Franchisors take note: accountability for forecast issued – December 28, 2015 – mr. AW Dolphin
Court of Appeal of ‘s-Hertogenbosch, dated 15 September 2015, ECLI:NL:GHSHE:2015:3583
A judgment by the ‘s-Hertogenbosch Court of Appeal raised the question of who must now demonstrate that the franchisor’s prognosis was or was not sound. See Court of Appeal of ‘s-Hertogenbosch 15 September 2015, ECLI:NL:GHSHE:2015:3583 (To Fuel/franchisee).
The franchisor has a formula called To Fuel, aimed at operating shops at petrol stations. Entrepreneurs can become franchisees through so-called partner agreements. The franchisee accused the franchisor of having drawn up an incorrect forecast regarding the expected turnover/profit. It was objected to the franchisor that, due to errors in forecasting, the franchisee was in error. The main rule is that in that case the franchisee will have to provide proof of those errors. Sometimes the franchisee will have only a vague suspicion that something is wrong with the forecast. The Court of Appeal extends a helping hand to the franchisee here.
The forecast was based on the number of visitors to the gas station, the number of visitors to the shop and the average spending at a shop. The Court of Appeal orders the franchisor to provide further evidence of the correctness of the figures used on these three aspects. The franchisor must therefore account for the way in which it made forecasts. The assertion that visitor numbers are based on empirical figures must also be further substantiated by the franchisor, for example by submitting annual accounts or an auditor’s report.
If it appears from the account given that the prognosis contains errors, the appeal to error may succeed. The Court of Appeal adds that it does not matter whether the errors can be attributed to the franchisor itself or to one or more third parties (HR 25 January 2002, ECLI:NL:HR:2002:AD7329, legal ground 3.3.2). .
Although in principle the burden of proof of an unsatisfactory prognosis lies with the franchisee, the franchisor will have to provide insight into how the prognosis was arrived at. This means that it is important for franchisors to be able to provide sound numerical justification for the prognosis issued.
mr. AW Dolphijn – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl
Other messages
Article Franchise & Law No. 7 – Franchise agreement as general terms and conditions
Uniformity of the franchise formula and (therefore also) uniformity of the agreements with the franchisees will often be of great importance to the franchisor.
The franchisee’s customer base
If the partnership between a franchisee and a franchisor ends, the question of who will continue to serve the customers may arise.
The healthcare franchisor is not a healthcare provider
The Healthcare Quality, Complaints and Disputes Act (WKKGZ) creates the possibility of government measures being imposed on healthcare institutions to guarantee the required quality of healthcare.
The restructuring within the Intergamma formats from a legal perspective
The legal reality is sometimes more unruly than the factual. The controversial issue at Intergamma is a good example of this.
Open vacancy: lawyer-employee and/or lawyer-trainee!
Due to the departure of one of our colleagues, we are looking for a new lawyer-employee or lawyer-trainee. Interested?
Non-compete clause on the sale of a franchise business
How strict should a non-compete clause be when selling a franchise business to the franchisor? This question was raised in a dispute in which the District Court of Gelderland op