Dispute between main lessor and franchisor: strict interpretation of contractual provisions.

In a dispute between the main lessor and the franchisor/main lessee, the subdistrict court judge of the Overijssel District Court recently ruled that the contractual provisions of the franchise agreement must be interpreted strictly.

The issue is as follows. Franchisor is the main tenant of a retail space in a shopping center in Enschede. The franchisee then sub-leases the retail space to a franchisee. At the moment that the franchisee indicates that he wishes to cease operating the store and to terminate the lease, (a department of) the main lessor – behind the back of the franchisor – enters into negotiations with the subtenant. It is agreed that the subtenant may vacate the retail space, despite the fact that the lease term has not yet expired. Subsequently, the franchisor is held liable by the main lessor for failure to comply with the exploitation obligation under the rental agreement and failure to comply with the agreed opening and closing times from the internal regulations.

The main lessor requests the franchisor to maintain the operation, in the event of defects of which the main lessor will charge the contractual penalty. The franchisor then indicates that it can no longer continue the operation, because the subtenant has left in the meantime, after all with the permission of the main lessor, who hereby creates a situation on the basis of which the fines can be collected.

It comes to a procedure. The main lessor is suing for a fine of €500 per violation of the opening hours in the internal regulations, totaling €246,000, and in the alternative a fine of €250 per day for the period in which the main lessee does not meet his exploitation obligation, a total of € 143,500 due to non-compliance with the exploitation obligation. The franchisor concludes that the claim must be rejected in full.

The court is of the opinion that although the franchisor has not complied with the exploitation obligation claimed by the main lessor and the agreed opening and closing times in accordance with the internal regulations, the franchisor has not been given proper notice of default in this regard. It is true that the franchisor has been summoned by the main lessor to manage the exploitation of the space maintain , but maintain is not a resume. According to the district judge. Nor has a proper term been given within which the franchisor should comply. All in all, this notice from the main lessor cannot be regarded as a correct and adequate notice of default, as a result of which the franchisor is not in default.

The main lessor then argues that it was able to deduce from the franchisor’s statement that it would no longer comply, so that no notice of default is required pursuant to Section 6:83 of the Dutch Civil Code and that the franchisor would be in default by operation of law. The subdistrict court ruled as follows with regard to this: in the opinion of the subdistrict court, although there is a communication from the franchisor from which the main lessor must deduce that it is failing to comply with the obligation, this does not affect the contractual obligation of the main lessor to give proper notice of default to the franchisor regarding the non-compliance with its exploitation obligation before it can claim the fine. The obligation to give notice of default under the general provisions entitles the tenant to clarity. He must be able to know with certainty whether and, if so, from when the lessor will use his authority to collect the fine. After all, the main landlord can claim the fine, but does not have to.

In conclusion, it can therefore be deduced from this judgment that a contractual provision, which states that the creditor must first give notice of default to the debtor with due observance of a specific period before the intended legal consequences can be invoked, cannot be deviated from without of the argument that the agreement would be permanently impossible. In this context, a comment should be made on the fact that this explicitly concerns a penalty clause and that, in the opinion of the subdistrict court, the tenant must obtain sufficient clarity with regard to this penalty clause as to whether or not the rent is due. contractual penalty. In any case, this once again makes it clear that correctly giving notice of default to a debtor is crucial for successfully invoking the intended legal consequence. If the manner of notice of default has been contractually agreed, it is advisable to follow this provision.

Mr D. Uijlenbroek – Franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Mail to uijlenbroek@ludwigvandam.nl