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
Is the end of the lack of evidence in prognosis cases in sight?
For many years, the franchise agreement has been, as it is called, an unnamed agreement.
Ex-Franchisee sentenced to rectification at EenVandaag after unacceptable statements
Very recently, the President has ruled in interlocutory proceedings that the franchisee has made statements, the correctness of which has not been established.
Jumbo’s refusal to convert C1000 is definitely subject to appeal
A sad outcome for a C1000 franchisee, of which the preliminary relief judge of the court in Amsterdam
Jumbo refuses to convert C1000 and claims the franchise company
An apparently remarkable outcome about a C1000 franchisee, of which the preliminary relief judge of the court in Amsterdam
Franchisor hinders litigation – An unbalanced arbitration clause
It has been agreed in a franchise agreement that disputes will be settled by arbitration, to be held in New York, in the English language.
DA Drugstore head office clashes hard with franchisees
DA Drugstore head office clashes hard with franchisees