The possibilities regarding claiming a rent reduction then

Following on from earlier published articles of my hand, I will once again deal with a tenancy law issue below. In most cases, the franchisee and the franchisor have also concluded a rental agreement in addition to a franchise agreement. The franchisor will have entered into the rental agreement as lessor and the franchisee as lessee. Of course, it is also possible that the franchisee has concluded a rental agreement with another (legal) person. In the following, it will be assumed that a lease has been concluded with the franchisor, in which the franchisor has entered into as lessor/sublessor and the franchisee as tenant/sublessee. In this context, a specific subject with regard to the rental relationship between the parties will be discussed below, namely the situation in which a rental agreement has been concluded with the franchisor whereby it has been agreed that the rented property relates to, for example, 150 m2 and the tenant (hereinafter : franchisee) it turned out afterwards (possibly even months later) that the leased property relates to a considerably lower number of m2, for example 110 m2.

In this context, the question is important to what extent the franchisee can claim a rent reduction and to what extent any damage suffered as a result of the fact that it eventually transpired that the leased property relates to a smaller number of linear m2 than agreed. In this context, there is a defect, as stated in Article 7:204 paragraph 2 of the Dutch Civil Code, which (in short) means that the leased property, due to a circumstance not attributable to the franchisee, does not provide the franchisee with the enjoyment that the franchisee may expect when entering into the lease.

First of all, the possibility of claiming a rent reduction will be discussed in more detail. Article 7:207 of the Dutch Civil Code shows that in the event of a reduction in the enjoyment of the rental due to a defect, the franchisee can claim a proportional reduction in the rent from the day on which the franchisee duly informed the franchisor of the defect or on which the defect was already known to a sufficient extent to take measures. The rent reduction can then be claimed until the day on which the defect has been remedied. The franchisor must therefore first be informed of the fact that the number of square meters of the rented space is less than what the franchisee and the franchisor have agreed upon. In order to claim a proportional rent reduction, not only the presence of a defect within the meaning of Article 7:204 paragraph 2 of the Dutch Civil Code is necessary, but it must also be of such importance that there is a substantial impairment of the rental enjoyment that the tenant franchisee may expect at the start of the lease.

As a result of the fact that the franchisee has less m2 than agreed with the franchisor, the franchisee may have suffered damage. In this context, it is important to what extent the franchisee can recover any loss of profit or trading loss from the franchisor. The franchisor is liable for this damage if the defect was already present when the rental agreement was entered into and the franchisor knew or should have known of the defect at the time, or informed the franchisee that the item did not have that defect. What is important in this context is what the franchisor – given his familiarity with the leased property – should have known. However, the circumstances of the case must be taken into account. In addition, the franchisee must prove that he has suffered trading loss as a result of the aforementioned defect.
In view of the foregoing, it is advisable for the franchisee to verify immediately upon conclusion of the lease whether he actually has the agreed number of m2 at his disposal, in order to avoid any (unpleasant) surprises.

Ludwig & Van Dam franchise attorneys, franchise legal advice