The (in)validity of a post-contractual non-competition clause in a franchise agreement: analogy with employment law?
On 5 September 2017, the District Court of Gelderland, ECLI:NL:RBGEL:2017:4565, rendered a judgment on, among other things, whether Bruna, as a franchisor, could invoke the ban on a franchisee from performing competitive acts after the expiry of a franchise agreement . The franchisee had argued that the franchisor had structurally and very seriously failed in its obligations as a franchisor, as a result of which the franchisee was forced to terminate the franchise agreement. Therefore, according to the franchisee, the prohibition no longer applies.
What does not follow from the judgment is whether an analogy of this situation between an employer and an employee has been invoked. Labor law stipulates that an employer cannot derive any rights from an agreed non-competition clause if the termination or non-renewal of the employment contract is the result of seriously culpable acts or omissions on the part of the employer (see Section 7:653(4) of the Dutch Civil Code). .
In the present case, the franchisee was not followed by the court, because it has not become apparent that the franchisee had also informed the franchisor before the termination of the franchise agreement that the franchisor was failing in its obligations as a franchisor. Because the franchisee had only made this point of view known after the termination of the franchise agreement, it cannot be established, according to the court, that the termination of the franchise agreement is largely attributable to the franchisor. The non-competition clause therefore remains valid on that basis. Because, incidentally, in the opinion of the court it has been sufficiently established that the franchisee was not involved in the notified competitive actions, the appeal to the non-competition clause was still rejected.
It can be deduced from this ruling that the power relationship between a franchisor and franchisee may in certain situations show a parallel with the power relationship between an employer and an employee. Does a small dependent franchisee deserve the same protection against a large powerful franchisor that an employee has against an employer? The court’s considerations do not seem to rule out this possibility.
mr. AW Dolphijn – franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl .
Other messages
On the edge of a franchisee’s exclusive territory
The Court of Appeal of Arnhem-Leeuwarden ruled on 15 May 2018, ECLI:NL:GHARL:2018:4395, on the question whether a franchisor has a branch just over the edge of the exclusively granted protection area.
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?”