Want to get rid of your franchise agreement in the meantime?

Franchise agreements are usually concluded for a longer period of time. Many franchisors also use a standard franchise agreement and it is often a considerable undertaking to adjust this standard in consultation with all franchisees. Such adjustments are periodically necessary in view of changing market conditions. All kinds of changes can also occur with individual franchisees. Interim changes can also lead to a franchisee wanting to get rid of the rest of the term of the franchise agreement.

How do you break open a franchise agreement? Most franchise agreements have a term agreed for a certain period of time and this term cannot usually be shortened in the interim without the franchisor’s consent. In a number of cases, however, the law does offer opportunities for the franchisee to terminate the franchise agreement prematurely. An important category of possibilities is the situation in which the franchisor has done something wrong, or is doing something wrong, as a result of which the unaltered continuation of the cooperation cannot be maintained. Not every franchisor error will allow the franchisee to complete the entire franchise agreement. The error must be sufficiently serious.

An illustrative case has arisen in this respect where the franchise agreement prescribed certain formalities to be observed in order to arrive at a certain change. For example, it was stipulated that the franchisees’ association had to be given the opportunity to give advice before the franchisor could make a certain change. Because the franchisor ignored this right to advice, the intended change could not be implemented, but there was no reason for the franchisee to disregard all obligations under the franchise agreement.

Breaking open a franchise agreement in the meantime does not always have to mean the end of the collaboration, but can also mean, for example, that parts of the franchise agreement are changed (for the individual franchisee).

In any case, it is certainly not always impossible to break open a franchise agreement. However, this is a legally thorny issue that requires proper guidance and advice.

mr. AW Dolphijn – franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to: dolphijn@ludwigvandam.nl

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