Late notification that no franchise agreement will be concluded
On 11 April 2017, the Court of Appeal of Amsterdam-Leeuwarden, EQLI:NL:GHARL:2017:3104, not only assessed the question of whether the termination of negotiations on a franchise agreement to be concluded was unlawful, but also whether the franchisor was sufficiently has broken down.
In the first instance, the District Court of Gelderland ruled on 6 May 2015, EQLI:NL:RBGEL:2015:4708, that it was clear in advance to the aspiring franchisee that 9 steps would have to be completed in order to eventually become a franchisee. See my earlier comment on that statement here.
While going through the necessary steps, the shares in the franchisor are taken over by another party. The new policy is that no new franchisees will be recruited. Going through the next steps to reach a franchise agreement is therefore terminated by the franchisor. The court ruled in favor of the franchisor. The Court of Appeal follows that view of the District Court.
However, the court ruled that the subject of the dispute is not only the termination of the franchise agreement negotiations, but that other conduct during the negotiations could also be unlawful. The franchisee’s contention is that the franchisor must have known shortly after acquiring its stock that there was a new policy not to hire any more new franchisees. Nevertheless, the aspiring franchisee would only be made clear to the aspiring franchisee after a considerable period of time that it would not come to a franchise agreement. According to the court, the aspiring franchisee has been kept on the line for too long, which is contrary to social decency. The Court of Appeal refers the case to a damage assessment procedure to determine the extent of the damage.
This ruling shows that although breaking off negotiations may be justified, the way in which this breaking off is implemented may be contrary to social decency.
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl .
Other messages
Franchisee does not achieve operating forecast: the interim score.
Recently, the court in Roermond rendered an interim judgment between a franchisee and a franchisor, whereby the turnover was one third lower than budgeted by the franchisor.
Dissolution of the franchise agreement at the end of the franchise formula
It often happens that a franchise formula ceases to exist.
Comparative advertising in the supermarket sector
The court of Amsterdam recently ruled on comparative advertising in the supermarket sector.
Supermarket letter – 1
Supermarket entrepreneur may not be bound by a non-competition clause.
Incorrect forecasts: far-reaching consequences for the franchisor-franchisee relationship
Incorrect forecasts: far-reaching consequences for the franchisor-franchisee relationship
Incorrect forecasts: no dissolution of the franchise agreement
On 6 January 2010, the provisional relief judge of the District Court in The Hague rendered a judgment