Silent extension
Many franchise agreements contain provisions governing the termination and possible continuation of the existing franchise agreement. It is quite often included in the franchise agreement that the agreement is tacitly renewed under the same conditions if neither party, franchisor or franchisee, cancels. Is such a regulation permissible under all circumstances?
If there is a sublease situation in which the franchisee rents from the franchisor, this is permissible in all cases as long as the sublease agreement continues and the market share of the relevant franchise organization does not exceed 30%. Please note that this market share can be regional or local as well as national.
If there is no question of subletting, tacit renewal is still possible as long as the market share of the franchise organization is below 15%. Contrary to what is sometimes thought, tacit renewal of a franchise agreement is therefore often possible in practice. It should be noted, however, that the regulation on which the possibility of tacit renewal is based for a market share of less than 15% can in theory be set aside by the court or the Netherlands Competition Authority (NMa). In a specific practical case, however, the NMa ruled that the regulation in question had to be fully respected.
When extending the franchise agreement, it is therefore really not necessary in all cases to conclude a new agreement and therefore necessarily sit down together. A simple clause that properly regulates tacit renewal for the parties is often sufficient.
Ludwig & Van Dam franchise attorneys, franchise legal advice
![](https://ludwigvandam.megaconcept.nl/wp-content/uploads/2020/12/232court-min-400x222.jpg)
Other messages
The small print, obligatory for the franchisee?
In many franchise formulas, the franchisee is obliged to use the contacts made by the franchisor
Settling claims between franchisor and franchisee
It seems so obvious. You have a claim against someone who also receives money from you and you speak
Franchisee as a subtenant in particular in bankruptcy
It often happens that a franchisor takes care of finding a suitable rental location
The franchisor’s duty of care in extreme times
The current credit crisis is spreading like wildfire and has already claimed many victims
Deal or no deal? The problem of broken negotiations
Before a franchise agreement is actually signed by a franchisor and a franchisee
Company Policy and Franchise Interest
Every organization of any importance sets policy goals for itself.