Obligation to sell back at the end of the franchise agreement
Franchise agreements sometimes provide that the franchisee is required to sell back purchased assets at the end of the franchise agreement. What if the franchisee sold the assets to another before the end of the franchise agreement? The preliminary relief judge of the District Court of Central Netherlands ruled on this question on 29 December 2017, ECLI:NL:RBMNE:2017:6793.
Pursuant to the franchise agreement, the franchisee is obliged to purchase certain equipment for the operation of the franchise formula. The franchise agreement stipulates that the franchisee must sell the purchased equipment back to the franchisor.
The franchisee, on the other hand, argues that it sold the equipment to a third party (in good faith) which would prevent it from meeting the sell-back obligation. In that case, the former franchisee could perhaps only be ordered to pay replacement compensation in proceedings on the merits.
However, the preliminary relief judge does not believe that the former franchisee actually sold the equipment to a third party. The preliminary relief judge considers that the story of the former franchisee is implausible, partly because the sale allegedly took place to the brother of the former franchisee, the former franchisee continued to use the equipment and that the equipment was only very recently moved to the new location of the former franchisee.
The conclusion is that the former franchisee is ordered to make the equipment available to the franchisor.
mr. AW Dolphin – franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl .
Other messages
Infringement of non-competition clause, where is the limit?
In this matter, a former freelancer of massage parlor Doctor Feelgood started his own massage parlor under the name Feelgood-store.
Research into numbers of franchise procedures
We recently published a brief survey of franchise jurisprudence over the past six years on the website.
Violation of duty of care affects exoneration
In a dispute about an appeal to an exoneration clause in the franchise agreement by the franchisor, it was considered that the nature of the franchise agreement should be taken into account
Supermarket letter – 5
Acquisition of a supermarket location by terminating the lease at the expense of the sitting tenant is allowed by the Supreme Court.
Acquisition of a supermarket location by terminating the lease at the expense of the sitting tenant is allowed by the Supreme Court
On 25 April 2014, the Supreme Court confirmed for the second time that the waiting period of three years for termination of the rental agreement for retail space due to urgent personal use after the purchase of the property
Unauthorized unilateral collective fee increase by the franchisor
In an important decision of the Amsterdam Court of Appeal of 23 April 2014, the question was whether a franchisor was allowed to implement an increase in a contribution.