Is franchising always the right form of cooperation?
Franchising is in most cases a form of cooperation that can bring great benefits to all involved, the proverbial “win-win situation”. Evidence of the success of franchising can be seen in multiples in every shopping center in the Netherlands. In a relatively short period of time, the phenomenon of franchising has spread to virtually all sections of society.
Franchise concepts therefore come in an enormous variety, from shoemakers to fast-food restaurants and from courier services to drugstores. The variation in activity that lends itself to franchising therefore seems endless. However, there are limits to that. Practice shows that not all franchise concepts, sometimes started with good courage and good intentions, lead to success. In general, it is extremely difficult to indicate where the boundary lies in that context. An important rule of thumb is that, perhaps, of course, the franchisee can generate sufficient turnover with the business to be operated by him, which, when compared to his operating costs, produces an adequate operating result from which to live. That goes without saying, of course, but in practice it sometimes happens that concepts meet that requirement in theory, but prove difficult to handle in practice. It goes without saying that concrete examples cannot be given here, but where some business activities as (part of) a branch company, belonging to a larger whole, can be an adequate addition to the total package that the company concerned offers to the end user, the same activity can be used for a franchisee simply offer too little economic basis. In order to anticipate these problems, it is therefore always advisable to open one or more pilot locations of the franchise concept to be launched on the market and to actually operate it for a considerable period of time, so that the (potential) franchisor knows from his own experience whether the concept is suitable to be operated as a franchise concept. Incidentally, members of the Dutch Franchise Association are already obliged to do so under the European Code of Honor on Franchising, which explicitly states the desirability of a pilot location.
As an extension of the above, the prognosis problem has already been discussed several times in this section. Does a (potential) franchisor paint a too rosy picture?
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Unauthorized unilateral collective fee increase by the franchisor
In an important decision of the Amsterdam Court of Appeal of 23 April 2014, the question was whether a franchisor was allowed to implement an increase in a contribution.
Interests Association of Franchisees of the Netherlands (BVFN) is in further consultation with the Minister
On April 16, 2014, the previously announced meeting between the Belangen Vereniging Franchisenemers Nederland (BVFN) and the Ministry of Economic Affairs took place.
Exoneration of duty of care with the franchisor’s prognosis
In a judgment of the Overijssel court of 9 April 2014, the interesting question arose whether a collaboration should be qualified as a franchise.
Non-competition clause is lost in summary proceedings
Recently, the preliminary relief judge in Rotterdam ruled that a franchisee was not bound by the non-competition clause included in the franchise agreement.
Advance on compensation after an unsound prognosis
In a beautifully substantiated summary judgment of the Northern Netherlands Court of 9 April 2014, the question was whether an advance should be paid for the damage assessment procedure.
Collection point requires shopping destination
In my supermarket newsletter of July 11, 2013, I already predicted that the establishment of collection points for goods ordered via the internet would set the judicial pens in motion.