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
A statutory franchise arrangement, far from our bed
A statutory franchise arrangement, far from our bed
Franchisor must take franchisee into account when determining transfer
A standard article in a franchise agreement is the so-called transfer arrangement.
Purchasing and purchase obligation right or wrong?
Purchasing and purchase obligation right or wrong?
The franchisee successfully appeals for error as a result of the forecast provided by the franchisor
The franchisee successfully appeals for error as a result of the forecast provided by the franchisor
Franchisor successfully invokes a post-contractual non-compete clause
The court in Maastricht was recently confronted with a case in which a franchisee had left the franchise formula prematurely.
The non-competition clause in the franchise agreement
A common clause in the franchise agreement is a so-called post-contractual non-compete clause.