The franchisee as the weaker party
Is the relationship between a supplier and a distributor similar to the relationship between a franchisor and franchisee? The District Court of Rotterdam, ECLI:NL:RBROT:2022:11463, ruled on this on 28 December 2022.
The issue concerned an agreement to distribute construction products. These products had been developed by the claimant. The defendant wanted to distribute the products. To this end, the parties entered into a distribution agreement.
However, the results of the collaboration were disappointing. The supplier demanded compliance with the distribution agreement. The distributor defended itself by making a comparison with the protection that a franchisee has as a “weaker party” in the event of incorrect forecasts. The distributor stated that it had entered into the agreement on the basis of incorrect assumptions and that the supplier had violated its pre-contractual information obligation. The distributor would have erred. The court did not follow the distributor’s reasoning.
The comparison that the distributor makes with franchise agreements and the jurisprudence about incorrect forecasts when entering into such an agreement does not hold. In franchise agreements, the franchisee is generally the weaker party, who has few options when entering into the franchise agreement to check (or have checked) the information provided by the franchisor about the franchise formula. In the present situation, the defendant is rather the stronger party who simply had the opportunity to conduct thorough research into the alleged potency of the product. For that reason alone, the situations are not at all comparable.
The court confirms that the franchisee can be regarded as a relatively “weaker party” in relation to the franchisor. Legislative history also shows that the franchise relationship is, in a sense, intrinsically unequal. This is not the case in the relationship between the supplier and the distributor, according to the court. This underlines the distinctive importance of the franchise agreement.
Ludwig & Van Dam lawyers, franchise legal advice.
Do you want to respond? Then email to dolphijn@ludwigvandam.nl
Other messages
Termination of a dealer agreement in relation to price maintenance
At the end of 2007, the Court of Appeal in Arnhem issued an interesting ruling concerning
Restyling forecasts
As is well known, a good franchisor offers its franchisee a good deal at the start
Nuanced franchise agreement on the grounds of error is a nuanced consideration
The Court in preliminary relief proceedings in Rotterdam recently ruled that a franchisor is not automatically responsible
The duty to offer in the franchise agreement is not valid
Recently, the Court of Appeal determined that an obligation of the franchisee
Franchise agreements of an indefinite term cannot be terminated just like that
Contrary to what is sometimes thought, franchise agreements for an indefinite period cannot be terminated just like that.
Sale of a franchise company, a subject to consider in good time
When entering into the franchise agreement, the fact that and under what conditions is not always considered in good time