Gathering evidence in franchising relationships

Gathering factual evidence is sometimes one of the biggest challenges in litigation between a franchisee and a franchisor. The legislature has created a number of options for this. Consider the provisional hearing of witnesses. In principle, such a request must always be granted. However, in exceptional cases it is rejected.

The Den Bosch Court of Appeal ruled on 29 January 2015 ( ECLI:NL:GHSHE:2015:259 ) on the question whether a franchisee was allowed to hear witnesses in a dispute with the franchisor, while in addition proceedings on the merits on appeal were ongoing between the parties. The request was rejected.

The parties had concluded a franchise agreement on the basis of which the franchisee would be allowed to operate the Hunkemöller formula exclusively in Israel. The franchisee argued that the franchisor failed to carefully fulfill the obligations under the franchise agreement. This caused major problems for the franchisee, who was therefore unable to successfully operate the formula and suffered damage. There were problems with deliveries, the provision of information, the construction and furnishing of the first store in Israel, the planned change of the brand name that did not take place, the marketing and administrative processing, according to the franchisee. The court rejected the franchisee’s claim. The franchisee then appealed. Pending this appeal procedure, after the complaints about the judgment had been filed, the franchisee filed a request for a preliminary witness hearing, in order to hear witnesses who could gather evidence for use in the appeal procedure and to demonstrate that there was indeed would be a reproach to the franchisor. The franchisee has based its request to hear witnesses on the basis of the fact that it wishes to determine its position in the proceedings on the basis of the witness statements, in particular with regard to the oral contacts that took place during the negotiations of the franchise agreement. A part on which the witnesses should be questioned is also the meaning of a handwritten document and the intentions behind this document. Furthermore, the franchisee wants proof of the formation and implementation of the agreement and not proof of already known – taken in the main – assertions.

In principle, the court must order a provisional witness examination, provided that the request is relevant and sufficiently concrete and concerns facts that can be proven with the provisional witness examination. However, a request can be rejected, for example, if the applicant has insufficient interest, or if it is contrary to due process.

The court ruled that the franchisee’s request to hear witnesses was too indefinite. The franchisee has not indicated in sufficient detail what evidence it needs and for what purposes it wishes to use it. For example, the franchisee apparently had not indicated which questions he wanted to ask the witnesses, or which answers he was looking for. In addition, there is the procedural aspect. The proceedings on the merits were on appeal and the franchisee had already submitted his complaints against the judgment to the Court of Appeal. That means the procedure is almost over. All the more, according to the Court of Appeal, granting a request to hold a provisional witness hearing can already be regarded as not appropriate for due process.

It is important to collect and inventory as much evidence as possible at the earliest possible stage of a dispute. When determining the litigation strategy, it is also important to recognize what evidence still needs to be provided. In that case, it may sometimes be advisable to order a provisional witness hearing before commencing proceedings and to see, on the basis of the witness statements made, whether and to what extent proceedings on the merits about the dispute could be useful.

Mr AW Dolphijn – Franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Mail to dolphijn@ludwigvandam.nl