Franchisor liable for errors made by a franchisee? – mr. AW Dolphijn – dated November 23, 2020

By Published On: 23-11-2020Categories: Statements & current affairs

A franchise organization of mortgage brokers requested the court to declare that the franchisor is not liable for the fact that a franchisee has committed a serious error, or at least committed fraud with a customer. The District Court of Amsterdam ruled in this case on November 4, 2020, ECLI:NL:RBAMS:2020:5408.

Mortgage brokers are supervised by the AFM and require a licence. The franchisor is the central license holder in this matter and has a collective license (Section 2:105 Wft). The individual franchisees then act under the responsibility of the franchisor. However, the franchisor stated that this does not mean that the franchisor is then in all cases liable for errors made by the franchisee.

The court rules that the franchisor can be liable, in addition to the franchisee, for an error on the part of the franchisee if that error is caused by the affiliated company not complying with the aforementioned licensing obligations and requirements. For example, if a franchisee does not comply with the licensing requirements and third parties suffer damage as a result, this can lead to liability of the franchisor towards that third party.

In this case, the franchisor’s claim to establish that the franchisor was not liable was formulated too broadly.

This ruling provides more guidance on the extent to which a franchisor under a collective license could be liable for errors and fraud by franchisees.

mr. AW Dolphijn – franchise lawyer
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