Supreme Court confirms permit sale of franchisee outside exclusive district
High Council
Franchisee acquires and sells outside its territory, in territories not yet issued to other franchisees. Franchisor objects to this state of affairs and requests them to stop this subject to dissolution of the franchise agreement. The parties will make further agreements on how to deal with the problem. Ultimately, this results in a conflict in which the franchisor dissolves the franchise contract out of court. During a court hearing, both the franchisor and the franchisee argued that the franchisee was allowed to work in territories that had not yet been assigned to anyone. In the end, the franchisor’s argument that the franchisee was not allowed to do this does not hold up either in court or in the highest instance, i.e. the Supreme Court.
NB: Franchisor and franchisee need not even have agreed that the franchisee was allowed to operate in territories that had not yet been allocated, unless otherwise agreed in this context. On competition law grounds, a franchisee is always permitted to do this and in principle a franchisee may not be restricted in this, unless a nuanced arrangement, for example reserving the areas for the franchisor itself, has been agreed between the franchisor and the franchisee.
Mr Th.R. Ludwig – Franchise lawyer Ludwig & Van Dam Franchise attorneys, franchise legal advice Would you like to respond? Mail to ludwig@ludwigvandam.nl
![](https://ludwigvandam.megaconcept.nl/wp-content/uploads/2020/12/232court-min-400x222.jpg)
Other messages
Forecast jurisprudence: Liability and evidence
By judgment of 16 October 2013, the subdistrict court in Breda has a franchisee
Service provision and franchise: towards a new franchise model
The last few years have shown an enormous variation in franchise formulas in the service sector; in the hotel industry, banking, temporary employment, childcare, elderly care and so on.
Rent reduction in practice: a joint effort by franchisee and franchisor
Rent reduction in practice: a joint effort by franchisee and franchisor.
Waiver of the non-compete clause
Most franchise agreements provide specific regulation of the consequences of terminating that agreement, whether after the term of that agreement has expired or prematurely.
Financial projections in a deteriorating fast food market
Financial projections in a deteriorating fast food market
Financial estimates in the hospitality industry
A recurring subject in franchising is liability in the case of incorrect forecasts.