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. What if the franchisee sold the assets to another before the end of the franchise agreement? The preliminary relief judge of the District Court of Central Netherlands ruled on this question on 29 December 2017, ECLI:NL:RBMNE:2017:6793.
Pursuant to the franchise agreement, the franchisee is obliged to purchase certain equipment for the operation of the franchise formula. The franchise agreement stipulates that the franchisee must sell the purchased equipment back to the franchisor.
The franchisee, on the other hand, argues that it sold the equipment to a third party (in good faith) which would prevent it from meeting the sell-back obligation. In that case, the former franchisee could perhaps only be ordered to pay replacement compensation in proceedings on the merits.
However, the preliminary relief judge does not believe that the former franchisee actually sold the equipment to a third party. The preliminary relief judge considers that the story of the former franchisee is implausible, partly because the sale allegedly took place to the brother of the former franchisee, the former franchisee continued to use the equipment and that the equipment was only very recently moved to the new location of the former franchisee.
The conclusion is that the former franchisee is ordered to make the equipment available to the franchisor.
mr. AW Dolphin – franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl .
Other messages
Article Franchise+: “Only with proof of transferred know-how can a non-compete appeal be invoked” – mr. T. Meijer – dated July 26, 2021
On July 16, 2021, the preliminary relief judge of the ...
Judge: “franchisee to move in standstill period” – mr. RCWL Albers – dated July 1, 2021
In recent proceedings before the preliminary relief judge in Utrecht, ...
Article Franchise+: “5 tips for starting franchisees” – mr. RCWL Albers – dated June 30, 2021
Choosing a franchise can be attractive for you as a ...
Supermarket Newsletter – No. 31 –
The Supreme Court still ruled in favor of Albert Heijn ...
Article De Nationale Franchisegids: The consequences of providing an incorrect (turnover and profit) forecast by the franchisor – mr. K. Bastiaans – dated June 9, 2021
In many cases, prior to entering into a franchise agreement, ...
Article De Nationale Franchisegids: “Prejudicial questions about ‘sharing the pain’ – rent reduction due to corona” – mr. K. Bastiaans – dated May 11, 2021
In the past period, the case law has not been ...