Settling claims between franchisor and franchisee

It seems so obvious. You have a claim against someone who also receives money from you and you agree that the person who has to pay the highest amount has paid the excess of his own claim to the other. For example, you have a claim against A of € 100.00 and A has a claim against you of € 75.00, then A will pay you an amount of € 25.00. The receivables are then settled.
The law also provides for this possibility. From article 6:127 of the Dutch Civil Code, settlement has been arranged.

The law stipulates that you can invoke set-off. This possibility exists when claims arose from the same legal relationship, which means that claims based on different agreements cannot, in principle, be set off against each other. If you have concluded both a rental agreement and a franchise agreement with your franchisor, this would mean that the claim based on the rental agreement cannot be set off against a claim based on the franchise agreement. Often these two agreements are linked. That link may be more or less explicitly included in the agreements. Settlement of the receivables is possible again when agreements are linked.
It is therefore advisable to check the agreements for the presence of a link before settling receivables. In any case, it is advisable to check whether the settlement of claims is not excluded in the agreement.

In practice, moreover, it often happens that settlement is not announced, but is simply done. This is not the right way and even leads to non-performance. It is important that settlement is explicitly announced. I advise you to record this in writing so that there can be no ambiguity afterwards about the status of the claims.
If you want to offset claims against each other, I can give you the following tips, referring to the above:
– Check in your agreement whether offsetting is not excluded;
– In the case of several agreements, check whether there is a link between the agreements;
– If you are a franchisee, notify your franchisor in writing that you are offsetting;
– If in doubt, you as a franchisee can discuss the possibility of settlement with your franchisor.

Ludwig & Van Dam franchise attorneys, franchise legal advice