On the edge of a franchisee’s exclusive territory
The Arnhem-Leeuwarden Court of Appeal ruled on 15 May 2018, ECLI:NL:GHARL:2018:4395, on whether a franchisor was allowed to open a branch just over the edge of the exclusively granted protection area.
In the franchise agreement it was agreed that the franchisee will be allocated an area with a radius of 300 meters around the location. No other branch of the franchisor would be located in this area.
The franchisee complains that the franchisor did not indicate when the agreement was concluded that another branch of the franchisor would be opened 380 meters from the franchisee’s business. The franchisee has argued, among other things, that with the location on the edge of the exclusivity area there are competitive activities that would depress profitability. The franchisor is thus charged with an unlawful act for breach of the franchisor’s pre-contractual information obligation.
According to the court, the franchisee had not fulfilled its duty to state that it would not be (properly) possible to operate two profitable branches at a distance of 380 meters from each other in the center of Almere. The Court of Appeal follows the opinion of the District Court that the franchisee has insufficiently substantiated its assertions by not providing information about the turnover it has realized and about the expectations it may have had in view of the turnover figures provided to it.
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
Article Mr. C. Damen – “When does the obligation to provide proof apply for the submission of the franchise agreement?” dated August 17, 2020
Does the obligation to produce information apply to showing a (franchise) agreement in proceedings if the parties to the proceedings do not have a legal relationship to the (franchise) agreement?
Article Mr. AW Dolphijn – “How do you value a franchise company with a discharge loan?” – dated August 14, 2020
A discharge loan is a proven means of franchisors to find long-term franchisees.
Article De Nationale Franchise Gids: “Information obligations of the intended franchisee under the Franchise Act” – dated August 7, 2020 – mr. AW Dolphin
Although the purpose of the Franchise Act is to protect franchisees against franchisors, a number of obligations have also been laid down for franchisees.
Legislative text of the Franchise Act – dated July 24, 2020 – mr. AW Dolphin
The legal text of the Franchise Act was published in the Staatsblad on 1 July 2020. The full legal text reads as follows:
Law Franchise – dated July 23, 2020 – mr. AW Dolphin
The Franchise Act will have a considerable impact on both franchisors and franchisees.
Contractual dissolution requirements not observed? No legal dissolution of the franchise agreement – dated July 23, 2020 – mr. C. Damen
Can a franchisor terminate the franchise agreement if it has failed to comply with its own contractual requirements?