Extensive application of the prohibition of competition from the Franchise Act

In a judgment of the Noord-Holland court of 11 February 2021, ECLI:NL:RBNHO:2021:2356, the preliminary relief judge applies the rules of the Franchise Act regarding the prohibition of competition to an agency relationship.

A broker has entered into an agency agreement with a broker organization. Pursuant to the non-competition clause, the estate agent has committed itself for 24 months after termination of the agreement to refrain from brokerage activities in the work area.

The preliminary relief judge has established, as also argued by the estate agent, that the Franchise Act came into force on 1 January 2021. It is true that the parties have not concluded a franchise agreement according to the preliminary relief judge and a transitional law of two years applies, but the interpretation of the benchmark to be assessed can be based on the legislation on that point. Section 7:290(2)(d) of the Dutch Civil Code stipulates that a clause that restricts the franchisee’s ability to operate in a certain manner after the end of the franchise agreement is only valid if it has lasted for one year after the end of the franchise agreement. does not exceed. In view of that provision, the preliminary relief judge sees reason to suspend the non-competition clause for a period of one year.

It is striking that in the case of the agency agreement, the law stipulates in Article 7:443 paragraph 2 of the Dutch Civil Code that a postal non-competition ban for a period of 2 years is in principle permitted. However, the preliminary relief judge is in line with the future rules of the Franchise Act, where a post-competition prohibition is maximized to 1 year in Article 7:290 paragraph 2 sub d of the Dutch Civil Code. The broker is therefore bound by a post-competition prohibition of 1 year after the end of the agreement, instead of 2 years. Apparently the preliminary relief judge believes that the relevant protective statutory provision does not extend far enough for the agent. The limitation of the post-competition prohibition from the Franchise Act has a wide scope of application.