Partial indebtedness of entrance fees due to lack of turnover and non-delivery of contractual performance by the franchisor
Court of Rotterdam
The franchisee rightly invokes unforeseen circumstances due to the lack of turnover and successfully claims moderation of the entrance fee due. The fact that no turnover has been realized within the framework of the franchise agreement, which moreover allows settlement of the entrance fee in connection with future turnover, is, in the opinion of the court, a circumstance that entails that the franchisee rightly invokes (partial) ) innocence. In addition, the franchisor has not provided any significant services. In addition to offering the franchise formula, only general printed matter, business cards, billboards and a general introduction were provided. Thus, the obligation of advice and assistance in accordance with the franchisor’s duty of care has apparently not been complied with. The court eventually halves the contractually due entrance fee.
NB: The fact that the court recognizes the lack of turnover as an unforeseen circumstance may also mean a new entry in the event of unrealized forecasts by franchisees. The ruling once again emphasizes the far-reaching duty of care of franchisors with regard to the actual ability to achieve reasonably expected turnovers, whether or not laid down in financial forecasts. If this core obligation from the franchise relationship is not met, the franchisee can invoke various grounds in relation to an action for damages against the franchisor.
Mr Th.R. Ludwig – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice Would you like to respond? Mail to ludwig@ludwigvandam.nl
Other messages
Article Franchise+ – Franchisees enjoy the same protection as employees and commercial agents with regard to a non-competition clause – dated 7 May 2020 – mr. RCWL Albers
It often happens that, especially by franchisees, the validity of a post-contractual non-compete clause is considered too lightly.
The support agreement for the Retail sector in this Corona crisis – dated 15 April 2020 – mr. K. Bastian
On April 10, 2020, the Ministry of Economic Affairs, together with a number of landlords, retailers and banks, reached a support agreement.
Court rules that corona crisis does not constitute force majeure – dated April 10, 2020 – mr. AW Dolphin
If payment cannot be made due to a decrease in income, then there is not always a force majeure situation.
Important information for directors of franchisees associations: Online meetings and decision-making in times of corona – dated April 10, 2020 – mr. J. Strong
Emergency law provisions for legally valid decisions without physically meeting within the association structure.
Unilateral amendment of the franchise agreement by the franchisor allowed? – dated April 7, 2020 – mr. K. Bastian
Is the franchisor allowed to implement certain announced changes/adaptations to the formula on the basis of the franchise agreement agreed between the parties?
Legal scientific publication: “Collective actions of franchisees” – dated April 2, 2020 – mr. AW Dolphin
An article by mr. Alex Dolphin