Franchise Self-Employment: Another Episode
In practice, it often happens that a franchisor finds it difficult to recruit new franchisees. The cause for this can be many. Particularly in the second half of the 90s, there was a general labor shortage on the labor market, which was also reflected in the availability of new franchisees. In tough economic times, potential franchisees sometimes lack the necessary capital to start a business on an independent basis.
In practice, the latter circumstance in particular is often taken care of by franchisors by allowing franchisees to start as an employee/branch holder for a certain period, after which period they become independent and continue the branch as a franchisee. The franchisee then purchases the business from the franchisor. In some cases, the purchase price is financed by the franchisor by means of a loan or similar arrangement, which allows the franchisee concerned to continue the business for his own account, even without equity, after a certain trial period.
Constructions as described above are quite workable in themselves. It is true that in such situations extra attention must be paid to the independence of the franchisee(s) involved. Naturally, it must at all times be prevented that the UWV or the tax authorities come to the conclusion during an inspection that there is a so-called fictitious employment relationship in this context: the franchisee is then not an independent entrepreneur with regard to the Social Insurance legislation and the Tax legislation. , resulting in the consequences described earlier in this section, including cancellation of social deduction options, retroactive premium levying and all kinds of possible fines. This is more pressing in this situation than elsewhere because the franchisee, in the example described above, was first an employee of the franchisor. If there is also a financing construction, the UWV and the Fiscus will take an extra critical look at the whole. In general, it is therefore strongly recommended that an informal preliminary assessment be carried out by the UWV and the Tax and Customs Administration in such situations, so that uncertainties on this point can be removed and remedied in a timely manner.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Bankrupt because the franchisor refused to sell the franchise company – dated January 28, 2020 – mr. AW Dolphin
The District Court of The Hague has dealt with a request from a franchisor to declare a franchisee bankrupt.
Prescribed shop fitting – dated January 28, 2020 – mr. AW Dolphin
The Midden-Nederland District Court has ruled on whether a franchisee is obliged to carry the shop fittings prescribed by the franchisor.
Ludwig & Van Dam attorneys summon Sandd and PostNL on behalf of the Sandd franchisees – dated 9 January 2020 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) has today summoned Sandd and PostNL before the court in Arnhem. The VFS believes that Sandd and PostNL are letting the franchisees down hard.
Article The National Franchise Guide: “Why joint and several liability, for example, next to private?” – dated 7 January 2020 – mr. AW Dolphin
Franchisees are often asked to co-sign the franchise agreement in addition to their franchise, for example. Sometimes franchisees refuse to do so and the franchise agreement is not signed.
Ludwig & Van Dam Advocaten assists Sandd franchisees: Franchisees Sandd challenge postal monopoly in court – dated 12 November 2019 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) is challenging the decision of State Secretary Mona Keijzer to approve the postal merger between PostNL and Sandd before the court in Rotterdam.
Franchisee trapped by non-compete clause? – dated October 21, 2019 – mr. AW Dolphin
The District Court of East Brabant has ruled that a franchisee was still bound by the non-competition clause in the event of premature termination of the franchise agreement.