Supreme Court: Code of Honor regarding franchising has no legal effect – dated September 25, 2018 – mr. AW Dolphin
On 21 September 2018, the Supreme Court ruled that the European Code of Honor on Franchising is not a benchmark for legal beliefs in the Netherlands. This Code of Honor states that a franchisor must provide the prospective franchisee with all available information and other data, such as a forecast, before concluding the franchise agreement. That obligation is therefore not enforceable.
The case concerned a franchisor who had indicated that he was committed to the European Code of Honour. The franchisor had prepared an initial forecast that was less rosy than the one the franchisor ultimately provided. The franchisee believed that the initial prognosis should also have been provided and referred to the obligations under the Honor Code. The Supreme Court ruled that the franchisor has no obligation to provide a prognosis and therefore also not the initial prognosis. According to the Supreme Court, the fact that the franchisor had committed itself to the Code of Honor does not change this, because the Code of Honor is not enforceable.
Providing information prior to concluding a franchise agreement is one of the cabinet’s spearheads in the preparation of franchise legislation. The above judgment appears to underline the need for regulation by the legislator of the franchisor’s obligation to provide complete and sufficient information prior to the conclusion of the franchise agreement. The aspiring franchisee would do well to at least request all much-needed information and to be critical of this.
mr. AW Dolphin – franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl
Other messages
Article Mr. C. Damen – “When does the obligation to provide proof apply for the submission of the franchise agreement?” dated August 17, 2020
Does the obligation to produce information apply to showing a (franchise) agreement in proceedings if the parties to the proceedings do not have a legal relationship to the (franchise) agreement?
Article Mr. AW Dolphijn – “How do you value a franchise company with a discharge loan?” – dated August 14, 2020
A discharge loan is a proven means of franchisors to find long-term franchisees.
Article De Nationale Franchise Gids: “Information obligations of the intended franchisee under the Franchise Act” – dated August 7, 2020 – mr. AW Dolphin
Although the purpose of the Franchise Act is to protect franchisees against franchisors, a number of obligations have also been laid down for franchisees.
Legislative text of the Franchise Act – dated July 24, 2020 – mr. AW Dolphin
The legal text of the Franchise Act was published in the Staatsblad on 1 July 2020. The full legal text reads as follows:
Law Franchise – dated July 23, 2020 – mr. AW Dolphin
The Franchise Act will have a considerable impact on both franchisors and franchisees.
Contractual dissolution requirements not observed? No legal dissolution of the franchise agreement – dated July 23, 2020 – mr. C. Damen
Can a franchisor terminate the franchise agreement if it has failed to comply with its own contractual requirements?