The possibility of actively or not actively recruiting customers outside
Based on the relevant regulations, it is permitted to limit the franchisee’s active solicitation activities to its exclusive territory. In that area, the franchisee can then freely advertise and acquire customers in any other way. In that case, the franchisor should not impose any restrictions on the franchisee in actively acquiring customers within the exclusive territory. It is of course possible that certain advertisements end up outside the exclusive territory of the relevant franchisee, whether or not via the internet.
It follows from the above that when a customer, who is not located in the franchisee’s exclusive territory, turns to this franchisee, the franchisee is free to do business with this customer. This also applies, of course, if such customer contact is established via the internet or a catalogue. In that context, however, a franchisee may be prohibited from actively distributing e-mails outside its exclusive territory. This is what is known as active recruitment. In other words: if there is active sales, the possibilities of a franchisee can be limited. In summary, the above means that if a franchisor allocates an exclusive territory to its franchisee, the franchisee must have considerable freedom in acquiring customers in that territory; the so-called active sale. The franchisor can only impose restrictions if the sales activities take place in the area outside the exclusive territory of the relevant franchisee. Often this will also arise from the protection of other franchisees located in that adjacent area, each with its own exclusive area.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Franchise agreement or employment contract?
“Franchise Agreement” is not a legal term. The law sees a franchise agreement as an ordinary agreement.
The bankruptcy of a franchisor: end of the franchisee’s right of action?
Although fortunately sporadic in itself, it does happen that franchise organizations go bankrupt.
Statutory commercial interest in the franchise relationship
In daily practice, payment arrears often give rise to legal disputes.
Silent extension
Many franchise agreements contain provisions governing the termination and possible continuation of the existing franchise agreement.
Abuse of bankruptcy law
The right must be used for the purpose for which it was written.
Transfer of the Franchisor’s Business: A Follow-up
In previous contributions in this section, aspects of the transfer of the company have already been discussed