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 Franchiseplus: “Franchisors participate in franchisees” – dated June 3, 2020 – mr. AW Dolphin
Franchisors are increasingly participating in the franchisee's business. There are several benefits for both the franchisee and the franchisor.
Article The National Franchise Guide – “Corona discount on rent” – dated June 2, 2020 – mr. AW Dolphin
If a rental property is obliged to be closed due to corona, there may be a right to a rent reduction, according to the Northern Netherlands court.
Article Franchise+ – Franchisees enjoy the same protection as employees and commercial agents with regard to a non-competition clause – dated 7 May 2020 – mr. RCWL Albers
It often happens that, especially by franchisees, the validity of a post-contractual non-compete clause is considered too lightly.
The support agreement for the Retail sector in this Corona crisis – dated 15 April 2020 – mr. K. Bastian
On April 10, 2020, the Ministry of Economic Affairs, together with a number of landlords, retailers and banks, reached a support agreement.
Court rules that corona crisis does not constitute force majeure – dated April 10, 2020 – mr. AW Dolphin
If payment cannot be made due to a decrease in income, then there is not always a force majeure situation.
Important information for directors of franchisees associations: Online meetings and decision-making in times of corona – dated April 10, 2020 – mr. J. Strong
Emergency law provisions for legally valid decisions without physically meeting within the association structure.