Distribution agreement or agency agreement: find the differences
Court of The Hague
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. Under Dutch law, the distinction between a distribution agreement (franchise agreement and an agency agreement) mainly lies in the fact that an agent mediates purely on behalf of his principal (client) in the conclusion of the agreements between the principal and the customer, while a distributor (franchisee) on the other hand, purchases products in its own name and for its own account and risk and then resells them.
The distinction is very important in connection with numerous legal obligations that apply to an agent, where they do not automatically apply to a distributor (franchisee), unless the franchisee and franchisor have arranged this in their franchise agreement. If there is mediation between the agent (this can also be a franchisee) and, as stated above, the principal (client, the company in question) and the consumer, under certain circumstances there is also a claim to legal goodwill upon termination of the contract. the contract between the agent and the principal. This is fundamentally different with a distribution agreement, where this legal right is absent. When the distribution agreement or agency agreement is terminated, other rights and obligations arise for the parties. Incidentally, in practice it appears that the systems can also go together. For example, there is a franchise agreement with agency elements or vice versa. This is very well possible, although the franchisee / agent and the franchisor / principal must make various choices with regard to their contract options. The choices are thereby limited, since not all agency provisions can be set aside by law, if this were desirable at all. In this case, the court ruled that there was a distribution agreement, which can have various consequences for the parties in the eventual settlement of their relationship in the long term.
Mr Th.R. Ludwig – Franchise attorney
Ludwig & Van Dam Franchise attorneys, franchise legal advice Would you like to respond? Mail to ludwig@ludwigvandam.nl
Other messages
Article Franchise+ – “Recipient’s liability in a franchise context, what exactly is that about?” – mr. K. Bastiaans – dated November 24, 2020
The phenomenon of hirer's liability means that a third party can be held liable for the debts of another under certain conditions.
Franchisor liable for errors made by a franchisee? – mr. AW Dolphijn – dated November 23, 2020
A franchise organization asked the court to declare that the franchisor is not liable if a franchisee has made a serious mistake with a customer.
The Real Intentions of the Parties to a Franchise Agreement – Mr. C. Damen – dated November 23, 2020
What really was the idea of the parties when they concluded a franchise agreement?
Circumventing the prohibition of competition in the franchise agreement – mr. AW Dolphijn – dated November 10, 2020
A non-competition clause in a franchise agreement is often experienced as objectionable by franchisees, especially if the non-competition clause also applies after the franchise agreement has expired.
Article Franchise+ – “How do I get rid of my debts: Also for franchisees and franchisors” – mr. AW Dolphijn – dated October 20, 2020
A reorganization may also be necessary for franchisees and franchisors who are in financial difficulties in order to continue to exist.
Article De Nationale Franchise Gids: “Reinvestment obligation for franchisees has limits” – dated October 13, 2020 – mr. RCWL Albers
In practice, it often happens that franchisors choose to renew their franchise formula and the appropriate image