Competing without a non-competition clause?
The franchise non-compete obligation remains a source of dispute. The Court of Appeal of ‘s-Hertogenbosch ruled on 27 May 2014 (ECLI:NL:GHSHE:2014:1502) on a matter that raised the question whether competing activities were permitted because no non-compete clause had been agreed.
A franchise entrepreneur of a funeral company sells his company to another. The buyer enters into a franchise agreement with the franchisor. After some time it turns out that the seller arranges funerals in the area where he was also active before the sale of his company.
The court, like the court, is of the opinion that the seller was not allowed to arrange funerals and was allowed to keep the profit. After all, the seller had sold that part of the company to the buyer for good money. It follows from the requirements of reasonableness and fairness that the seller must refrain from competing with the company that he has sold. This also applies if, as here, the parties have not included a non-competition clause in the purchase agreement.
The selling party is itself one of the partners of the franchisor. The franchisor is a general partnership. The franchise agreement prohibits the franchisor from entering into franchise agreements with other franchisees for a particular territory. It was therefore all the more true that the seller’s competitive activities within the territory were unacceptable.
This issue once again shows the importance of clear agreements. When transferring franchise companies, it is always wise to agree on the subject of competition. Even if it is agreed that no restriction of competition applies, it is also important to record that.
Mr AW Dolphijn – Franchise lawyer
Ludwig & Van Dam Franchise attorneys,franchise legal advice. Do you want to respond? Mail to dolphijn@ludwigvandam.nl
![](https://ludwigvandam.megaconcept.nl/wp-content/uploads/2020/12/232court-min-400x222.jpg)
Other messages
Distribution agreement or agency agreement: find the differences
The court in The Hague recently ruled whether there was a distribution agreement (this could be a franchise agreement, for example) or an agency agreement.
Franchisee does not achieve operating forecast: the interim score.
Recently, the court in Roermond rendered an interim judgment between a franchisee and a franchisor, whereby the turnover was one third lower than budgeted by the franchisor.
Dissolution of the franchise agreement at the end of the franchise formula
It often happens that a franchise formula ceases to exist.
Comparative advertising in the supermarket sector
The court of Amsterdam recently ruled on comparative advertising in the supermarket sector.
Supermarket letter – 1
Supermarket entrepreneur may not be bound by a non-competition clause.
Incorrect forecasts: far-reaching consequences for the franchisor-franchisee relationship
Incorrect forecasts: far-reaching consequences for the franchisor-franchisee relationship