Absence of (sub)lease agreement

Court of Amsterdam

A link between a franchise agreement and a rental agreement is a common phenomenon. In the present case, a franchisor rented retail premises in Utrecht from a subtenant (X), who in turn leased the retail premises from Y. On 1 March, a franchisee enters into a franchise agreement with the franchisor and, as a subtenant, moves into the premises owned by the franchisor on 1 April. rented shop.

However, X had informed the franchisor a few months earlier that X wanted to terminate the lease with Y, so that the lease between X and the franchisor would come to an end on 31 December. In that respect, the franchisor could only grant the franchisee the use of the retail space until 31 December. Subsequently, it should therefore be examined in consultation with Y to what extent a new lease agreement could be concluded between Y and the franchisor, or between Y and the franchisee.

Given the lack of clarity about what would happen after December 31 with regard to the rental of the retail property, the franchisor and the franchisee did not conclude a rental agreement with each other, but only laid down in an e-mail the conditions under which the franchisee was allowed to occupy the property. Basically, until December 31, the franchisee would not have to pay rent to the franchisor initially. If a rental agreement was concluded between the franchisor/franchisee and Y after December 31, the franchisee would owe rent from April 1. If no rental agreement was concluded between the franchisor/franchisee and Y, the franchisee would no longer have to pay the unpaid rent from April 1 to December 31 to the franchisor.

However, the parties will not arrive until that date, because the franchisee dissolves the franchise agreement as early as August 31 due to attributable shortcomings on the part of the franchisor. The parties later agree that the cooperation will be terminated on November 15 and that the franchisor will take over the company on that date. The franchisor is of the opinion that it can in any case still claim rent from the franchisee for the period 1 April to 15 November. After all, the earlier agreement about whether or not to pay the rent was only in the light of the continuation of the franchise relationship, also after 31 December. Now that the relationship is terminated, the franchisee must pay the rent for the period that he has used the retail property.

The Court of Appeal has established that there is no written rental agreement in force between the parties, so that the e-mail containing the agreements should provide guidance on what is legally correct. Since no (new) rental agreement has been concluded after December 31, the franchisee is not obliged to pay rent to the franchisor on the basis of the text of the e-mail. It would have been for the franchisor, as a professional party, to make further agreements about rent payments in the event that the cooperation was terminated before December 31, meaning that by definition no new lease agreement would be concluded. This could only be different if a rental agreement had been offered to the franchisee, presumably before the dissolution of the franchise agreement, but the franchisee was unwilling to sign it. However, this has not been proven, or has not been sufficiently proven.

Apart from a linguistic explanation of the agreements between the parties, it can of course be further questioned to what extent it would be reasonable, given the circumstances, for the franchisee to owe any rent, now that the premature termination of the franchise agreement, and therefore the main reason for a to enter into a rental agreement is clearly attributable to the franchisor. It illustrates that a professional approach may also be required from professional parties.

Mr JH Kolenbrander – Franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice Would you like to respond? Mail to coalbrander@ludwigvandam.nl