Sale of the franchise organization, consequences for the franchisees?
Last week it was announced that the HEMA organization may be sold by Maxeda, the owner of the organization. HEMA also has a number of franchise locations. Does the sale of a franchise organization affect the franchisees?
Many franchise agreements specifically regulate the sale of the organization by the franchisor. Such provisions allow the sale of the organization by the owner of the formula. However, when selling, the franchisor will have to respect the interests of the franchisees.
The agreement will continue to exist, but the formula itself will continue to exist and a sale will not have a negative impact on the formula or the franchisor’s care obligations to its franchisees.
In the event that the franchise agreement does not regulate anything when the franchise formula changes hands, it is actually no different. The franchisees are confronted with a different owner of the formula, but that new owner will also take over the applicable franchise agreements and must respect and comply with them. In the event of non-compliance, this can be enforced – in extreme cases before the courts. Even if no provision has been included in the franchise agreement that pertains to this situation, the franchisee may not be disadvantaged in the event of a takeover of a franchise formula.
On the other hand, the franchisees are also obliged to comply with the franchise agreement. In principle, a transfer of the formula will not change this. Only a material change to the franchise formula by the new owner may give the franchisee the option of rescinding or voiding the franchise agreement. There is no question of a substantial change when, for example, the house style is adjusted, but this can be the case when, for example, the entire product line is changed. Nevertheless, great restraint should be exercised with measures in this regard.
Because a new franchisor can implement new policies, it is preferable that it is clearly stated that sale of the organization is possible, but that in that case the franchisor will have to keep an eye on the rights and interests of the franchisees. Including a corresponding provision in the franchise agreement can contribute to that clarity.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Article Mr. C. Damen – “When does the obligation to provide proof apply for the submission of the franchise agreement?” dated August 17, 2020
Does the obligation to produce information apply to showing a (franchise) agreement in proceedings if the parties to the proceedings do not have a legal relationship to the (franchise) agreement?
Article Mr. AW Dolphijn – “How do you value a franchise company with a discharge loan?” – dated August 14, 2020
A discharge loan is a proven means of franchisors to find long-term franchisees.
Article De Nationale Franchise Gids: “Information obligations of the intended franchisee under the Franchise Act” – dated August 7, 2020 – mr. AW Dolphin
Although the purpose of the Franchise Act is to protect franchisees against franchisors, a number of obligations have also been laid down for franchisees.
Legislative text of the Franchise Act – dated July 24, 2020 – mr. AW Dolphin
The legal text of the Franchise Act was published in the Staatsblad on 1 July 2020. The full legal text reads as follows:
Law Franchise – dated July 23, 2020 – mr. AW Dolphin
The Franchise Act will have a considerable impact on both franchisors and franchisees.
Contractual dissolution requirements not observed? No legal dissolution of the franchise agreement – dated July 23, 2020 – mr. C. Damen
Can a franchisor terminate the franchise agreement if it has failed to comply with its own contractual requirements?