The franchise formula as the destination of the rented property
The Amsterdam Court of Appeal recently ruled on the question of whether a rental agreement can be dissolved and the rented property should be vacated, because the renting franchisee acted contrary to the destination clause in the rental agreement. That clause prescribed use of the leased property according to the franchise formula. See: http://uitspraken.rechtspraak.nl/inziendocument?id=ECLI:NL:GHAMS:2013:4913&keyword=franchise
The tenant, who is also the franchisee, defended himself against the claims, arguing, among other things, that the formula in practice deviated strongly from what had been agreed in writing at the time.
The Court of Appeal has established that a franchise formula is usually subject to development, and that this is all the more true in this case since the lessee is the formula’s first and only franchisee. The franchise agreement also stipulates that the franchisee is obliged to cooperate in the further development of the formula. The Court of Appeal ruled that it can be argued against the franchisee that he violated the destination clause in the rental agreement because he did not meet the essential characteristics of the formula.
It follows from this ruling that franchisees should be vigilant when interpreting the franchise formula, especially if the formula is relatively new and under development. Franchisors would do well to include a clause in the rental agreement that the tenant is obliged to use the formula, as well as that the tenant is obliged to cooperate in the further development of the formula.
Mr AW Dolphin – Franchise attorney
Ludwig & Van Dam Franchise attorneys,franchise legal advice. Do you want to respond? Mail to dolphijn@ludwigvandam.nl
Other messages
The further determination of the rental price of business premises at the request of the lessor/franchisor or the lessee/franchisee
Does the (sub)tenant/franchisee still pay a competitive rent for the leased business space?
Partial indebtedness of entrance fees due to lack of turnover and non-delivery of contractual performance by the franchisor
The franchisee rightly invokes unforeseen circumstances due to the lack of turnover and successfully claims moderation of the entrance fee due.
Termination of the franchise agreement does not automatically lead to termination of the sublease agreement
Franchisor terminated the franchise agreement with the franchisee. The franchise agreement stipulated that termination of the franchise agreement would also terminate the sublease agreement
Despite the franchisee’s counterclaim, the franchisor justified dissolution of the franchise contract
The Rotterdam court recently ruled that payment arrears of more than € 80,000 is sufficient for the franchisor to dissolve the franchise agreement.
Actually using a building, but without a lease
In franchising, it often happens that the business premises from which the franchisee operates his business
Switching franchisee from one franchise organization to another is not without risks
The court in Amsterdam recently ruled in a case where a franchisee switched from one franchisor to another, in the same industry.