Incorrect forecasts: no dissolution of the franchise agreement
Franchise lawyer, franchise agreement, forecast
On 6 January 2010, the preliminary relief judge of the District Court in The Hague rendered a judgment that could have major consequences for the franchise practice. Based on this judgment, it will become considerably more difficult for a franchisor to terminate a franchise agreement with a franchisee if the franchisor previously, at the time of entering into the franchise agreement, provided unsatisfactory forecasts to this franchisee.
A dissolution of an agreement can only take place if various elements are met, such as, in certain cases, default on the part of the other party. If a franchisor has previously provided an unsatisfactory forecast to a franchisee, the franchisor will automatically be in default by operation of law because it commits an unlawful act against the franchisee. As a result, the franchisee will not in turn be in default, so that the franchisor cannot pronounce the dissolution as a result.
This is important for the legal development of the case law in the area of franchising, because it has never before been so clearly established by a court that, due to the franchisor’s automatic default, a dissolution invoked by the franchisor is ineffective. In practice, this will mean that franchisees who have been provided with unsatisfactory forecasts by their franchisee at the time of concluding the franchise agreement can more easily defend themselves against an attempt to dissolve the franchise agreement by the same franchisor.
Franchisors are therefore – also for this reason – well advised to ensure that all forecasts they provide to potential franchisees are sound. Franchisees – in turn – should be aware of the implications of the foregoing should they find themselves in such a situation.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Ludwig & Van Dam attorneys summon Sandd and PostNL on behalf of the Sandd franchisees – dated 9 January 2020 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) has today summoned Sandd and PostNL before the court in Arnhem. The VFS believes that Sandd and PostNL are letting the franchisees down hard.
Article The National Franchise Guide: “Why joint and several liability, for example, next to private?” – dated 7 January 2020 – mr. AW Dolphin
Franchisees are often asked to co-sign the franchise agreement in addition to their franchise, for example. Sometimes franchisees refuse to do so and the franchise agreement is not signed.
Ludwig & Van Dam Advocaten assists Sandd franchisees: Franchisees Sandd challenge postal monopoly in court – dated 12 November 2019 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) is challenging the decision of State Secretary Mona Keijzer to approve the postal merger between PostNL and Sandd before the court in Rotterdam.
Franchisee trapped by non-compete clause? – dated October 21, 2019 – mr. AW Dolphin
The District Court of East Brabant has ruled that a franchisee was still bound by the non-competition clause in the event of premature termination of the franchise agreement.
Supermarket letter – 26
Supermarket Newsletter No. 26
Link franchise agreement and rental agreement uncertain? – dated October 14, 2019 – mr K. Bastiaans
It is no exception within a franchise relationship that the parties agree that the franchise agreement and the rental agreement are inextricably linked.