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
Extension under “the then applicable conditions”
Many franchise agreements contain a clause regarding renewal of the franchise agreement
Franchise agreement or employment contract?
“Franchise Agreement” is not a legal term. The law sees a franchise agreement as an ordinary agreement.
The bankruptcy of a franchisor: end of the franchisee’s right of action?
Although fortunately sporadic in itself, it does happen that franchise organizations go bankrupt.
Statutory commercial interest in the franchise relationship
In daily practice, payment arrears often give rise to legal disputes.
Silent extension
Many franchise agreements contain provisions governing the termination and possible continuation of the existing franchise agreement.
Abuse of bankruptcy law
The right must be used for the purpose for which it was written.