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 bank’s duty of care in franchise agreements
On 23 May 2017, the Court of Appeal in The Hague, EQLI:NL:GHDHA:2017:1368, had to rule on the question whether the bank should have warned a prospective franchisee in connection with the
Article in Entrance: “Standing up”
“Can I fire an employee with immediate effect if he steals something trivial, such as food that has passed its expiration date?”
Arbitration clause in franchise agreement sometimes inconvenient
On 20 July 2016, the District Court of Gelderland, ECLI:NL:RBGEL:2016:4868, ruled on the validity of an agreement in a franchise agreement, whereby disputes would be settled
Supermarket letter – 18
Can an entrepreneur be obliged to operate a different supermarket formula?
Article in Entrance: “New owner”
“The catering company where I work has been taken over. The new owner now says that I no longer have to work for him, but can he refuse me as an employee?”
Directors’ liability in the settlement of a franchise agreement
Privately, can the director of a franchisee legal entity be liable to the franchisor if the franchisee legal entity wrongfully fails to provide business to the franchisor?