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
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.
Article De Nationale Franchisegids: “The interim termination of the franchise agreement” – August 12, 2019 – mr. JAJ Devilee
A franchise agreement can end prematurely in many ways.
Article De Nationale Franchise Gids: “Parliamentary questions asked about (false) self-employment franchisees” – dated 24 July 2019 – mr. M. Munnik
Parliamentary questions have recently been asked about the so-called bogus self-employment within the relationship between franchisor and franchisee.
Article Franchise+: “With our franchise formula you will earn mountains of gold.” dated 10 July 2019 – mr. AW Dolphin
The distinction between permissible promotions and misleading information remains a gray area, despite the relevant legislation.
Franchisee may purchase a range of foreign products after mandatory formula change – June 6, 2019 – mr. JAJ Devilee
The District Court of East Brabant recently dealt with an important matter in preliminary relief proceedings in which a franchisee was completely involuntarily forced to adopt an alternative formula.