From omni-channel to single-channel allowed

Court of Amsterdam,  November 4, 2015, ECLI:NL:RBAMS:2015:8040 (IBG/Accell)

Can a bicycle supplier terminate the dealer agreement if the dealer no longer operates physical stores, but restricts itself to a web shop?

Where previously there seemed to be a discussion mainly about the transformation from purely physical stores (single-channel) to a combination of physical stores and a web shop (omni-channel), the discussion can be further evaluated towards the transformation from omni-channel and to just an online store. In that context, the judgment of the preliminary relief judge of the District Court of Amsterdam of 4 November 2015, ECLI:NL:RBAMS:2015:8040 (IBG/Accell), is important.

The preliminary relief judge ruled on the issue in which a supplier and a dealer concluded a dealer agreement for the supply of bicycles of various brands. In addition to physical stores, the dealer also operated a web shop (underfietsenwinkel.nl). After a year, the dealer sells the stores and continues its web shop. Because the supplier has doubts about whether the dealer can still provide the necessary optimal service to the customers, various financial conditions and facilities from the dealer agreement are suspended by the supplier. The parties enter into a discussion, during which the dealer secretly makes sound recordings. When the supplier found out about this, the supplier terminated the agreement.

The dealer demands fulfillment of the dealer agreement. The preliminary relief judge ruled that the dealer did not fall short, because the dealer has guaranteed that the correct service is provided with regard to the bicycles purchased via the internet, because collection points, a fully-fledged helpdesk and service provided at home are provided. In addition, the dealer maintains at least one workshop. There is therefore no question of a shortcoming that justifies the dissolution, according to the preliminary relief judge.

The supplier had also argued that the dealer agreement was (partly) canceled due to a breach of trust that arose because the dealer secretly recorded the conversations. The dealer agreement provides for the possibility of termination with due observance of a notice period of six months. The preliminary relief judge rules that the supplier has made it sufficiently plausible that the reason for terminating the cooperation is actually (partly) that the supplier has completely lost its confidence in the dealer as a business partner due to the dealer’s conduct. The loss of the dealer’s physical stores is also taken into account.

It seems to be possible to conclude from this judgment that if a dealer or franchisee changes the way in which it sells its products, this does not necessarily constitute a shortcoming that justifies dissolution. It may, however, also be a ground for terminating the cooperation.

Various dealer and franchise agreements now provide for provisions on the expansion of sales channels to, for example, a web shop. In order to prevent ambiguity and disputes, the dealer or franchise agreements could also include agreements on the limitation of sales channels.

mr. AW Dolphijn – Franchise lawyer

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