Indemnity I
Many franchise contracts contain clauses that must indemnify the franchisor against the conduct of the franchisee. Not infrequently, such a clause is so general and rigid in nature that the franchisee must, after all, be responsible for matters that simply cannot be held against him. An example of this is guaranteeing any liability that arises directly between the consumer and the franchisee. Such a provision is generally too far-reaching. This scope may, for example, relate to product liability. If the franchisee sells a defective product to the consumer, this does not automatically mean that the franchisee has to guarantee that it is faulty.
It is true that the franchisee can be held liable directly by the consumer, but on the basis of product liability the producer and/or supplier of the product in question is indeed (further) liable for the faulty product delivered. This may be the franchisor or a supplier designated by the franchisor. In practice, the franchisor’s liability may be aggravated by the fact that the franchisee simply had to purchase the product in question from the franchisor or from a supplier designated by the franchisor under an exclusive purchasing provision. In that case, the franchisee therefore had no choice with regard to purchasing the product. Under those circumstances, the franchisor is the one who has to pay for the problem, or the supplier indicated by the franchisor.
The franchisor and franchisee must realize in advance that indemnification clauses must be careful and nuanced in nature and ideally also contain a certain degree of two-sidedness. This makes invoking it much more realistic under concrete circumstances and is therefore much more workable for the franchise practice. Next time, we will look more closely at indemnification clauses related to non-achieved operating forecasts.
Ludwig & Van Dam franchise attorneys, franchise legal advice
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Article Franchise+ – “Recipient’s liability in a franchise context, what exactly is that about?” – mr. K. Bastiaans – dated November 24, 2020
The phenomenon of hirer's liability means that a third party can be held liable for the debts of another under certain conditions.
Franchisor liable for errors made by a franchisee? – mr. AW Dolphijn – dated November 23, 2020
A franchise organization asked the court to declare that the franchisor is not liable if a franchisee has made a serious mistake with a customer.
The Real Intentions of the Parties to a Franchise Agreement – Mr. C. Damen – dated November 23, 2020
What really was the idea of the parties when they concluded a franchise agreement?
Circumventing the prohibition of competition in the franchise agreement – mr. AW Dolphijn – dated November 10, 2020
A non-competition clause in a franchise agreement is often experienced as objectionable by franchisees, especially if the non-competition clause also applies after the franchise agreement has expired.
Article Franchise+ – “How do I get rid of my debts: Also for franchisees and franchisors” – mr. AW Dolphijn – dated October 20, 2020
A reorganization may also be necessary for franchisees and franchisors who are in financial difficulties in order to continue to exist.
Article De Nationale Franchise Gids: “Reinvestment obligation for franchisees has limits” – dated October 13, 2020 – mr. RCWL Albers
In practice, it often happens that franchisors choose to renew their franchise formula and the appropriate image