The right to the formula name upon termination of the franchise relationship
In practice, discussions regularly occur when the franchise relationship is terminated between a franchisor and one or more franchisees regarding the question of whether and to what extent the departing franchisee(s) is/are entitled to continued use of the formula name. This discussion arises in particular in the event that a collective of franchisees part ways with the franchisor and in particular when all franchisees of the organization are involved in such a case. The reasoning is often that it is the franchisees who have made the name what it is. If the departure of the franchisees is also due to (alleged) attributable shortcomings on the part of the franchisor, then the idea takes hold that, certainly against that background, the franchisees have the right to continue using the name.
Of course, it happens that departing franchisees set up a new organization under the name of the franchisor they just left. However, this should be based on corresponding agreements. If there are none, then it is the franchisor who is and remains the rightful claimant to the formula name. The franchise agreement often also contains a provision to that effect. This is not affected by the fact that the franchisor in question did not adequately comply with the franchise agreement or, in general, in the opinion of the franchisees, did not function as a good franchisor. A nuance in this regard may be that, in a specific case, the franchisor has not adequately ensured the trademark protection of the name. If that is the case, a situation could arise in which the franchisees register the name as a trademark with the Benelux Trademark Register. In practice, however, such a situation will not easily arise, since a good franchisor naturally ensures adequate protection of its format name and, as stated, the provisions of the franchise agreement stand in the way of such a course of action.
In conclusion:
In almost all cases, therefore, leaving the organization means giving up the name of the formula.
Ludwig & Van Dam franchise attorneys, franchise legal advice
![](https://ludwigvandam.megaconcept.nl/wp-content/uploads/2020/12/232court-min-400x222.jpg)
Other messages
The preliminary agreement
The European Code of Honor on Franchising has already been discussed in this series of articles.
Sale of the franchise organization, consequences for the franchisees?
Last week it was announced that the HEMA organization may be sold by Maxeda, the owner of the organization.
Indemnification II – Failed Forecasts
A special form of indemnification consists of exoneration clauses that attempt to indemnify the franchisor against incorrect forecasts.
Incorporation of the franchisee’s business into a private limited company
When the franchisor and franchisee conclude their franchise agreement, in most cases there are franchisees
Price maintenance always leads to nullity?
Under competition law, it is not permitted to include so-called resale price maintenance in franchise agreements
Again turnover-related rent
In an earlier contribution to First Formula (November 10, 2006) about turnover related issues, I asked the question whether unilateral change