Insured and well
Occasionally, a franchise agreement contains a clause that obliges the franchisee to take out legal expenses insurance. Taken in itself, the idea arises that this clause may be too far-reaching in the context of the legal and economic independence of the franchisee. In addition, it is up to the franchisee himself whether or not he is insured in case he needs to take out legal assistance insurance. Nevertheless, it is not unwise to include such a clause in the franchise agreement, as this is permitted in the context of independence or if it contributes to an increased risk with regard to a disguised employer/employee relationship (fictitious employment). To ensure this, prior approval must be requested from the relevant implementing body. Assuming that the clause is in order, such a clause protects the franchisee in bad weather. It should be expressly considered that the vast majority of cases in which the franchisee has to rely on legal assistance have nothing to do with the relationship with the franchisor at all. Even in such situations, however, adequate legal assistance insurance offers a guarantee for all parties involved. Statistically, however, this rarely occurs in practice, in relation to all other legal problems that can happen to a franchisee. This includes, for example, labor disputes with staff, rental problems, or, for example, problems with the municipality in connection with permits, etc. A good franchisor anticipates for the benefit of its franchisees by informing them that they can insure themselves for most forms of legal assistance. It goes without saying that the quality of that legal assistance and therefore of the legal expenses insurer is of great importance. Not only should the premium be considered, but above all the policy conditions.
Incidentally, it should be noted that a franchisor can insure itself against most disputes that may befall it. Here too, however, it is of eminent importance that a careful inventory is made before one is insured, under which conditions and whether a (specialised) lawyer can handle the matter if necessary.
Ludwig & Van Dam franchise attorneys, franchise legal advice
![](https://ludwigvandam.megaconcept.nl/wp-content/uploads/2020/12/232court-min-400x222.jpg)
Other messages
Recent jurisprudence
Discussion deserves a recent ruling by the Court in preliminary relief proceedings.
Franchise Councils and Franchisee Associations: A Balancing
Nowadays it is good practice to consult between the franchisor and the franchisees
Proven formula for success – a sequel
Unfortunately, in recent months it has become increasingly common for franchisees to run into problems as a result of
Extension under “the then applicable conditions”
Many franchise agreements contain a clause regarding renewal of the franchise agreement
Franchise agreement or employment contract?
“Franchise Agreement” is not a legal term. The law sees a franchise agreement as an ordinary agreement.
The bankruptcy of a franchisor: end of the franchisee’s right of action?
Although fortunately sporadic in itself, it does happen that franchise organizations go bankrupt.