Circumventing the prohibition of competition in the franchise agreement – mr. AW Dolphijn – dated November 10, 2020
A non-competition clause in a franchise agreement is often experienced as objectionable by franchisees, especially if the non-competition clause also applies after the franchise agreement has expired. The Franchise Act does impose some restrictions on this prohibition, but such a prohibition is still possible. Sometimes attempts are made to circumvent the prohibition of competition. For example, see that commented-out statement here: https://bit.ly/3piUbyK
In a remarkable case, the preliminary relief judge ruled on October 22, 2020 (ECLI:NL:RBGEL:2020:5763) that a former franchisee had not violated the non-competition clause, even though the former franchisee leased the store to a friend who continued similar activities there.
The franchise agreement provided, among other things, the following:
In view of the protection of (the…) Formula, for a period of two years after termination of this Agreement, the Franchise will not, directly or indirectly, be self-employed or employed or in the form of any company or legal form, work or are otherwise involved, in any form whatsoever, in activities similar to (the…) Formula or the activities performed by the Franchisor under this Agreement.
The preliminary relief judge ruled that the former franchisee was actually not (any longer) able to close the shop and had no control over the new company. There was therefore no violation of the prohibition of competition, according to the court. There was therefore no question of evading the prohibition of competition. One may wonder whether involvement in the competitive activities, as referred to in the post-non-compete clause, does not exist if there is (sub)leasing to a third party that continues competing activities at the same location. Again and again, a concrete situation will have to be assessed on its specific merits in order to determine whether there has been a violation of the prohibition of competition.
mr. AW Dolphijn – franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl
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Supermarket Newsletter – 27
Supermarket Newsletter No. 27
Bankrupt because the franchisor refused to sell the franchise company – dated January 28, 2020 – mr. AW Dolphin
The District Court of The Hague has dealt with a request from a franchisor to declare a franchisee bankrupt.
Prescribed shop fitting – dated January 28, 2020 – mr. AW Dolphin
The Midden-Nederland District Court has ruled on whether a franchisee is obliged to carry the shop fittings prescribed by the franchisor.
Ludwig & Van Dam attorneys summon Sandd and PostNL on behalf of the Sandd franchisees – dated 9 January 2020 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) has today summoned Sandd and PostNL before the court in Arnhem. The VFS believes that Sandd and PostNL are letting the franchisees down hard.
Article The National Franchise Guide: “Why joint and several liability, for example, next to private?” – dated 7 January 2020 – mr. AW Dolphin
Franchisees are often asked to co-sign the franchise agreement in addition to their franchise, for example. Sometimes franchisees refuse to do so and the franchise agreement is not signed.
Ludwig & Van Dam Advocaten assists Sandd franchisees: Franchisees Sandd challenge postal monopoly in court – dated 12 November 2019 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) is challenging the decision of State Secretary Mona Keijzer to approve the postal merger between PostNL and Sandd before the court in Rotterdam.