Sale of rental rights supermarket location not allowed

Recently, the Court of Appeal in The Hague issued a directional judgment for switching locations between supermarket organisations. The case was as follows.

Supermarket chain X, a discounter, enters into an agreement to transfer exploitation rights with supermarket chain Y, a so-called full-service supermarket. Among other things, goodwill, construction facilities and tenancy rights are transferred for the location in question. It is true that personnel are also transferred, but the most important personnel, the cadre, are not transferred.

Also, no stocks and inventory are taken over. After all, the business space must be delivered to Y “empty and broom clean”, as it is called. After this, Y wants to establish a supermarket belonging to its formula. However, the landlord opposes the cooperation of X taking over the tenancy rights from Y. Such a contract takeover cannot take place without the approval of the landlord. An exception to this main rule is the statutory right to request replacement permission from the subdistrict court judge by means of a substitution authorization. That claim is the subject of debate here. However, assignment is only possible if all legal requirements are met, including, among other things, a “substantial interest” in “acquisition of a company”.

The Court of Appeal concludes that in this case there is no “company” or will be taken over if only an empty business space and thus only the rental rights are taken over. The legal rule has not been written for this, according to the court. Moreover, the Court of Appeal states that insufficient weight has also been shown. The stated financial need is too brief and therefore insufficiently plausible.

This statement is certainly interesting in relation to the agreements that supermarket organizations make on the heads of both franchisees/sub-tenants and owners of supermarket locations, who feel supported by this against having to accept a tenant/sub-lessor that is unwelcome to them. The Court of Appeal has opted for a restrictive application of the statutory substitution scheme, which is perhaps also best suited to an exception to the principle of freedom of contract enshrined in the Dutch system.

Ludwig & Van Dam franchise attorneys, franchise legal advice