Franchising and agency
Franchise constructions can sometimes contain elements of agency. In concrete terms, this is the case when the franchisee mediates in the establishment of a transaction between the consumer and the franchisor and/or mediates in the establishment of a transaction between the consumer and a party other than the franchisor.
Examples include constructions in the financial services sector, in which the franchisee mediates, for example, in arranging mortgages between the consumer and a lender to be named (bank or insurance company, or another lender) or constructions in which franchisees take care of for the conclusion of temporary employment or temporary employment contracts between the mediated workers and (a large) client.
If there is a typical franchise situation, i.e. a situation in which the franchisee actively sells his products himself, and also carries out marketing, in short, applies a franchise formula, the competition regulations, as they apply to all franchise relationships, also apply when there are there are agency elements in a franchise construction. Franchisor and franchisee must therefore be aware that in the case of specific termination arrangements, subjects such as exclusive purchase, exclusive territory, etc. must also be dealt with correctly under competition law.
In practice, the fields of agency and franchising can be combined well if the specific elements from both areas are combined in advance and, in particular, communication is made between franchisor and franchisee.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Supermarket letter – 18
Can an entrepreneur be obliged to operate a different supermarket formula?
Article in Entrance: “New owner”
“The catering company where I work has been taken over. The new owner now says that I no longer have to work for him, but can he refuse me as an employee?”
Directors’ liability in the settlement of a franchise agreement
Privately, can the director of a franchisee legal entity be liable to the franchisor if the franchisee legal entity wrongfully fails to provide business to the franchisor?
Column Franchise + – mr. Th.R. Ludwig: “Towards strict liability”
The Supreme Court recently ruled in a prognosis issue.
Article in Entrance: “Rentals”
“The landlord increased the prices of the property every year, but he hasn't done this for 2 years, maybe he forgets. Can he still claim an overdue amount later?”
No valid appeal to non-compete clause in franchising
On 28 February 2017, ECLI:NL:RBGEL:2017:1469, the provisional relief judge of the District Court of Gelderland ruled on whether a franchisee could be bound by a non-compete clause.