Restyling forecasts
As is well known, a good franchisor offers its franchisee a sound investment exploitation forecast at the start. It should be possible to derive the turnover and the result for the franchisee for a period of, for example, three years from this investment/exploitation forecast. It goes without saying that the franchisee has a great responsibility in this respect, by actively convincing himself of the correctness of the prognosis provided. If this prognosis is clearly incorrect, and the franchisee cannot be blamed for his efforts and diligence, then the responsibility for this can, under certain circumstances, be traced back to the franchisor. After all, as an experienced party with regard to the pretended success formula, he is expected to properly assess the correctness of the prognosis.
What is the situation now with the reorganization of the franchise formula? Are the responsibilities identical in the case of a major restyling, for example?
Every franchise formula has to deal with modernization and adaptation of the formula from time to time. Fashion chains, for example, usually have fast retail cycles. More than once, this means that substantial reinvestments must be made every few years. Sometimes this reinvestment takes place by the franchisor, suppliers and franchisees together, but sometimes a franchisee is faced with a very drastic reinvestment in the refinancing of his company. This situation is comparable to a pre-contractual phase. This means that the franchisor is also largely responsible for correctly assessing the feasibility and degree of success of the restyling. In that context, a good franchisor will once again provide a sound investment and operating forecast for a period of, for example, three years. Of course in that situation the franchisee has more experience than before. However, in the dependency relationship in which the franchisee also finds himself, the franchisor is nevertheless expected to adequately and correctly assess the correctness of this.
The franchisor and franchisees would be wise to proceed to a possible restyling on the basis of consensus and to make agreements for the rest if this unexpectedly turns out to be disappointing in individual situations.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
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Prescribed shop fitting – dated January 28, 2020 – mr. AW Dolphin
The Midden-Nederland District Court has ruled on whether a franchisee is obliged to carry the shop fittings prescribed by the franchisor.
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The Association of Franchisees of Sandd (VFS) has today summoned Sandd and PostNL before the court in Arnhem. The VFS believes that Sandd and PostNL are letting the franchisees down hard.
Article The National Franchise Guide: “Why joint and several liability, for example, next to private?” – dated 7 January 2020 – mr. AW Dolphin
Franchisees are often asked to co-sign the franchise agreement in addition to their franchise, for example. Sometimes franchisees refuse to do so and the franchise agreement is not signed.
Ludwig & Van Dam Advocaten assists Sandd franchisees: Franchisees Sandd challenge postal monopoly in court – dated 12 November 2019 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) is challenging the decision of State Secretary Mona Keijzer to approve the postal merger between PostNL and Sandd before the court in Rotterdam.
Franchisee trapped by non-compete clause? – dated October 21, 2019 – mr. AW Dolphin
The District Court of East Brabant has ruled that a franchisee was still bound by the non-competition clause in the event of premature termination of the franchise agreement.