Mandatory transfer of franchise business to franchisor?
On 23 January 2017, the District Court of Amsterdam, ECLI:NL:RBAMS:2017:412 (CoffeeCompany/Dam Spirit BV) rendered a judgment on the question whether a franchisee is obliged to return his franchise company upon termination of the cooperation with the franchisor. delivery to the franchisor.
Before the catering entrepreneur in question entered into cooperation with the franchisor, the catering entrepreneur in question had already rented the catering business space on Dam Square in Amsterdam for some time. A catering permit was also present from the start of the rental.
A cooperation agreement, called a license agreement, was subsequently concluded between the parties, under which the franchisee obtained the right to operate the catering establishment according to a specific formula of the franchisor. It was included in that agreement that upon termination of this agreement, the franchisor was entitled to continue the business itself at the location where the franchisee worked. After the cooperation has ended, the franchisor demands from the former franchisee to offer it the lease rights to the business space in question, or at least to cooperate in substituting the franchisor as tenant.
The court considers that there is no question of a termination situation, but that the cooperation has ended by operation of law due to the passage of time. The court also considers it illogical that the franchisee was prepared to offer the lease rights to the franchisor when the cooperation ended. The court therefore rejects the franchisor’s claim to transfer the franchise company to it.
It follows from this ruling that if the parties wish to make a far-reaching agreement about the transfer of the franchise company at the end of the cooperation, this must be explicitly stated in order to avoid misunderstandings afterwards.
mr. AW Dolphijn – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl .
Other messages
Judge: Protect franchisee against supermarket organization (Coop) as lessor
Does the franchisee need legal protection from supermarket franchisor Coop? The District Court of Rotterdam ruled on 9 February 2018, ECLI:NL:RBROT:2018:1151, that this is the case.
Acquisition fraud vs. error in franchise forecasting
Who has to prove that the franchisor's forecast is unsound? In principle, this is the franchisee. If the franchisee invokes the Acquisition Fraud Act, it may be that
Obligation to sell back at the end of the franchise agreement
Franchise agreements sometimes provide that the franchisee is required to sell back purchased assets at the end of the franchise agreement.
Supermarket letter – 20
Uncertain legal position of Emté franchisees
Position of franchisees in franchisor restructuring
Franchisees must be adequately and generously informed in advance by the franchisor about the content and consequences of (further) agreements...
Interview Franchise+ – mrs. J. Sterk and AW Dolphijn – “Reversal of burden of proof in forecasts approved by court” – February 2018
The new Acquisition Fraud Act indeed appears to be relevant for the franchise industry, according to this article from Franchise+. Alex Dolphijn of Ludwig & Van Dam assists a franchisee in a