Proven formula for success – a sequel
Unfortunately, in recent months it has become increasingly common for franchisees to run into problems as a result of, in short, a franchise formula that looked good on paper, but turned out not to work in practice. This often concerns small franchise organizations in the start-up phase, usually already in the first year of their existence. The cause of the problems can often be found in the fact that the franchisor in question has either just started in the sector or has been working in it for some time, but has no experience with franchising. Through their own entrepreneurship, and perhaps a dose of luck, the involved franchisor manages to set up and maintain his own company, but the franchisees are often confronted with a concept that does not work at all linked to their person. This translates into virtually no turnover and substantial losses.
The European Code of Honor on Franchising, a code of conduct to which all franchisors affiliated with the Dutch Franchise Association must adhere, but of which it is highly recommended that non-members also follow the instructions therein, stipulates that before a concept or formula is is offered to franchisees through franchise agreements, there must be a proven formula for success, and therefore a track record. That track record can be achieved, for example, by operating a pilot store for a longer period of time, a pilot project as it were, which can be used to determine whether the concept can actually function, independently of the person of the franchisor. In that case there can be a proven formula for success and only then can setbacks as referred to above, often with very far-reaching negative consequences for the franchisees, but also for the franchisor, be prevented.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Article Franchise+ – “Recipient’s liability in a franchise context, what exactly is that about?” – mr. K. Bastiaans – dated November 24, 2020
The phenomenon of hirer's liability means that a third party can be held liable for the debts of another under certain conditions.
Franchisor liable for errors made by a franchisee? – mr. AW Dolphijn – dated November 23, 2020
A franchise organization asked the court to declare that the franchisor is not liable if a franchisee has made a serious mistake with a customer.
The Real Intentions of the Parties to a Franchise Agreement – Mr. C. Damen – dated November 23, 2020
What really was the idea of the parties when they concluded a franchise agreement?
Circumventing the prohibition of competition in the franchise agreement – mr. AW Dolphijn – dated November 10, 2020
A non-competition clause in a franchise agreement is often experienced as objectionable by franchisees, especially if the non-competition clause also applies after the franchise agreement has expired.
Article Franchise+ – “How do I get rid of my debts: Also for franchisees and franchisors” – mr. AW Dolphijn – dated October 20, 2020
A reorganization may also be necessary for franchisees and franchisors who are in financial difficulties in order to continue to exist.
Article De Nationale Franchise Gids: “Reinvestment obligation for franchisees has limits” – dated October 13, 2020 – mr. RCWL Albers
In practice, it often happens that franchisors choose to renew their franchise formula and the appropriate image