Longer eviction period for the subleasing franchisee in the event of bankruptcy of the subleasing franchisor

In the event of the bankruptcy of a franchisor, a franchisee who sublets business premises from his (bankrupt) franchisor will, in principle, have a weak legal position. The main lessor can terminate the main tenancy agreement on the basis of the Bankruptcy Act. A period of three months is sufficient according to the Bankruptcy Act. The starting point is that the subtenant is no longer entitled to use the business space after the notice period has expired. However, a franchisee recently enforced a longer use of the business premises in court.

On 19 April 2016, the subdistrict court judge of the District Court of Rotterdam rendered an interim judgment (ECLI:NL:RBROT:2016:3095) on, among other things, abbreviated, a claim of a franchisee who is also a subtenant against the main lessor in order to be able to make longer use of the business premises then only until the evacuation date notified by the main lessor. In this article, the other claims filed are left undiscussed.

The main lessor terminated the main lease and took the position that he should only observe a maximum period of three months in case of termination of the main lease due to the bankruptcy of the renting franchisor, based on Article 39 of the Bankruptcy Act.    

The bankruptcy trustee of the bankrupt franchisor, who was also the sub-lessor, accepted the termination. The trustee took the position with regard to the sub-leasing franchisee that the franchisee should vacate and vacate the business premises on the vacating date announced by the main lessor.      

The franchisee involved the main lessor and the bankruptcy trustee in preliminary relief proceedings. In these preliminary relief proceedings, the subdistrict court judge ruled that weighing the interest of the main lessor in the possibility of being able to lease the business space to a third party in the short term, against the interests of the sub-renting franchisee in getting more time to use the business space vacated than the short term that would still remain after the judgment, means that the claim can be assigned to a longer term of the franchisee.          

What is special about this ruling is that the subletting franchisee has been granted a longer period than the period of three months on the basis of Article 39 of the Bankruptcy Act. On the basis of the judgment, the main lessor must tolerate the franchisee’s use of the business premises up to and including one month after the date of the judgment, which is almost a month longer than the eviction date announced by the main lessor. This is subject to forfeiture of a penalty to be paid by the main lessor to the franchisee if the main lessor fails to comply with the judgment.    

mr. J. van de Peppel – Franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice.

Do you want to respond? Go to vandepeppel@ludwigvandam.nl