Termination of franchise agreement in case of changes in leased retail space – September 27, 2019 – mr. AW Dolphin

On 15 July 2019, the District Court of Overijssel, ECLI:NL:RBOVE:2019:3337,
adjudicated on the question of termination of a franchise agreement
the light of the substantial modification of the rented retail space.

A continuing performance contract existed between the franchisee and the franchisor
indefinitely. The franchisee rented a business space from a
third. The landlord had terminated the lease by December 1, 2019. The
franchisee was unable to negotiate a new one with the landlord
to conclude a rental agreement. The franchisor managed to get one
come to a new lease with the landlord, albeit that the
the relevant business space would be rented out in a larger and more luxurious manner.

The franchisee did not wish to continue the franchise agreement,
because with the larger, older business space, the costs for the
franchisee would increase. Consider a higher throughput
rental costs and refurbishment costs. Also, the franchisee would be more
become dependent on the franchisor, now the franchisor also
become a landlord.

The franchisee had the franchise agreement almost immediately on July 1
terminated in 2019 and the obligations under the franchise agreement,
including the purchase obligation, no longer fulfilled.

The franchise agreement was terminated as soon as possible
to allow the company to stand on its own two feet, so that, partly because of this, it can move quickly
can be moved elsewhere, without being (further) dependent
from the franchisor. It should be expected to work
to find suitable affordable housing for well before December 1, 2019
his business nearby. This date December 1, 2019 was also the
date on which the landlord terminated the lease.

However, the franchisor believes that the termination of the
franchise agreement has been too abrupt and has left it for the
franchisor has been made impossible to adequately respond to the upcoming
(temporary) situation.

The court ruled that a reasonable notice period had been observed
must be made by the franchisee and that the cancellation has to be made first
apply from October 1, 2019, instead of July 1, 2019. That date as
termination date of what has been agreed upon by the parties does more justice
the mutual interests, as outlined above, according to the
right. During the notice period, the franchisee is sentenced to
still make exclusive purchases from the franchisor.

It remains difficult to find a good balance between the interests of and
again if circumstances change without the parties having much influence
finished.

mr. AW Dolphijn – franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice. Want
you respond?

Go to dolphijn@ludwigvandam.nl