Acquisition fraud vs. error in franchise forecasting
Who has to prove that the franchisor’s forecast is unsound? In principle, this is the franchisee. If the franchisee invokes the Acquisition Fraud Act, the burden of proof may be reversed. In that case, the franchisor, and therefore not the franchisee, will have to prove that the prognosis issued was not misleading.
The Amsterdam Court of Appeal ruled that the reversal of the burden of proof under the Acquisition Fraude Act does not also apply to an appeal by the franchisee on the basis of error. See Amsterdam Court of Appeal 16 January 2018, ECLI:NL:GHAMS:2018:123. In the first instance, the franchisee had only invoked error to no avail. See District Court of Noord-Holland 27 February 2017, ECLI:NL:RBNHO:2017:1590.
If there is a mistake, there does not have to be an unlawful act on the part of the franchisor. In error, the franchisee claims that he entered into the franchise agreement in the event of a misrepresentation. It is important that the franchisor is involved in the occurrence of that mistake or misunderstanding. A wrongful act occurs when an error has been committed. Acting by the franchisor in violation of the Acquisition Fraud Act constitutes an unlawful act.
A franchisee who believes that the prognosis presented is unsound, should think carefully about how to approach this.
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
Article Mr. C. Damen – “When does the obligation to provide proof apply for the submission of the franchise agreement?” dated August 17, 2020
Does the obligation to produce information apply to showing a (franchise) agreement in proceedings if the parties to the proceedings do not have a legal relationship to the (franchise) agreement?
Article Mr. AW Dolphijn – “How do you value a franchise company with a discharge loan?” – dated August 14, 2020
A discharge loan is a proven means of franchisors to find long-term franchisees.
Article De Nationale Franchise Gids: “Information obligations of the intended franchisee under the Franchise Act” – dated August 7, 2020 – mr. AW Dolphin
Although the purpose of the Franchise Act is to protect franchisees against franchisors, a number of obligations have also been laid down for franchisees.
Legislative text of the Franchise Act – dated July 24, 2020 – mr. AW Dolphin
The legal text of the Franchise Act was published in the Staatsblad on 1 July 2020. The full legal text reads as follows:
Law Franchise – dated July 23, 2020 – mr. AW Dolphin
The Franchise Act will have a considerable impact on both franchisors and franchisees.
Contractual dissolution requirements not observed? No legal dissolution of the franchise agreement – dated July 23, 2020 – mr. C. Damen
Can a franchisor terminate the franchise agreement if it has failed to comply with its own contractual requirements?