Agreed early termination of the franchise agreement
A franchise agreement is usually concluded for a specific period of time. Early termination is possible if both the franchisor and the franchisee reach an agreement. In the matter that the District Court of Rotterdam assessed on 26 July 2023, ECLI:NL:RBROT:2023:7014, the question was whether there was an agreement to terminate the franchise agreement prematurely.
A franchisee prematurely stopped the execution of the franchise agreement because he believed that an agreement had been reached with the franchisor.
According to the franchisor, it was admittedly investigated with the franchisee whether agreement could be reached on the conditions under which the franchise agreement could be terminated prematurely. The parties had also drawn up a settlement agreement for this purpose. However, according to the franchisor, the parties could not agree on the conditions. There was therefore never a signed settlement agreement. The franchisor therefore claimed compensation for damage in respect of the period in which the franchise agreement should have been fulfilled.
However, the court is of the opinion that a signed settlement agreement is not necessary to reach early termination. According to the court, an e-mail from the franchisor to the franchisee shows that the franchisor had agreed to the early termination. The e-mail states: “As agreed yesterday afternoon, we will jointly ensure that we end the collaboration as of October 1.”. The court sees no reason to assume that the termination was dependent on further conditions to be set by the franchisor regarding the precise settlement. The franchisor’s claim for damages was therefore rejected by the court.
When negotiating the premature termination of the franchise agreement, the parties would do well to first record in writing when an agreement has been reached. This is possible, for example, by first agreeing that there is only an agreement if both parties have signed.
Ludwig & Van Dam lawyers, franchise legal advice.
Do you want to respond? Then email to dolphijn@ludwigvandam.nl
Other messages
Insured and well
Occasionally, a franchise agreement contains a clause that obliges the franchisee to take out legal expenses insurance.
Rayon protection II: limitation of the exclusive area.
As a follow-up to the contribution in the previous Newsletter, this time the (possibilities of) curtailment of the exclusive franchise area will be discussed. In most franchise agreements
Franchise Agreements and Terms and Conditions
Franchise agreements often include concise arrangements with regard to delivery and payment conditions.
Horizontal and vertical cooperation
In practice, purchasing organisations, whether or not in the form of a cooperative, sometimes function - partly - as a sales organisation.
Competition and brandability: recent developments
The president of the Court of Arnhem very recently once again considered a number of competition law issues in preliminary relief proceedings
Master franchising: a double dependency
Various franchise organizations in the Netherlands are based on a so-called master franchise construction