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
Legal Franchise Statistics 2019: slight decrease in number of franchise disputes
In 2018, 44 judgments were published on Rechtspraak.nl, 12 of which were appeal cases and one in cassation (a prognosis issue against Albert Heijn).
Article De Nationale Franchisegids: “Judge again rules in favor of Domino’s franchisees” – dated September 3, 2019 – mr. RCWL Albers
At the beginning of 2018, almost all franchisees of Domino's and the Association of Domino's Pizza Franchisees submitted two issues to the court in Rotterdam.
Article De Nationale Franchisegids: “The interim termination of the franchise agreement” – August 12, 2019 – mr. JAJ Devilee
A franchise agreement can end prematurely in many ways.
Article De Nationale Franchise Gids: “Parliamentary questions asked about (false) self-employment franchisees” – dated 24 July 2019 – mr. M. Munnik
Parliamentary questions have recently been asked about the so-called bogus self-employment within the relationship between franchisor and franchisee.
Article Franchise+: “With our franchise formula you will earn mountains of gold.” dated 10 July 2019 – mr. AW Dolphin
The distinction between permissible promotions and misleading information remains a gray area, despite the relevant legislation.
Franchisee may purchase a range of foreign products after mandatory formula change – June 6, 2019 – mr. JAJ Devilee
The District Court of East Brabant recently dealt with an important matter in preliminary relief proceedings in which a franchisee was completely involuntarily forced to adopt an alternative formula.