Franchisee may purchase a range of foreign products after mandatory formula change – June 6, 2019 – mr. JAJ Devilee
Much attention has already been paid to the fait accompli with which various franchisees of the disappearing EMTÉ formula were confronted last year, namely the obligation to join an alternative and unilaterally imposed formula. While a number of EMTÉ franchisees have gratefully taken advantage of this opportunity, a number of franchisees have come up against it. And recently even with success!
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. In the present case, the new franchisor has repeatedly summoned the franchisee to conform to the new formula, but the franchisee has refused (on good grounds) each time. This is because the franchisee wishes to join another formula that can guarantee the turnovers it has achieved in the past. In view of the approaching date of 1 June 2019 on which the new franchisor will only deliver under its terms and conditions, there have been several reasons for the franchisor to terminate the franchise agreement with this franchisee and to initiate summary proceedings.
Pursuant to (inter alia) the franchise agreement, the new franchisor has tried in interlocutory proceedings to, among other things, oblige the franchisee to transfer the company to the new franchisor or to cooperate with the intended changes in the supermarket space. However, the franchisee has filed counterclaims, including the (provisional) release of its obligations under the non-compete clause and the new franchisor’s obligation to allow the franchisee to purchase its entire range from another supermarket organisation.
The court first considered the question of what the parties had contractually agreed upon and whether the new franchisor was actually allowed to unilaterally impose its formula on the franchisee. Although the court is of the opinion that the possibilities in preliminary relief proceedings are limited to investigate this, the court is of the opinion for the time being that it is not highly likely that the court on the merits will rule that the new franchisor can unilaterally transfer its formula with accompanying condition system to the franchisee. and that there is therefore no shortcoming in the fulfillment of the franchise agreement for the time being. It is therefore highly questionable whether the new franchisor was entitled to terminate the franchise agreement. In view of the far-reaching consequences that the transfer of an undertaking would have for the franchisee, the court rules for the time being that the franchisee need not cooperate in this.
Since a supermarket without an assortment is like a car without wheels, the court has considered the claim on the part of the franchisee, which extends to being able to purchase an assortment in a strange way. Although the franchise agreement does not (fully)
As a disciplinary measure, the court is of the opinion that the franchisee should be allowed to make foreign purchases during the proceedings on the merits, in order to keep the supermarket operational after 1 June 2019.
Undoubtedly to be continued…
mr. JAJ Devilee – franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond?
Go to devilee@ludwigvandam.nl
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