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?
Go to dolphijn@ludwigvandam.nl
Other messages
Know-how and identity protection
One of the most essential parts of a franchise formula is
Internet sales in a franchise relationship
Internet sales are also enjoying increasing interest in conventional franchise circles.
What role does the franchisor play in the sale of a franchise business?
When a franchisee is thinking about selling his business, it is advisable
Litigation costs order
There is often a misconception about the reimbursement of legal costs
Franchisor in trouble, what to do?
It seems inevitable that the world is heading for a recession.
The bankrupt franchisor
In the penultimate contribution to this column, the phenomenon “Franchisor in difficulties, what to do?” discussed.