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
The benchmark for franchise forecasts – dated 29 May 2019 – mr. AW Dolphin
On 19 March 2019, the Den Bosch Court of Appeal, ECLI:NL:GHSHE:2019:1037, listed the case law of the Supreme Court on prognosis in franchising.
Franchise arbitration: too high a threshold? – mr. M. Munnik
When entering into an agreement, it is possible for the parties - contrary to the law - to designate a competent court. This also applies to the franchise agreement. Of this possibility
Franchise appeal for error due to incorrect forecasts and lack of support rejected – dated April 25, 2019 – mr. K. Bastian
The Court of Appeal of 's-Hertogenbosch ruled (ECLI:NL:GHSHE:2019:697) on the question whether the mere fact that forecasts did not materialize justifies the conclusion that the franchisee has been shortchanged...
Article De Nationale Franchise Gids: “Increasing protection against recruiting franchisees” – dated 2 April 2019 – mr. AW Dolphin
It is becoming increasingly apparent that recruited franchisees can be protected on the basis of the Acquisition Fraud Act.
The Franchise Association and Franchise Binding – Contracting 2019, No. 1
A contribution on common provisions in franchise agreements that require a franchisee to be a member of a franchisee's association.
Deception in recruiting a franchisee?
A ruling on whether the franchisor had made a misrepresentation when recruiting a franchisee.