Interim termination (franchise) agreement
On 3 February 2015, the Court of Appeal of ‘s-Hertogenbosch rendered judgment (ECLI:GHSHE:2015:33) in a case that may also be relevant for franchise practice. At first glance, the case is far from it. It concerns a license agreement with regard to the development and production of fiber boards by applying a special adhesive technology. The core of the debate, however, lies in the question of whether the cooperation may also be terminated prematurely if the agreement has been entered into for a definite period of time, in this case 20 years. That is to say, if interim termination has not been agreed, or, as is the case in this case, is limited to specific grounds stated in the agreement itself, which did not arise in that case. Referring to a judgment of the Supreme Court (HR 21 OCTOBER 1988, NJ1990, 439), the court concludes that “that such cooperation cannot, in principle, be terminated prematurely, but that an exception to this can be accepted if it is based on unforeseen, i.e. not discounted in the agreement, circumstances that are not for the account of the terminating party and that are of a serious nature that, according to standards of reasonableness and fairness, the other party cannot expect the agreement to be concluded until the agreed time”. According to the court, this situation arose in this case because there was no longer any interest in the adhesive technology to be developed and the agreement therefore lost its right to exist. However, such a situation can also be translated into franchise relationships. More specifically, the question can be asked to what extent continuation of the franchise agreement can still be required in the event of loss-making operations, the cause of which must be found in unexpected external calamities. The judgment of the Court of Appeal therefore seems to confirm that, in the event of unforeseen circumstances, early termination, even if not agreed, must always be possible in exceptional cases.
Mr J. Sterk – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Mail to Sterk@ludwigvandam.nl
Other messages
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.
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.