For clarity
The last period shows that discussions regarding goodwill payments at the end of a franchise partnership are still numerous. These discussions usually boil down to a franchisee’s opinion that his franchisor should pay him a goodwill amount for the customer base built up by that franchisee during the term of the franchise agreement. This discussion occurs in particular in situations where either the operation of the franchise establishment in question is completely discontinued or the franchisor takes over the establishment. This discussion is less common when the franchisee, within the rules of the franchise agreement, transfers his business to a successive franchisee, because in those cases a market-based acquisition price is often paid.
In the other two situations, however, the discussion does take place, whereby the franchisee concerned is undoubtedly inspired by the legal provisions regarding agency. Without wanting to go into detail here, it should be noted that it does include a goodwill arrangement at the end of the agreement. However, such a regulation does not exist in franchising relationships. Therefore, unless otherwise agreed between the parties, a franchisor is not obliged to make any goodwill payment to a departing franchisee on the basis of the franchise agreement as such. If that does happen, then this is solely the result of negotiations between the parties and the payment, where appropriate, of a price in line with the market. Goodwill, it must be repeated, is pre-eminently a subject that is subject to market forces and, unless otherwise agreed in principle, is at the discretion of the entrepreneurs involved.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
The benchmark for franchise forecasts – dated 29 May 2019 – mr. AW Dolphin
On 19 March 2019, the Den Bosch Court of Appeal, ECLI:NL:GHSHE:2019:1037, listed the case law of the Supreme Court on prognosis in franchising.
Franchise arbitration: too high a threshold? – mr. M. Munnik
When entering into an agreement, it is possible for the parties - contrary to the law - to designate a competent court. This also applies to the franchise agreement. Of this possibility
Franchise appeal for error due to incorrect forecasts and lack of support rejected – dated April 25, 2019 – mr. K. Bastian
The Court of Appeal of 's-Hertogenbosch ruled (ECLI:NL:GHSHE:2019:697) on the question whether the mere fact that forecasts did not materialize justifies the conclusion that the franchisee has been shortchanged...
Article De Nationale Franchise Gids: “Increasing protection against recruiting franchisees” – dated 2 April 2019 – mr. AW Dolphin
It is becoming increasingly apparent that recruited franchisees can be protected on the basis of the Acquisition Fraud Act.
The Franchise Association and Franchise Binding – Contracting 2019, No. 1
A contribution on common provisions in franchise agreements that require a franchisee to be a member of a franchisee's association.
Deception in recruiting a franchisee?
A ruling on whether the franchisor had made a misrepresentation when recruiting a franchisee.