Abuse of bankruptcy law
The right must be used for the purpose for which it was written. The purpose of bankruptcy law is to prevent people or companies from continuing to accrue debt that they cannot pay off.
Bankruptcy law is often used by a franchisor as a means of pressure to induce the franchisee to pay promptly. If payment is not made on time, the franchisor immediately threatens to file for the bankruptcy of the franchisee. No room is left for a possible counterclaim or to contest the claim.
In short, the bankruptcy law indicates that bankruptcy can be declared when there are several creditors and the debtor is in a state in which he has ceased to pay. The requirement that there must be more than one creditor will often be met when a franchisor claims to have a claim against a franchisee. As a creditor, for example, the current account credit already counts. However, the fact that there are several creditors is not a sufficient condition to be declared bankrupt. In addition, there must also be a situation in which payment has ceased.
When a franchisee leaves an invoice unpaid and the franchisee has a reason for this, it is therefore advisable to properly communicate and record the reason for non-payment. If the franchisee does not pay for a reason, he is not in the situation that he has ceased to pay, so the reason must be known. In this way, the franchisee avoids being wrongly put under pressure to file for bankruptcy or, more annoyingly, that, after the franchisor has already filed for bankruptcy, the situation has to be explained to the court, where there is actually a discussion about the amount of the invoice or the quality of the service or goods provided.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Distribution agreement or agency agreement: find the differences
The court in The Hague recently ruled whether there was a distribution agreement (this could be a franchise agreement, for example) or an agency agreement.
Franchisee does not achieve operating forecast: the interim score.
Recently, the court in Roermond rendered an interim judgment between a franchisee and a franchisor, whereby the turnover was one third lower than budgeted by the franchisor.
Dissolution of the franchise agreement at the end of the franchise formula
It often happens that a franchise formula ceases to exist.
Comparative advertising in the supermarket sector
The court of Amsterdam recently ruled on comparative advertising in the supermarket sector.
Supermarket letter – 1
Supermarket entrepreneur may not be bound by a non-competition clause.
Incorrect forecasts: far-reaching consequences for the franchisor-franchisee relationship
Incorrect forecasts: far-reaching consequences for the franchisor-franchisee relationship