No special duty of care franchisor

On 1 December 2015, the Court of Appeal of ‘s Hertogenbosch (ECLI:NL:GHSHE:2015:4989)  “Hunkmöller Bodique/HB Israel” decides that there is no special duty of care of a franchisor in a franchise relationship. In the first instance, the Oost-Brabant District Court ruled on 23 April 2014 (ECLI:NL:RBOBR:2014:2305) that the franchisor had a special duty of care towards its franchisee.

The Court ruled on the franchisee’s statement that a franchisor has a special duty of care  ‘s-Hertogenbosch:
“In this regard, the court sees, differently than[franchisenemer] has argued, no reason for a special duty of care on the part of[franchisegever] to assume. The mere fact that the agreement relates to franchise is considered insufficient by the Court of Appeal. The nature of the agreement does not automatically mean that the franchisee is always in a dependent position with regard to the franchisor. Whether this is the case depends on the circumstances of the case and the professionalism of the parties.”

The question of whether a franchisor has a special duty of care towards a franchisee is therefore related to the question of whether the franchisee is (always) dependent on the franchisor. The existence of a franchise agreement does not always mean that the franchisee is (always) dependent on the franchisor. This is more likely to be the case with hard franchising than with soft franchising. Any financing of the investments by the franchisor to the franchisee may also be important in this respect. 

The Court of Appeal ruled that in the present international franchise agreement, the franchisee should be regarded as a professional and that there was no (always) dependent position with respect to the franchisor. In that context, what the parties had agreed upon was all the more important. That was agreed upon the franchisee conducts his business entirely at his own expense and risk, is primarily responsible for assessing its possibilities for a profitable business and that, if it needed information from the franchisor for that assessment, the franchisee should have asked for it to franchisor. 

The Supreme Court has already ruled several times that in (international) trade contracts between professional parties, heavy weight must be given to what the parties have agreed in writing. See Supreme Court 5 April 2013, ECLI:NL:HR:2013:BY8101 (Lundiform/Mexx) and the previous Supreme Court judgments referred to there. This thought seems to have been followed here. The Court therefore assumes no special duty of care for the present case.

This judgment shows that there are many sizes and types of franchise agreements, which must always be interpreted according to the specific circumstances of the case. Formulating a general duty of care, for example in a code of conduct for the franchise industry, will have to provide room for exceptions and/or deviations.

mr. AW Dolphijn – Franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Mail to dolphijn@ludwigvandam.nl