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
Damage estimate after wrongful termination of the franchise agreement by the franchisor
In a judgment of the Supreme Court of 15 September 2017, ECLI:NL:HR:2017:2372 (Franchisee/Coop), it was discussed that supermarket organization Coop had not complied with agreements, as a result of which the franchisee
Franchisor is obliged to extend the franchise agreement
On 6 September 2017, the Rotterdam District Court ruled, ECLI:NL:RBROT:2017:6975 (Misty / Bram Ladage), that the refusal to extend a franchise agreement by a franchisor
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, the question of whether Bruna, as a franchisor, could invoke the prohibition for a
Column Franchise+ – mr. J Sterk: “Court orders fast food chain to extend franchise agreement
The case is set to begin this year. For years, the franchisee has been refusing to sign the new franchise agreement that was offered with renewal, as it would lead to a deterioration of his legal position
Not a valid non-compete clause for franchisee
On 18 November 2016, the interim relief judge of the Central Netherlands District Court, ECLI:NL:RBMNE:2016:7754, rendered a judgment in the issue concerning whether the franchisee was held
Franchise & Law No. 5 – Acquisition Fraud and Franchising Act
The Acquisition Fraud Act came into effect on 1 July 2016. This includes amendments to Section 6:194 of the Dutch Civil Code.