Unreasonable compensation at the end of the franchise agreement – dated September 17, 2019 – mr. AW Dolphin

This is stipulated in some franchise agreements  the franchisee always owes the franchisor at least a certain amount of costs upon termination of the franchise agreement. On 20 August 2019, the Arnhem-Leeuwarden Court of Appeal ruled, ECLI:NL:GHARL:2019:6745, that  in the event that such costs are unreasonably onerous. The  the departing franchisee therefore did not have to pay it. 

The franchise agreement required the  franchisee to always pay a minimum of € 5,400 in back-office costs upon termination of the franchise agreement. Franchisee has the  annulment of this provision is invoked because it is considered general terms and conditions  be considered and it would be unreasonably onerous (see Article 6:233,  preamble and under a BW). The franchisee had argued that it  back-office system was not functioning and that the height of the relevant  costs are disproportionate to the actual costs.  The franchisor had not contradicted this. That is why the court  assumes that these costs for the franchisee upon termination of the  franchise agreement is indeed unreasonably onerous, so the stipulation  rightly nullified and the amount is not due on that ground.

It is not inconceivable that, if the franchisor had objected substantively to the unreasonable objection, the Court of Appeal would also have come to the same conclusion. 

mr. AW Dolphijn – franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? 

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