Central website (and/or central telephone number), an infringement of an exclusive catchment area?
In various franchise agreements (in the past), the central acquisition of customers via the internet was not properly considered, in combination with the geographic exclusive territories of the franchisees.
On 10 February 2015, the Amsterdam Court of Appeal (ECLI:NL:GHAMS:2015:412) rendered an interesting ruling on the question whether the franchisor’s central website infringed on the franchisee’s exclusive catchment area. The central telephone number of the franchisor was also discussed in that context.
The franchisee argued that the franchisor’s central referral system infringed on the (undisputed portion of the) exclusive service area.
The franchisor disputed this claiming that the exclusive territory, as defined in the franchise agreement, in no way means that potential customers must be referred to the franchise location in the territory in which they are located. This exclusivity only provides that no other franchisees or branches of the franchisor may be established within an assigned district and that entrepreneurs may not work for third parties, according to the franchisor.
According to the franchisor, the referral system also functions properly and (potential) customers from the exclusive service area are referred to the franchisee in question. Via the central telephone number, customers are referred to branches with the shortest travel time for them.
The Court of Appeal ruled that a franchisor who opens a central website is in principle obliged to realize equal opportunities for his franchisees. The franchisee has, in the opinion of the Court of Appeal, not sufficiently proven that the franchisor acted differently than might be expected of it.
With regard to the referral system via the central telephone number, the franchisor had apparently outsourced this to De Telefoongids, whereby the franchisor had made sufficient efforts to bring about synchronicity with the exclusive catchment areas. The referral mechanism based on the shortest travel time was apparently the best possible solution. The Court of Appeal ruled that the franchisor had made sufficient efforts in this respect.
Of course, it is highly dependent on the case-by-case in which way a central referral system functions and should function. In particular, it is also important whether the franchisor itself competes with the franchisee in its exclusive service area. Unlawful competition can easily arise in many webshops of franchisors, if and insofar as this is not (properly) regulated in the franchise agreement.
Mr AW Dolphijn – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Mail to dolphijn@ludwigvandam.nl
Other messages
Economic headwinds and duty of care: sometimes a difficult relationship
The trade press, as well as the more general media, are full of it: the retail trade is under heavy pressure
Gathering evidence for faulty prognosis
Gathering evidence for faulty prognosis
Exclusion nullification in unsigned franchise contract
On 17 February 2015, the Arnhem-Leeuwarden Court of Appeal assessed a court judgment.
Liability advisor for franchise agreements
When entering into a franchise agreement, the prospective franchisee sometimes engages an advisor to arrange financing, for example.
Financial contribution to the association of franchisees may not be stopped just like that
Financial contribution to the association of franchisees may not be stopped just like that
Seizure of ex-franchisee by franchisor not automatically permitted
Within a franchise relationship, disputes about money claims are unfortunately the order of the day.