Qualitaria franchisee put in his shirt – dated July 2, 2020 – mr. JAJ Devilee

Introduction

The District Court of Zeeland-West-Brabant has rendered a judgment in legal proceedings initiated by a Qualitaria franchisee. In this case, the franchisee argued that the sales brochure, quick scan and market research (“recruitment documents”) made available to him – in which turnover forecasts are stated – are not good and that he has erred due to these faults. The franchisee allegedly entered into the franchise adventure with Kwalitaria on the basis of incorrect information, according to the franchisee. The court did not agree with the franchisee’s story. In fact, the court ordered the Qualitaria franchisee to pay compensation of approximately € 95,000, among other things. What happened? 

Background

The Kwalitaria franchisee had conceived the plan to establish a combined branch of Kwalitaria and Delifrance in Baarle-Nassau. Based on this, the franchisor has made various recruitment documents available, which show that an excellent turnover can be achieved  generated with such a branch at this location. In the end, this franchisee only opened a Kwalitaria branch and the turnover apparently lagged behind what the franchisor (and the consultancy it engaged) had forecast. The franchisee did not stop there and nullified the franchise agreement (and the associated purchase and rental agreement). 

Subsequently, the Kwalitaria franchisee initiated legal proceedings against the franchisor. The court had to consider, among other things, whether the franchisee legally annulled the franchise agreement and the related agreements. If that were the case, the franchisee might be entitled to the fees already paid by him to the franchisor.

Judgment court

Despite the fact that the franchisee has argued, among other things, that (i) the franchisor knew that 50% of the market potential does not visit Kwalitaria stores, (ii) that the recruitment documents do not state that there is a bankrupt predecessor at this location, (iii) this location has suffered from long-term vacancy, (iv) the recruitment documents do not take into account a major competitor, (v) the location of the location has to do with a negative purchasing flow, (vi) the recruitment documents refer to an overestimated purchasing power tie and incorrectly do not take into account the outflow of purchasing power to surrounding municipalities, this cannot offer this Qualitaria franchisee any solace in these proceedings.

The court simply concludes that the franchisee has not sufficiently substantiated, or at least that it has not been established, that there are inaccuracies in the recruitment documents. For this reason, the Kwalitaria franchisee was not allowed to nullify the franchise agreement, so that the annulment of the franchise agreement was not legally valid. The result is that the franchisor rightly argued that the franchisee was not allowed to annul the franchise agreement and that the damage suffered by the franchisor as a result must be compensated by the Qualitaria franchisee. 

Conclusion

Insofar as you intend to terminate your franchise agreement, never take a decision to terminate it too lightly, also to prevent you from getting the lid on the nose at a later stage. First seek legal advice on this in order to examine the possibilities. 

mr. JAJ Devilee

Ludwig & Van Dam Franchise attorneys, franchise legal advice.

Do you want to respond? Go to devilee@ludwigvandam.nl