Price maintenance and non-competition clause
Franchise agreements are increasingly governed by competition law advancing from Europe. This is also not always sufficiently taken into account in day-to-day franchising practice. An example of this is the imposition of fixed prices.
The court recently confirmed in summary proceedings that the franchisor may not impose fixed (minimum) prices on its franchisees. This is against competition law. Advertising campaigns, provided they meet certain conditions, are excluded. In principle, it is irrelevant what the organization’s market share is. Small franchise organizations therefore also fall under this prohibition. The structural imposition of fixed prices is therefore always prohibited. This also applies if these minimum prices have been established in mutual consultation with the franchisees.
In principle, agreements on maximum prices are permitted because they do not restrict competition. Insofar as maximum prices are at such a low level that they actually constitute a minimum price because the franchisee can only sell at a loss if he sells below this maximum price, one could possibly also speak of a prohibited price agreement.
The consequence of such a prohibited agreement may be that the entire franchise agreement is declared null and void, which was also the case in the above-mentioned ruling. The consequences of this are often incalculable. For example, the non-competition clause often included in the franchise agreement is then also null and void and the franchisee may be able to submit a claim against the franchisor for undue payment.
In franchise relationships, the franchisee should in principle always be free to determine the minimum selling price of his products and/or services.
The above does not alter the fact that the franchisor may give price advice. However, it is advisable to always stipulate that the franchisee is free to deviate from this.
Ludwig & Van Dam franchise attorneys, franchise legal advice
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.
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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