Can a franchisee leave sales channels unused?
Franchise formulas are now generally well equipped with an online sales channel. The expansion with an online sales channel sometimes caused friction with the franchisee. However, developments continue. What if a franchisee of a formula, who traditionally worked with physical stores, only operates the formula through the online sales channel?
In that context, the judgment of the preliminary relief judge of the District Court of Amsterdam of 4 November 2015, ECLI:NL:RBAMS:2015:8040 (IBG/Accell), is important.
In addition to physical stores, the franchisee also operated a web shop (underfietsenwinkel.nl). After a year, the dealer sells the stores and continues its web shop. This is not what the franchisor had in mind. It focused on an omni channel formula. The franchisor requires that the necessary optimal service can be offered to customers within the framework of the franchise formula, and that would really only be possible with a physical store as well.
The franchisor wished to terminate the cooperation immediately on the grounds of non-performance, or at least terminate the cooperation after the agreed notice period had expired. The court ruled that there was no breach of contract, because it had not been explicitly agreed that a physical store should be present. It was agreed that the franchisee would provide the necessary service. The franchisee does that too, but doesn’t do it from a store. This is because service is provided at home. Immediate termination of the cooperation was therefore rejected. According to the court, the franchisor was authorized to terminate the cooperation with the franchisee, subject to the agreed notice period.
To avoid ambiguity and disputes, the dealer or franchise agreements should not only contain agreements on the expansion of sales channels, but also on the limitation of sales channels.
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 Franchise+ – “Immediate information obligations of franchisors upon operation of the Franchise Act” – mr. AW Dolphijn – dated June 25, 2020
As soon as the Franchise Act enters into force, this will have an immediate effect on franchise agreements that already exist. The question is whether the information flows are set up optimally from a legal point of view.
Senate will adopt Franchise Act – dated 24 June 2020 – mr. AW Dolphin
The House of Representatives had unanimously adopted the proposal to introduce the Franchise Act on 16 June 2020
Franchise Act passed by the House of Representatives – dated 16 June 2020 – mr. AW Dolphin
The Franchise Act was adopted by the House of Representatives on 16 June 2020.
Sandd franchisees find satisfaction in nullifying Sandd and PostNL merger – dated 12 June 2020
The franchisees of mail delivery company Sandd went to court in November, assisted by Ludwig & Van Dam Advocaten. Court of Rotterdam rules on takeover by PostNL.
Plenary debate dated June 9, 2020 in the Lower House of the Franchise Act – dated June 10, 2020 – mr. AW Dolphin
On 9 June 2020, the legislative proposal for the Franchise Act was discussed in plenary in the House of Representatives. An amendment and a motion have been tabled.
Franchising is “a bottleneck in tackling healthcare fraud” – dated 10 June 2020 – mr. AW Dolphin
According to the various supervisory authorities in the healthcare sector, franchise constructions can be seen as a non-transparent business construction in which the supervision of professional and