Customers, clientele and exceptions thereto
Some franchise constructions have the characteristic that the products or services in question are only supplied to certain consumers. Is this allowed?
If a prohibition is imposed on all franchisees by the franchisor to restrict sales to certain end-users, this is permissible only if there is an objective justification linked to the product. For example, this could be a general ban on the sale of hazardous substances to certain customers or for safety or health reasons. Only then is such a ban allowed.
The situation is different when others than end users (consumers like you and me) are excluded. Consider, for example, a franchise formula in which the franchisees are assigned an exclusive clientele whereby the franchisees are not allowed to supply wholesalers. Only to end users may be delivered. In principle, such an arrangement is possible. However, so-called passive sales should remain possible. This means responding to spontaneous requests from individual customers. This may be the case, for example, as a result of general advertising and promotion in the media and on the Internet that reaches customers within exclusive customer groups of other franchisees. If the potential customer then wants to go to a franchisee in another exclusive area, this is possible at any time.
The franchisor and franchisee are advised to clearly record such situations in advance in the franchise agreement, so that no misunderstandings or undesirable situations can arise. For the record, it should be pointed out that what is described here is mandatory law, from which it is absolutely not allowed to deviate. If this does take place, this can form grounds for nullity of the franchise agreement. Other measures, for example by the Netherlands Competition Authority (NMa), are also possible. Mr Th.R. Ludwig
For information: Theodoor Ludwig or Derk van Dam
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Price maintenance and non-competition clause
Franchise agreements are increasingly governed by competition law advancing from Europe.
Indirect price maintenance
As is well known in franchising practice, resale price maintenance is out of the question.
Indemnity I
Many franchise contracts contain clauses that must indemnify the franchisor against the conduct of the franchisee.
The professional problem solver: the judge reinvented
In our society, a true alternative circuit of problem solvers exists, including in the form of mediators.
Nice weather as an excuse?
Legal discussions are regularly held about the question of whether disappointing visitor numbers
Acquisition of inventory and goods
Many franchise agreements, especially where retail situations are concerned