No compensation of goodwill in franchise agreements? – January 28, 2016 – mr. AW Dolphin
On January 20, 2016, the Interim Relief Judge of the District Court of Amsterdam ruled, ECLI:NL:RBMNE:2016:353 (Ipic/franchisee Lelystad) that “compensation of goodwill is not normally an issue in franchise agreements”. The franchisor had entered into a franchise and rental agreement with a franchisee. On the basis of the provisions of Article 7:291 paragraph 2 of the Dutch Civil Code, the subdistrict court had approved the clause in the rental and franchise agreement, in the sense that, in short, upon termination of the franchise agreement, the rental agreement also ends, without a court order. intervention. Accordingly, the franchisor had terminated the franchise and lease agreement. The stipulation that deviates from the law, approved by the subdistrict court, also implies a contractually fixed remuneration to the franchisee.
The franchisee takes legal action against the termination, arguing, among other things, that the contractual termination compensation offered is too low and the franchisee is entitled to a higher goodwill compensation.
The preliminary relief judge considered that compensation of goodwill is not normally an issue in franchising agreements. This is one of the reasons why the franchisee’s argument is ignored. This consideration deserves attention. Not only because, pursuant to Section 7:308 of the Dutch Civil Code, a lessee may, under certain circumstances, claim a goodwill compensation in the event of termination by the lessor, but even more so now that the franchise agreement itself also grants compensation in the event of termination by the franchisor of the franchising property. and rental agreement. The latter occurs more often and is certainly no exception.
Incidentally, the judgment HR 12 July 2002, NJ 2002, 457 was not discussed, from which it follows that the compensation pursuant to Article 7:308 of the Dutch Civil Code cannot yet be claimed (in counterclaim) in the termination proceedings initiated by the lessor, because a claim to compensation can only arise if the business space is actually used for conducting a similar business.
It is true, however, that the compensation pursuant to Article 7:308 of the Dutch Civil Code in rental and franchise agreements is sometimes less high or difficult to allocate, precisely because it is obvious that any advantage of the lessor/franchisor in the exercise of a comparable continued business must be attributed to the franchise formula and not to the entrepreneurial activities of the former tenant/franchisee. It is of course highly dependent on the circumstances, but a goodwill compensation at the end of a franchise agreement does not seem impossible to me. Not even if this has not been agreed.
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
Franchisors may no longer impose changes to store hours – February 12, 2019 – mr. AW Dolphin
At the end of 2018, a draft of the “Freedom of Choice for Retailers (Opening Hours) Act” was presented.
When does a franchisor go too far when recruiting franchisees?
The judgment of the Court of Appeal of Arnhem-Leeuwarden on 5 February 2019 dealt with whether the franchisor had acted impermissibly when recruiting the franchisees.
Advisory Board on Regulatory Pressure (ATR) advises State Secretary Keijzer about the Franchise Act
In short, it is first advised to actively inform franchisors and franchisees about this amendment to the law.
Post non-competition ban on services and sales franchise
When a franchise agreement ends, many franchisees encounter a prohibition in the franchise agreement to perform similar work for a period of time thereafter
The concept of the Franchise Act: impact for franchisors and franchisees – dated February 5, 2019 – mr. AW Dolphin
Ludwig & Van Dam Advocaten believes that if the draft of the Franchise Act actually becomes law, a lot will change for franchisors and franchisees.
Buy franchise business and the laid off sick employee from 7 years ago
The question is whether a Bruna franchisee, when selling the franchise company to Bruna, should have stated that seven years ago an employee had left employment sick.