Franchisor liable for franchisee error

On 17 March 2021, the Midden-Nederland District Court ruled, ECLI:NL:RBMNE:2021:1351, that a franchisor could be held liable for an alleged error by a franchisee.

A franchisee of a housing brokerage formula had contact with a home owner. The franchisee would mediate in the rental of the home. To this end, they concluded a contract for services. However, the homeowner was not satisfied with the performance of the assignment and held the franchisor liable for this. The franchisor (and not the franchisee) was then subpoenaed.

The franchisor takes the position that the home owner has not turned to the right party. The franchisor has never operated a rental office at the stated office address, while the franchisee was located there with his sole proprietorship. According to the franchisor, the home owner therefore had an agreement with that franchisee. The franchisee in question had several employees. An employee of the franchisee has also had frequent contact with the home owner. According to the franchisee, the confusion arose because the employee concerned used the old stock of the franchisor’s stationery. The lease is printed on that old stationery and in a model that names the franchisor. The name of the franchisee’s sole proprietorship does not appear anywhere.

The court ruled that the franchisor (and, incidentally, also the franchisee) must ensure that it is clear to a third party which company it is dealing with. To this end, the court considers, among other things, that the franchisor or the franchisee has opted to use old stationery with the designation of the franchisor on it. This is not a circumstance that can be invoked against the homeowner. The franchisor could have ensured that such old stationery was no longer available. In addition, it has not been alleged or shown that the franchisor gave instructions to the franchisee regarding the use or non-use of stationery. The court therefore assumes that the franchisor is the contracting party and that the homeowner has summoned the correct party.

The court also considers that there was no shortcoming in the assignment of the home owner, so that the franchisor was not liable. However, it is important that under certain circumstances the franchisor can be held accountable for the conduct of the franchisee towards third parties.