The franchisee successfully appeals for error as a result of the forecast provided by the franchisor
Court of Utrecht
The court in Utrecht recently ruled in favor of a franchisee who argued during the court case that his franchisor had provided him with inadequate operating forecasts when entering into the franchise agreement. According to these forecasts, the franchisee could realize an acceptable turnover. The opposite turned out to be true – the franchisee achieved virtually no turnover. Nevertheless, after the early termination of the franchise agreement, the franchisor claims payment of (missed) fees from this franchisee and institutes legal proceedings.
However, the franchisee invokes error in the lawsuit; had he known how the proverbial ‘fork’ would really be ‘in the stem’, he would not have concluded the franchise agreement with the franchisor. The court accepts the defense and points out – among other things – that there is such a big difference between what the franchisor has forecast and what the franchisee has achieved in terms of turnover. Nor is it disputed by the franchisor that other franchisees also fail to meet the forecasts provided. The franchisor also apparently used historical data, even though this data dates from before the credit crisis. All this is reason for the court to assume that the forecasts provided by the franchisor are not sound.
The previous ruling ‘fits in’ completely with the line that the Supreme Court set almost 10 years ago and which has already been discussed several times in these articles. A franchisee must be able to rely on the accuracy of the forecasts provided to him by a franchisor. It obliges the franchisor to provide information based on sound grounds. Since the franchisee’s decision whether or not to participate in a particular franchise formula will largely depend on the return that can be achieved from the operation, this is without doubt justified.
Mr JH Kolenbrander – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice Would you like to respond? Mail to coalbrander@ludwigvandam.nl
Other messages
Damage estimate after wrongful termination of the franchise agreement by the franchisor
In a judgment of the Supreme Court of 15 September 2017, ECLI:NL:HR:2017:2372 (Franchisee/Coop), it was discussed that supermarket organization Coop had not complied with agreements, as a result of which the franchisee
Franchisor is obliged to extend the franchise agreement
On 6 September 2017, the Rotterdam District Court ruled, ECLI:NL:RBROT:2017:6975 (Misty / Bram Ladage), that the refusal to extend a franchise agreement by a franchisor
The (in)validity of a post-contractual non-competition clause in a franchise agreement: analogy with employment law?
On 5 September 2017, the District Court of Gelderland, ECLI:NL:RBGEL:2017:4565, rendered a judgment on, among other things, the question of whether Bruna, as a franchisor, could invoke the prohibition for a
Column Franchise+ – mr. J Sterk: “Court orders fast food chain to extend franchise agreement
The case is set to begin this year. For years, the franchisee has been refusing to sign the new franchise agreement that was offered with renewal, as it would lead to a deterioration of his legal position
Not a valid non-compete clause for franchisee
On 18 November 2016, the interim relief judge of the Central Netherlands District Court, ECLI:NL:RBMNE:2016:7754, rendered a judgment in the issue concerning whether the franchisee was held
Franchise & Law No. 5 – Acquisition Fraud and Franchising Act
The Acquisition Fraud Act came into effect on 1 July 2016. This includes amendments to Section 6:194 of the Dutch Civil Code.