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
Circumvent post non-compete clause in franchising
On 3 April 2018, the Court of Appeal of Arnhem-Leeuwarden, ECLI:NL:GHARL:2018:3128, overturned an interim injunction of the District Court of Gelderland on competitive activities.
Column Franchise+ – “Prohibition of sales via internet platforms in franchise agreement exempt from cartel prohibition”
At the end of last year, Thuisbezorgd.nl incurred the wrath of many meal delivery companies by announcing another rate increase. The standard rate of Thuisbezorgd.nl thus reached a
Column Franchise+ – Franchisor acts unlawfully by providing a forecast through a third party
Disputes about forecasts between franchisor and franchisee remain a hot topic in franchising. After the Street-One judgment, it seems that franchisors feel safe
Column Franchise+ – Outsourcing forecasting to an administrative office does not benefit the franchisor
Disputes about forecasts between franchisor and franchisee remain a hot topic in franchising. After the Street-One judgment, it seems that franchisors feel safe
Outsourcing prognosis to an administrative office does not benefit the franchisor
Disputes about forecasts between franchisor and franchisee remain a hot topic in franchising.
Contribution Mr. AW Dolphijn in Contracting magazine 2018, no. 1: “The unilateral amendment clause in the franchise agreement.”
A contribution by mr Dolphijn has been published in the magazine Contracteren entitled: “The unilateral amendment clause in the Franchise Agreement”.