Horizontal and vertical cooperation
In practice, purchasing organisations, whether or not in the form of a cooperative, sometimes function – partly – as a sales organisation. In addition to purchasing, such an organization sometimes feels the need to further streamline matters such as the assortment to be carried by the members. This may give rise to the idea of concluding a franchise agreement or similar contract with the members of the purchasing organisation. Can these two forms of cooperation coexist?
The Guidelines on Vertical Restraints accompanying the Block Exemption Regulation for Vertical Agreements make it known that an association of retailers may make use of the benefits offered by the exemption regulation. This means that, like a franchise organization, they can enter into vertical agreements with their members. Clauses regarding exclusive purchasing, but also non-competition, must then comply with the competition-related vertical requirements that also apply to a franchise organization. It is also important that there are no (further) agreements between the members that could hinder the conclusion of franchise agreements from a competition point of view. Examples include the division of exclusive areas: this too must take place vertically, ie on the basis of, for example, a franchise agreement or a comparable contract. However, if the members make (horizontal) agreements about, for example, exclusive areas, this is not allowed. When assessing whether a joint venture correctly applies both vertical and horizontal agreements, it must first be examined whether the cooperating partners have made mutually permissible agreements (horizontal assessment). If this is in order, then it can be examined how the collaboration has been designed vertically and whether this is in accordance with what is permissible from a competition point of view (vertical assessment).
In concrete terms, a purchasing organization can therefore conclude a franchise agreement with its members, which may include an exclusive purchase clause, for example. It is of eminent importance that the board of the purchasing association then actually presents itself as a “franchisor” and that it is not at all an intention to shape mutual agreements vertically, if these are not permitted horizontally, as is the case, for example, with publishing of exclusive areas.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Amsterdam Court of Appeal restricts franchisor’s appeal to non-competition – dated July 6, 2020 – mr. T. Meijer
On 30 June 20202, the Amsterdam Court of Appeal ruled that a franchisor is not entitled to an (unlimited) appeal to a contractual non-competition clause.
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Ludwig & Van Dam Advocaten is a law firm that specializes entirely in franchise and other partnerships and is the market leader of its kind in the Netherlands.
Qualitaria franchisee put in his shirt – dated July 2, 2020 – mr. JAJ Devilee
The District Court of Zeeland-West-Brabant has rendered a judgment in legal proceedings initiated by a Qualitaria franchisee.
Supermarket newsletter -28-
Supermarket newsletter -28-
Article Franchise+ – “Immediate information obligations of franchisors upon operation of the Franchise Act” – mr. AW Dolphijn – dated June 25, 2020
As soon as the Franchise Act enters into force, this will have an immediate effect on franchise agreements that already exist. The question is whether the information flows are set up optimally from a legal point of view.
Senate will adopt Franchise Act – dated 24 June 2020 – mr. AW Dolphin
The House of Representatives had unanimously adopted the proposal to introduce the Franchise Act on 16 June 2020