(Im)decent behaviour
In practice, situations occur in which a franchisor is confronted with conduct by one or more franchisees that does not fall directly under the scope of the franchise agreement. This includes matters that do not directly relate to what has been agreed in the contract, such as the manner in which fellow franchisees and/or the franchisor are treated, making statements to third parties, such as the press, about the concept and the manner in which of cooperation, the way in which external relations of the franchise organization are dealt with, and, based on some practical examples, the way in which conflicts are handled within the organisation. The franchise agreement often contains a dispute settlement procedure, but this generally only contains formal provisions regarding the manner in which a dispute must be brought before and before which body this must be done.
In practice, it sometimes happens that when franchisees have a dispute with their franchisor on an individual basis, they try to find allies for their cause among fellow franchisees. In some cases, this leads to the establishment of an interest group. There is nothing against this in itself, of course, but if this takes the form of deliberately sabotaging the cooperation by giving the franchise organization a bad name, whether or not via the press, or by trying to charge fellow franchisees against the franchisor, such conduct may be unlawful and, as such, grounds for rescinding the franchise agreement and seeking damages from the affected franchisee(s). The reverse is also possible: a franchisor can also behave towards one or more of its franchisees in such a way that this gives rise to unlawfulness.
It is not for nothing that the European Code of Honor on Franchising stipulates that, in short, parties should treat each other with good will, especially in the event of conflicts. If that benevolence is not exercised, the limits of decency may come into view, even though the parties in a franchise relationship have not made any agreements with each other about this. If these limits are exceeded, as can be seen from the foregoing, this can have serious and far-reaching consequences.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Termination of franchise agreement in case of changes in leased retail space – September 27, 2019 – mr. AW Dolphin
Termination of a franchise agreement in light of a substantial change in the leased retail space.
Article De Nationale Franchisegids: “Distribution of (potential) customers prohibited?” – September 17, 2019 – mr. AW Dolphin
Within many franchise organizations, agreements are made about the recruitment of (potential) customers in a certain area.
District protection no protection against termination due to urgent own use – dated September 17, 2019 – mr. AW Dolphin
As a landlord, can the franchisor terminate the lease for urgent own use, in the sense of district protection, while this would be excluded on the basis of the franchise agreement.
Unreasonable compensation at the end of the franchise agreement – dated September 17, 2019 – mr. AW Dolphin
Some franchise agreements stipulate that the franchisee always owes the franchisor a minimum of a certain amount of costs upon termination of the franchise agreement.
Legal Franchise Statistics 2019: slight decrease in number of franchise disputes
In 2018, 44 judgments were published on Rechtspraak.nl, 12 of which were appeal cases and one in cassation (a prognosis issue against Albert Heijn).
Article De Nationale Franchisegids: “Judge again rules in favor of Domino’s franchisees” – dated September 3, 2019 – mr. RCWL Albers
At the beginning of 2018, almost all franchisees of Domino's and the Association of Domino's Pizza Franchisees submitted two issues to the court in Rotterdam.