Not an exclusive catchment area, but still exclusivity for the franchisee

The judgment of the District Court of Noord-Holland dated 18 April 2018, ECLI:NL:RBNHO:2018:3268, ruled on the exclusivity area of ​​a franchisee. 

It was agreed that the franchisor is in principle entitled to admit another franchisee in the same district, provided that the franchisor has offered the franchisee the opportunity in writing to expand its business to meet customer demand and that the franchisee has given you 30 days to accept this offer. 

However, the franchisee and the franchisee newly admitted to the district had already worked together before, each exploiting the formula for their own account. Although this argues that the new franchisee could be admitted by the franchisor to the relevant district, the interpretation is not only governed by the content of the franchise agreement, but also by reasonableness and fairness. 

It turned out that the franchisee in question, newly admitted to the district, had just been presented to the franchisor as a temporary experiment and it had been agreed, at the suggestion of the existing franchisee, that “the ownership of the franchise license and the district will remain fully in the hands of [ the (existing) franchisee]” remains. The court therefore concludes that the franchisor, after the end of the experiment, should not have allowed the new franchisee in question to enter the territory of the existing franchisee. So the circumstances dictate how the franchise agreement should be applied. 

mr. AW Dolphijn – franchise lawyer 

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