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
Termination of franchise agreement in case of changes in leased retail space – September 27, 2019 – mr. AW Dolphin
Termination of a franchise agreement in light of a substantial change in the leased retail space.
Article De Nationale Franchisegids: “Distribution of (potential) customers prohibited?” – September 17, 2019 – mr. AW Dolphin
Within many franchise organizations, agreements are made about the recruitment of (potential) customers in a certain area.
District protection no protection against termination due to urgent own use – dated September 17, 2019 – mr. AW Dolphin
As a landlord, can the franchisor terminate the lease for urgent own use, in the sense of district protection, while this would be excluded on the basis of the franchise agreement.
Unreasonable compensation at the end of the franchise agreement – dated September 17, 2019 – mr. AW Dolphin
Some franchise agreements stipulate that the franchisee always owes the franchisor a minimum of a certain amount of costs upon termination of the franchise agreement.
Legal Franchise Statistics 2019: slight decrease in number of franchise disputes
In 2018, 44 judgments were published on Rechtspraak.nl, 12 of which were appeal cases and one in cassation (a prognosis issue against Albert Heijn).
Article De Nationale Franchisegids: “Judge again rules in favor of Domino’s franchisees” – dated September 3, 2019 – mr. RCWL Albers
At the beginning of 2018, almost all franchisees of Domino's and the Association of Domino's Pizza Franchisees submitted two issues to the court in Rotterdam.