Franchisor successfully invokes a post-contractual non-compete clause

Court of Maastricht The court in Maastricht was recently confronted with a case in which a franchisee had left the franchise formula prematurely. Although the franchisor agreed to this premature termination of the cooperation, it explicitly pointed out to the (former) franchisee that the (post-contractual) non-compete clause (and non-solicitation clause) had to be fully complied with.

This non-competition clause consisted – in short – of the (former) franchisee not being allowed to develop any activities in the area where it was employed during one year after the termination of the franchise agreement that were the same as the activities it developed during the franchise agreement (in this case: pediatric occupational therapy). The (former) franchisee, however, stated that it had no intention of doing so at all, because the clause would make it ‘breadless’; it would be formulated much too broadly and would also be contrary to the law.

A short time later, the franchisor noticed that the (former) franchisee was indeed developing competitive activities and is therefore forced to start summary proceedings against the (former) franchisee in order to protect the interests of itself, but also of the other parties. protect franchisees. In these proceedings, the (former) franchisee claims, as a counterclaim, suspension of the non-compete clause.

In the opinion of the court, the franchisor is right to hold the (former) franchisee to the non-compete clause. In principle, after all, ‘a deal is a deal’. Only if the stipulation would be unacceptable on the basis of the standards of reasonableness and fairness would a suspension be possible. And that is therefore not the case in the case of the present non-compete clause. The court considers it important that the (former) franchisee has agreed to the clause and that it knew what restrictions were placed on it in the event that the franchise agreement were to be terminated. The franchisor, on the other hand, has a legitimate interest, according to the court, to remain protected from competition by former franchisees.

The (former) franchisee also points out that she has not built up a financial buffer in the eighteen months that she was a franchisee and that it would therefore not be reasonable for her to be deprived of income for a year. However, the court considers these circumstances to be at its expense and risk, in particular because the (former) franchisee had taken the initiative to terminate the cooperation prematurely. Furthermore, the clause does not prohibit the (former) franchisee from developing activities as an (adult) occupational therapist, so that income can indeed be obtained. The area in which no competing activities may take place is also limited.

It is therefore actually quite simple: if you, as a franchisee, sign for a non-compete clause, you can in principle be held to it, unless there are (legal) objections to it that prevent the clause from being (fully) maintained. As an independent entrepreneur, it is therefore extremely wise to check (or have someone check) the possible consequences of such stipulations after the termination of the cooperation with the franchisor before signing the franchise agreement. This is all the more so if the retail premises in which the operation takes place is rented directly from a third party (ie not from the franchisor). If this discussion only starts after signing the franchise agreement, the franchisee may already be behind “1-0”.

Mr JH Kolenbrander  – Franchise attorney 

Ludwig & Van Dam Franchise attorneys, franchise legal advice Would you like to respond? Mail to coalbrander@ludwigvandam.nl