment it has made in the leased property. As a third interest, the entrepreneur mentions that the presence of a supermarket in the shopping center is of great importance for the shopping center as a whole, and therefore also for the entrepreneur as lessor.

The key question in these proceedings is whether the cooperation agreement and the tenancy agreement are interrelated in such a way that they have become a link in legal transactions. The court is of the opinion that this is not the case because, in the opinion of the court, the interests of the entrepreneur as a commercial lessor are not so closely involved in the cooperation agreement that PLUS Retail had to take those interests into account on that basis. upon termination of that agreement. This means that PLUS Retail did not have to take into account the interests of the entrepreneur as an indirect lessor when terminating the cooperation agreement.

According to the court, PLUS Retail had nevertheless (also) taken those interests into account. For example, PLUS Retail had tried to increase the turnover of the supermarket with extra commercial campaigns and management support over a period of several months. The entrepreneur received (1) her income from the rental agreement during that period. During that period, it (2) also recouped part of its investment, and (3) the PLUS supermarket remained present in the shopping centre. Against that background, the termination of the cooperation agreement cannot be regarded as unlawful.

What is striking is that it cannot be concluded from the judgment that the Franchise Act has been invoked. The cooperation agreement between an independent supermarket entrepreneur and a supermarket organization such as the present one is precisely a typical example of a franchise agreement. It is precisely in the Franchise Act that rules are laid down about good franchisorship, as well as mandatory assistance and support by the franchisor. The Franchise Act also aims to protect the franchisee against an unbalanced situation and with these rules the court might have imposed higher due care requirements on the actions of PLUS Retail than is now apparent from the judgment. The question is, of course, whether the final judgment would have been different.

mr. A.W. Dolphijn
Ludwig & Van Dam lawyers, franchise legal advice.
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