The set-off defense and the termination of the franchise agreement for an indefinite period
On 29 September 2015, the Arnhem-Leeuwarden Court of Appeal (ECLI:NL:GHARL:2015:7296) ruled on whether the franchisor could terminate the franchise agreement for an indefinite period.
The franchisee argued that there was no payment arrears because the franchisee still had setoffable claims against the franchisor. The Court of Appeal established that this set-off claim was (largely) not (yet) due and payable at the time when the franchisor’s claim against the franchisee was due and payable. There was therefore a shortcoming in the fulfillment of the franchisee’s obligations under the franchise agreement.
Now that there is an attributable shortcoming, the franchise agreement stipulates that the franchise agreement can be terminated. The Court reasoned that the presence of a compelling ground is not a requirement for a valid termination of the franchise agreement. In its judgment of 28 October 2011 (ECLI:NL:HR:2011:BQ9854), the Supreme Court ruled that a continuing performance contract that has been entered into for an indefinite period (if the law and contract do not provide for a termination arrangement) can, in principle, be terminated , on the understanding that the requirements of reasonableness and fairness in connection with the nature and content of the agreement and the circumstances of the case may mean that cancellation is only possible if there are sufficiently compelling grounds for cancellation. However, that situation does not arise here, if only because it is not in dispute between the parties that the franchise agreement, on the basis of the provisions of the franchise agreement, can be terminated immediately if the franchisee has not fulfilled its obligations, according to the Court of Appeal.
The conclusion is that although the franchisee had a counterclaim against the franchisor, this counterclaim was not yet due and payable, so that the franchisor could terminate the franchise agreement at that time because the franchisor did have a due and payable claim against the franchisee.
mr. AW Dolphijn – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Mail to dolphijn@ludwigvandam.nl
![](https://ludwigvandam.megaconcept.nl/wp-content/uploads/2020/12/232court-min-400x222.jpg)
Other messages
The small print, obligatory for the franchisee?
In many franchise formulas, the franchisee is obliged to use the contacts made by the franchisor
Settling claims between franchisor and franchisee
It seems so obvious. You have a claim against someone who also receives money from you and you speak
Franchisee as a subtenant in particular in bankruptcy
It often happens that a franchisor takes care of finding a suitable rental location
The franchisor’s duty of care in extreme times
The current credit crisis is spreading like wildfire and has already claimed many victims
Deal or no deal? The problem of broken negotiations
Before a franchise agreement is actually signed by a franchisor and a franchisee
Company Policy and Franchise Interest
Every organization of any importance sets policy goals for itself.