The supplier prescribed by the franchisor is not performing? What now?
The Court of Appeal of ‘s-Hertogenbosch ruled on 20 February 2018, ECLI:NL:GHSHE:2018:727, on the question of who must prove that the franchisee was misled when entering into the franchise agreement.
Under the franchise agreement, the franchisee must purchase exclusively from suppliers specified by the franchisor. The franchisee states that the franchisor already had problems with two prescribed suppliers at the time, but did not communicate this to the franchisee when the franchise contract was signed. The franchisee invokes fraud and error and nullifies the concluded franchise agreement on those grounds. The franchisor disputes the alleged problems with the prescribed suppliers. The Court ruled that if the franchisor indeed had problems with the exclusive suppliers, the franchisor should have communicated this to the person who was about to become a franchisee.
The franchisee believes that the burden of proof regarding the problems with the prescribed suppliers lies with the franchisor. The Court of Appeal ruled that the franchisee invoked a lack of will and stated that there were grounds to nullify the franchise agreement. Based on the main rule, this entails that he must prove the facts on which he is based, which have been disputed by the franchisor with reasons. The franchisee therefore has the burden of proof.
It is not inconceivable that the franchisee might have had a different position of proof if the Acquisition Fraude Act had been invoked. After all, there is an explicit possibility to reverse the burden of proof if there is a sufficient suspicion of deception.
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl .
Other messages
Article Mr. C. Damen – “When does the obligation to provide proof apply for the submission of the franchise agreement?” dated August 17, 2020
Does the obligation to produce information apply to showing a (franchise) agreement in proceedings if the parties to the proceedings do not have a legal relationship to the (franchise) agreement?
Article Mr. AW Dolphijn – “How do you value a franchise company with a discharge loan?” – dated August 14, 2020
A discharge loan is a proven means of franchisors to find long-term franchisees.
Article De Nationale Franchise Gids: “Information obligations of the intended franchisee under the Franchise Act” – dated August 7, 2020 – mr. AW Dolphin
Although the purpose of the Franchise Act is to protect franchisees against franchisors, a number of obligations have also been laid down for franchisees.
Legislative text of the Franchise Act – dated July 24, 2020 – mr. AW Dolphin
The legal text of the Franchise Act was published in the Staatsblad on 1 July 2020. The full legal text reads as follows:
Law Franchise – dated July 23, 2020 – mr. AW Dolphin
The Franchise Act will have a considerable impact on both franchisors and franchisees.
Contractual dissolution requirements not observed? No legal dissolution of the franchise agreement – dated July 23, 2020 – mr. C. Damen
Can a franchisor terminate the franchise agreement if it has failed to comply with its own contractual requirements?