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
Rent indexation unrealistically high
Does an agreed rent indexation always apply? The District Court ...
Clarity pays off
Clarity pays off Many agreements sometimes use vague definitions ...
Continued activities of the franchisee do not violate a non-competition clause
A judgment was recently rendered in preliminary relief proceedings in ...
Car dealer wrongly not a franchisee?
The Franchise Act entered into force on 1 January ...
Suspension of payouts allowed by the franchisor
The District Court of Limburg ruled on 30 March 2023, ...
Franchising is on the rise: ‘There is still a huge amount of room for it in the Netherlands’
An interview with mr. AW Dolphijn about franchise. De Beren, ...