Franchisee, don’t forfeit your rights

Complaining out loud does not seem appropriate in an intensive collaboration such as franchising, let alone a liability claim. But if a franchisee fails to do so, he may forfeit his rights. Franchise agreements sometimes contain short complaint, prescription and/or expiration periods. This means that the franchisee must pay extra attention and take the right legal action in time to ensure that no claims are lost.

Complain

Complaining is not much more than expressing dissatisfaction. The law stipulates that if an agreed performance has not been properly fulfilled, a complaint must be made within a reasonable period of time. If that does not happen, there is a chance that the shortcomings will not be rightly pointed out afterwards. This obligation to complain does not apply if no performance is performed at all.

The law does not determine what a reasonable period is. It very much depends on the case. It can be very short. Sometimes two months are held. A complaint period of more than two years is exceptionally long.  Complaints should therefore be made as soon as possible and preferably in writing in order to be able to prove it later.

Prescription and decay

A statute of limitations is different from a complaint period. The limitation periods usually start when the injured party becomes aware of the problem. A submitted complaint can then often be regarded as the starting point. In many cases, a statute of limitations of 5 years applies. Within that period, therefore, either an interruption must be made, or a lawsuit must be initiated. A judgment of the District Court of Amsterdam dated 16 March 2016 (ECLI:NL:RBROT:2016:1769) shows that a franchisee sat idle for too long, as a result of which the case was time-barred. The lawsuit that the franchisee subsequently started was therefore lost. A franchisee can often easily prevent this by taking quick and adequate legal measures.

A possible legal measure is to interrupt the statute of limitations. Interruption means that a new reminder causes the limitation period to start running again. Interruption can happen again and again and as a result, the statute of limitations can actually be postponed indefinitely. But watch out! The law provides an expiry period in some situations. These cannot be stopped.

What does the franchise agreement regulate?

Franchise agreements may stipulate that there are usually shorter complaint, prescription or expiration periods. This should be kept in mind. For example, it may be stipulated that the franchisee must initiate proceedings for incorrect provision of information within an expiry period of one year after the conclusion of the franchise agreement. See, for example, the judgment of the Northern Netherlands District Court of 9 April 2014, ECLI:NL:RBNNE:2014:1936.

The pitfalls in franchise agreements can sometimes be very far-reaching. It is therefore very important to understand the franchise agreement.

mr. AW Dolphijn – Franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice.
Do you want to respond? Go to dolphijn@ludwigvandam.nl