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+ – Current state of affairs Franchise Act – dated March 27, 2020 – mr. AW Dolphin
The legislative process regarding the Franchise Act continues despite everything.
Rent reduction and corona crisis – dated 25 March 2020 – mr. Th.R. Ludwig
In this turbulent time for franchisors and franchisees, many are faced with ongoing obligations that have become problematic.
Franchise agreements and the corona crisis – dated March 20, 2020 – mr. AW Dolphin
A time of draconian measures with far-reaching consequences. There is a lot of legal uncertainty, also in franchise relationships.
Recommendations by the franchisor in general terms are permitted – dated March 6, 2020 – mr. AW Dolphin
The boundary between praise in general terms on the one hand and culpable deception and misrepresentation on the other remains a difficult issue.
Article De Nationale Franchise Gids – Know-how decisive for scope of application Franchise Act – dated 5 March 2020 – mr. RCWL Albers
It will have escaped the attention of few in the sector that on 10 February 2010 the legislative proposal for the Franchise Act was submitted to the House of Representatives.
Column Franchise+ – A conflict can be prevented, just communicate well – February 2020 – mr. AW Dolphin
Formula changes are a fascinating topic. It is often the subject of conflicts, but those conflicts can be avoided.