Not a valid non-compete clause for franchisee

On 18 November 2016, the preliminary relief judge of the Central Netherlands District Court, ECLI:NL:RBMNE:2016:7754, rendered a judgment in the matter concerning whether the franchisee was bound by the non-compete obligation from the franchise agreement. 

After the franchise agreement was concluded, the franchisee invoked the nullification of the franchise agreement, because she stated that she had erred at the time the franchise agreement was concluded. Based on statements from the franchisor, the franchisee assumed that the formula in question was an exclusive concept. This mainly concerned the alleged exclusivity of the slimming equipment used within the formula. 

However, after the start of the collaboration, it turned out that another franchise formula uses the same slimming equipment. The judge also ruled that the franchise formula actually consisted of no more than the purchase of the slimming equipment and a WhatsApp group with the other franchisees. According to the franchisor, the added value of the formula lies in the transfer of knowledge, for example by means of a handbook and basic training. The preliminary relief judge believes that it seems plausible for the time being that the nullification of the franchise agreement will be upheld. 

The franchisor demanded payment of sums of money for violating the non-compete clause. However, if the franchise agreement remains null and void, the non-compete clause is deemed never to have been concluded. The franchisor’s claim is therefore rejected. 

mr. AW Dolphijn – franchise lawyer 

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