Although a non-compete clause is validly formulated in a franchise agreement, a situation may arise that is so diffuse that the franchisor cannot invoke it. See the judgment of the Arnhem-Leeuwarden Court of Appeal of 10 October 2017, ECLI:NL:GHARL:2017:8777.

The franchisor argued that the franchisee had acted in violation of the non-compete clause by opening his new store. This stipulation meant that, if the agreement ends, the franchisee is prohibited for a period of six months from carrying out similar commercial activities within the territory.

The Court of Appeal shares the view of the preliminary relief judge who previously ruled that the franchisor could not invoke the non-compete clause. This was because the leased retail property had to make way for housing and the franchisor had terminated the franchise agreement per  canceled on January 1, 2012. In anticipation of new business premises to be rented from the franchisor, the franchisee (temporarily) operated a business under his own name. It was uncertain whether the franchisor would still be able to offer (suitable) business premises to continue the collaboration.

In view of this diffuse situation after the termination of the franchise agreement, it is insufficiently clear that the parties nevertheless continued the franchise agreement and that all provisions of the franchise agreement continued to apply in full. The appeal to the post-non-compete clause in the franchise agreements therefore failed.

If, upon termination of a franchise agreement, a franchisor leaves open whether the post-non-compete clause applies, this ambiguity can under certain circumstances be held against the franchisor.

mr. AW Dolphijn – Franchise lawyer

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

Other messages

Article De Nationale Franchise Gids: “Information obligations of the intended franchisee under the Franchise Act” – dated August 7, 2020 – mr. AW Dolphin

Although the purpose of the Franchise Act is to protect franchisees against franchisors, a number of obligations have also been laid down for franchisees.

Contractual dissolution requirements not observed? No legal dissolution of the franchise agreement – dated July 23, 2020 – mr. C. Damen

Can a franchisor terminate the franchise agreement if it has failed to comply with its own contractual requirements?

By mr. C. Damen|23-07-2020|Categories: Statements & current affairs|

Legal ban on unilaterally changing opening hours by the franchisor – July 13, 2020 – mr. J. Strong

Legislative proposal of the State Secretary which, in short, means that the shopkeeper may not be bound by unilateral changes to the opening hours during the term of the agreement.

By Jeroen Sterk|13-07-2020|Categories: Statements & current affairs|
Go to Top