Operating contribution payable by the franchisor – mr. AW Dolphijn – dated December 27, 2021

Sometimes a franchisor makes a financial contribution to a franchisee so that the franchisee can make more profit. This may be to persuade and commit the franchisee to the partnership with the franchisor. In other cases, the goal is to provide financial assistance to the franchisee in times of financial hardship. Agreements about financial contributions can lead to ambiguity if they are not properly recorded. This was the subject of dispute in a judgment of the Rotterdam District Court of 8 December 2021, ECLI:NL:RBROT:2021:12693.

At the end of 2010, a supermarket entrepreneur and supermarket organization Boon entered into a partnership under Boon’s MCD formula for the period January 2011 through December 2015. Boon confirmed the agreements to the franchisee in a letter dated 19 January 2011. Part of the agreements was the annual operating contribution. In 2016, the parties negotiated further cooperation. They agreed on this at the end of 2016. The collaboration would continue through 2017 and a (one-off) compensation would be paid by Boon.

For the period after 2017 – unlike for the years 2011 up to and including 2017 – no concrete agreements have been made about the payment of an operating contribution, because the negotiations on this were broken off in December 2018. However, it is certain that the cooperation between the parties in 2018, during the negotiations, continued on the same footing as before.

The franchisee received no exploitation contribution from Boon for 2018. The franchisee was still an MCD supermarket and complied with all related obligations. The franchisee entered into a partnership with Plus in 2019. The franchisee is claiming Boon’s operating contribution for 2018.

The court ruled that the franchisee could assume that the agreement on the exploitation contribution also continued to apply. It was Boon’s responsibility as the franchisor to inform the franchisee in a timely and explicit manner that in her opinion this was different and that in her opinion the exploitation contribution, after the term of the written contract had expired, would depend on the contractual recording the continuation of the long-term cooperation between the parties. Boon has left that behind and that is at her expense and risk.

The conclusion is therefore that the franchisor owes the franchisee the operating contribution for 2018. Making arrangements between franchisee and franchisor is not easy and requires expert attention.

mr. A.W. Dolphijn
Ludwig & Van Dam lawyers, franchise legal advice.
Do you want to respond? Then email to dolphijn@ludwigvandam.nl

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