Link rental agreement and franchise agreement

Mr MSJ Steenhuis – Franchise lawyer 

In franchise relations, the franchisor regularly makes business space available to the franchisee where the franchise establishment is operated. This is often done by means of a separate (sub)lease agreement. In view of the preservation and value of a franchise organization’s network, it is often in a franchisor’s interest that, at the end of the franchise agreement, the business premises leased by the franchisee are returned to the franchisor so that they can be used by a third party. successive franchisee can be (sub)let. It is then important that the link between the duration of the (sub)lease agreement and that of the franchise agreement is realized in a legally correct manner. 

If there is a question of renting business premises, the so-called mandatory regime of article 7A:1624 and further Civil Code (BW) applies. Mandatory law means that the parties cannot deviate from the provisions as included in the Dutch Civil Code. The rental regime primarily protects the tenant’s interests in order to provide him with certainty that his business can be operated at the same location for a certain period of time.
If it is stipulated in a (sub)lease agreement that it ends as soon as the franchise agreement ends, for whatever reason, this deviates from the mandatory provisions of law. Such a clause in the rental agreement is therefore in principle null and void and, in the event of a dispute, there is a chance that a court will set this clause aside and hold that the (sub)lease agreement will continue regardless of the end of the franchise agreement.

If the lessor has nevertheless included one of the mandatory provisions of the Dutch Civil Code in a rental agreement that deviates from it, the lessor requires approval from the District Court, Cantonal Division. In that case, a petition must be submitted to the court, subdistrict department, of the place where the business premises are located. Furthermore, the franchisee / (sub) tenant must agree to such a request. Although there are also known exceptions, the court often grants its permission to such a deviating clause. It is important here that, on the basis of the franchise agreement concluded between the parties, this franchisor does not have too much freedom to terminate the franchise agreement, which could harm the interests of the franchisee / (sub) tenant. 

Mr MSJ Steenhuis is a lawyer in Rotterdam. The law firm Ludwig & Van Dam is specialized in franchising. 

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