Partial indebtedness of entrance fees due to lack of turnover and non-delivery of contractual performance by the franchisor

Court of Rotterdam

The franchisee rightly invokes unforeseen circumstances due to the lack of turnover and successfully claims moderation of the entrance fee due. The fact that no turnover has been realized within the framework of the franchise agreement, which moreover allows settlement of the entrance fee in connection with future turnover, is, in the opinion of the court, a circumstance that entails that the franchisee rightly invokes (partial) ) innocence. In addition, the franchisor has not provided any significant services. In addition to offering the franchise formula, only general printed matter, business cards, billboards and a general introduction were provided. Thus, the obligation of advice and assistance in accordance with the franchisor’s duty of care has apparently not been complied with. The court eventually halves the contractually due entrance fee.

NB: The fact that the court recognizes the lack of turnover as an unforeseen circumstance may also mean a new entry in the event of unrealized forecasts by franchisees. The ruling once again emphasizes the far-reaching duty of care of franchisors with regard to the actual ability to achieve reasonably expected turnovers, whether or not laid down in financial forecasts. If this core obligation from the franchise relationship is not met, the franchisee can invoke various grounds in relation to an action for damages against the franchisor.

Mr Th.R. Ludwig – Franchise lawyer

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