Continuation of operation, despite substantial backlog of franchise fee?
Can the franchisee continue to operate despite a significant franchise fee payment arrears? On 29 April 2014, the District Court of Rotterdam (ECLI:NL:RBROT:2014:4701) ruled on this question in preliminary relief proceedings.
As a franchisor, IPIC rents out an IMO car wash to a franchisee for operation. The franchisee has left more than a ton of franchise fee due unpaid. After notice of default, IPIC dissolves the franchise agreement extrajudicially, replaces the locks to the car wash and renders the car wash unusable for the franchisee.
The franchisee claims in preliminary relief proceedings to have the car wash freely available again. As a counterclaim, the franchisor claims – inter alia – insofar as required, to oblige the franchisee to vacate the leased property and to keep it vacated.
The preliminary relief judge rules that, now that the franchise agreement can (partly) be qualified as the lease of business space, the franchisor cannot dissolve the lease agreement extrajudicially. Only the court can dissolve a commercial space lease (Article 7:231 paragraph 1 DCC). The court awards the claim to make the car wash available again to the franchisee. In that context, the franchisor’s counterclaim for eviction of the leased property is also rejected.
The legal qualification of a franchise agreement sometimes remains difficult if there is also the use of immovable property. If the use of the immovable property can be qualified as a business space and there is some form of compensation for this, then the legal protection rules for the benefit of the tenant of a business space will very quickly prevail. An important protective rule is that the tenant cannot prematurely terminate the lease for a business space without the court or without the cooperation of the tenant. A preliminary legal analysis of the franchise agreement and the relevant circumstances can help to prevent uncertainties.
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
Franchisee may not be bound by a non-competition clause
Recently, the court of Utrecht ruled again on the Super de Boer case against one of its (former) franchisees.
Exchange information about takeover entrepreneurs C1000
Exchange information about takeover entrepreneurs C1000
More choices for fast food entrepreneur
In the competitive market of fast food concepts, those who have access to their own premises often determine which formula may be used.
Franchisee protection in case of subletting
Franchisee protection in case of subletting
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.