Position of franchisees in franchisor restructuring
Franchisees must be adequately and generously informed in advance by the franchisor about the content and consequences of (further) agreements that the franchisor makes about a proposed restructuring of the franchisor’s organization, as has recently been determined in court.
In the internal franchisor organization, drastic changes can sometimes be made in the structure and governance. It therefore not only concerns changes in brand strategy, but also, for example, with regard to (collective) purchasing conditions and the entanglement of interests with purchasing organizations or competitors. All this can mean that a lot will change for franchisees.
The following case happened recently. A franchisor of a do-it-yourself formula was looking for support from its franchisees for its restructuring plans. Initially, there was insufficient support for the intended restructuring. When the franchisor wanted to adjust its restructuring plans, the question for various franchisees was what the adjustments would be. However, in the opinion of the franchisees, these questions were insufficiently answered. The franchisor went ahead with the restructuring, but the franchisees did not accept it. It came to a lawsuit. On that occasion, the Court of Appeal underlined the franchisor’s duty in such situations to inform its franchisees in a timely manner and in advance, generously and adequately about the changed restructuring plans.
Other case law also shows that franchisees must, under certain circumstances, be generously and adequately informed in the event of reorganizations within the franchisor’s organisation. In many cases, the franchisee’s association or franchise council takes this on. Of course that’s a good thing. The collective interests of the franchisees must then be parallel to the individual interests. In any case, individual franchisees should determine their own legal position for themselves.
Franchisees would do well to be alert, to keep in touch with the franchisor and to document the questions and answers in writing as well as possible. If it turns out that there was a misunderstanding or lack of clarity afterwards, it can be established on the basis of the documentation whether adequate and generous information was provided.
See also: The National Franchise Guide (click here)
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
Amsterdam Court of Appeal restricts franchisor’s appeal to non-competition – dated July 6, 2020 – mr. T. Meijer
On 30 June 20202, the Amsterdam Court of Appeal ruled that a franchisor is not entitled to an (unlimited) appeal to a contractual non-competition clause.
Vacancy lawyer-employee
Ludwig & Van Dam Advocaten is a law firm that specializes entirely in franchise and other partnerships and is the market leader of its kind in the Netherlands.
Qualitaria franchisee put in his shirt – dated July 2, 2020 – mr. JAJ Devilee
The District Court of Zeeland-West-Brabant has rendered a judgment in legal proceedings initiated by a Qualitaria franchisee.
Supermarket newsletter -28-
Supermarket newsletter -28-
Article Franchise+ – “Immediate information obligations of franchisors upon operation of the Franchise Act” – mr. AW Dolphijn – dated June 25, 2020
As soon as the Franchise Act enters into force, this will have an immediate effect on franchise agreements that already exist. The question is whether the information flows are set up optimally from a legal point of view.
Senate will adopt Franchise Act – dated 24 June 2020 – mr. AW Dolphin
The House of Representatives had unanimously adopted the proposal to introduce the Franchise Act on 16 June 2020