Reinvestment / restyling within an existing franchise concept.
In practice, we have recently seen more and more developments that point to a conversion/restyling of the franchise organization, for which the franchisee must reinvest.
An important question in such a situation is whether the existing franchise agreement offers the possibility of realizing such a conversion/restyling of the entire franchise organization?
If a provision is included in the existing franchise agreement from which, in short, it follows that the franchisee can be obliged, at the franchisor’s request, to cooperate in a “collective conversion/restyling” of the organisation, then the franchisee can (in principle) must also be adhered to. It is important here who is expected to bear the costs for the conversion/restyling.
If the franchisee is expected to make a significant contribution to this, it is important that the franchisor preferably provides forecasts that are geared to the new situation, in order to be able to take the consequences of the conversion into account. This is all the more pressing now that this situation can be compared with the situation of the so-called pre-contractual phase. After all, even in the situation of a major restructuring of the organization, the franchisor must cover the investments to be made by the franchisees with the necessary care obligations.
If a reinvestment is of a limited nature, a prognosis may be omitted, although in such a situation a franchisor should also ask himself to what extent the reinvestment will have a negative effect on the franchisee’s organisation. If it is a considerable investment, the franchisor should, as already stated above, ask himself whether the investment actually leads to an improvement in turnover or whether a loss of turnover is prevented. In addition, the requested investment must be justified in relation to the operating result of the franchisees involved. In short, this must be done with the necessary caution and policy. This will be discussed in more detail in one of the following articles.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Ludwig & Van Dam attorneys summon Sandd and PostNL on behalf of the Sandd franchisees – dated 9 January 2020 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) has today summoned Sandd and PostNL before the court in Arnhem. The VFS believes that Sandd and PostNL are letting the franchisees down hard.
Article The National Franchise Guide: “Why joint and several liability, for example, next to private?” – dated 7 January 2020 – mr. AW Dolphin
Franchisees are often asked to co-sign the franchise agreement in addition to their franchise, for example. Sometimes franchisees refuse to do so and the franchise agreement is not signed.
Ludwig & Van Dam Advocaten assists Sandd franchisees: Franchisees Sandd challenge postal monopoly in court – dated 12 November 2019 – mr. AW Dolphin
The Association of Franchisees of Sandd (VFS) is challenging the decision of State Secretary Mona Keijzer to approve the postal merger between PostNL and Sandd before the court in Rotterdam.
Franchisee trapped by non-compete clause? – dated October 21, 2019 – mr. AW Dolphin
The District Court of East Brabant has ruled that a franchisee was still bound by the non-competition clause in the event of premature termination of the franchise agreement.
Supermarket letter – 26
Supermarket Newsletter No. 26
Link franchise agreement and rental agreement uncertain? – dated October 14, 2019 – mr K. Bastiaans
It is no exception within a franchise relationship that the parties agree that the franchise agreement and the rental agreement are inextricably linked.