Franchise agreements and horizontal cooperation
Franchise agreements are, by their nature, so-called vertical in nature. This means that there is a vertical cooperation between the franchisor, the one who makes the franchise formula available, and the franchisee, the one who exercises the franchise formula. This is generally seen as a collaboration between two different links in the supply chain.
In addition, we know of cooperation between competitors in practice. We call this horizontal cooperation. In terms of competition law, considerably less is allowed within a horizontal collaboration than in a vertical collaboration, based on regular franchise agreements. On the basis of a common franchise agreement, it is permitted to stipulate matters such as exclusive purchasing, price recommendation arrangements, non-competition clauses, etc. between franchisor and franchisee. All these arrangements are not or hardly permitted in the case of cooperation between competitors. In the case of a collaboration between competitors, one should think of a partnership of, for example, two or more greengrocers who jointly make agreements with regard to the subjects mentioned above. If these agreements take place on a joint, for example cooperative basis, the legislator only allows such cooperation to a very limited extent. This is completely different with a franchise relationship. The topics mentioned here can indeed be properly constructed on the basis of a franchise agreement between franchisor and franchisee. In practice, of course, there must actually be a vertical relationship: cooperation between competitors may not lead to an artificial franchise construction with the aim of stipulating vertically what is actually not possible horizontally.
When setting up a franchise construction, the parties are advised to carefully check in advance whether there is cooperation between the parties or whether there is a franchise concept actually made available by a franchisor. If the latter is the case, the way is open for a construction that is permissible under competition law, based on a common franchise agreement.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Ludwig & Van Dam attorneys summon Sandd and PostNL on behalf of the Sandd franchisees – dated 9 January 2020 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) has today summoned Sandd and PostNL before the court in Arnhem. The VFS believes that Sandd and PostNL are letting the franchisees down hard.
Article The National Franchise Guide: “Why joint and several liability, for example, next to private?” – dated 7 January 2020 – mr. AW Dolphin
Franchisees are often asked to co-sign the franchise agreement in addition to their franchise, for example. Sometimes franchisees refuse to do so and the franchise agreement is not signed.
Ludwig & Van Dam Advocaten assists Sandd franchisees: Franchisees Sandd challenge postal monopoly in court – dated 12 November 2019 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) is challenging the decision of State Secretary Mona Keijzer to approve the postal merger between PostNL and Sandd before the court in Rotterdam.
Franchisee trapped by non-compete clause? – dated October 21, 2019 – mr. AW Dolphin
The District Court of East Brabant has ruled that a franchisee was still bound by the non-competition clause in the event of premature termination of the franchise agreement.
Supermarket letter – 26
Supermarket Newsletter No. 26
Link franchise agreement and rental agreement uncertain? – dated October 14, 2019 – mr K. Bastiaans
It is no exception within a franchise relationship that the parties agree that the franchise agreement and the rental agreement are inextricably linked.