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
How do I keep my location? – June 6, 2019 – mr. K. Bastian
Location is of great importance to franchisors and franchisees, especially in the retail sector.
Supermarket letter – 25
Supermarket Newsletter No. 25
The benchmark for franchise forecasts – dated 29 May 2019 – mr. AW Dolphin
On 19 March 2019, the Den Bosch Court of Appeal, ECLI:NL:GHSHE:2019:1037, listed the case law of the Supreme Court on prognosis in franchising.
Franchise arbitration: too high a threshold? – mr. M. Munnik
When entering into an agreement, it is possible for the parties - contrary to the law - to designate a competent court. This also applies to the franchise agreement. Of this possibility
Franchise appeal for error due to incorrect forecasts and lack of support rejected – dated April 25, 2019 – mr. K. Bastian
The Court of Appeal of 's-Hertogenbosch ruled (ECLI:NL:GHSHE:2019:697) on the question whether the mere fact that forecasts did not materialize justifies the conclusion that the franchisee has been shortchanged...
Article De Nationale Franchise Gids: “Increasing protection against recruiting franchisees” – dated 2 April 2019 – mr. AW Dolphin
It is becoming increasingly apparent that recruited franchisees can be protected on the basis of the Acquisition Fraud Act.