Switching franchisee from one franchise organization to another is not without risks
Court of Amsterdam
The court in Amsterdam recently ruled in a case where a franchisee switched from one franchisor to another, in the same industry.
Both the transferring franchisee and the new franchisor have a major responsibility in this regard. The new franchisor’s duty of care entails that the franchisor must investigate the facts and circumstances under which the franchisee is transferring. This should not only include a possible non-competition clause and its consequences, but also what the current obligations of the franchisee are towards the existing franchisor. It is insufficient if the new franchisor claims that it was not aware that there was a non-competition clause or that the transferring franchisee had outstanding obligations towards the old franchisor. If the franchisor simply cooperates in the transfer, i.e. without further active investigation, it may be unlawful towards the existing franchisor. For example, the disadvantage may be the transfer of customers from one franchise organization to another at the hands of the franchisee and the new franchisor. It does not matter that the franchisee camouflages activities by means of a private company, in which a third party, for example a family member, has formal control as the sole shareholder. This is where the court comes in.
Ultimately, the Amsterdam court concludes that both the new franchisor and the transferring franchisee are liable towards the old franchisor.
Careful consideration and an open card could have prevented all this.
Mr Th.R. Ludwig – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice
Do you want to respond? Mail to ludwig@ludwigvandam.nl
Other messages
Can a franchisee cohabit with a competing entrepreneur?
Can a franchisee violate a non-compete clause by cohabiting with someone who runs a competing business? On January 12, 2018, the District Court of Central Netherlands ruled
Not an exclusive catchment area, but still exclusivity for the franchisee
The judgment of the District Court of Noord-Holland dated 18 April 2018, ECLI:NL:RBNHO:2018:3268, ruled on the exclusivity area of a franchisee.
Supermarket letter – 23
AH may not reduce wages when taking over personnel from AH franchisees;
Termination or dissolution of the franchise agreement by the franchisee
In principle, franchise agreements can be terminated prematurely, for example by cancellation or dissolution. On 21 March 2018, the District Court of Overijssel ruled on ECLI:NL:RBOVE:2018:1335 on
Article in Entrance: “Sending mailings”
“Can I make a file of guests' email addresses because I occasionally want to inform them online about events, promotions and new dishes?”
Column Franchise + – mr. Th.R. Ludwig: “Fictitious employment: DBA Act shifts responsibility”
The Deregulation Assessment of Labor Relations Act (Wet DBA) has been in force for some time now.