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
Other messages
C1000 and AH entrepreneurs close to lawsuit
C1000 and AH entrepreneurs close to lawsuit
The fictional employment relationship
Recently, a number of rulings have been made in both the Netherlands and Belgium regarding the establishment of a fictitious employment relationship
Back from the fictitious employment relationship
Back from the fictitious employment relationship
Liable and yet rejection claim for damages from franchisor
Liable and yet rejection claim for damages from franchisor
Court prohibits franchisor from rolling out alternative franchise formula
Recently, the president of the Court of Arnhem in an extremely interesting
Mr Th.R. Ludwig gives a legal workshop in collaboration with the NFV.
Mr Th.R. Ludwig gives a legal workshop in collaboration with the NFV.