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
Which court for a rental and franchise agreement?
Which court is competent to rule on a related rental and franchise agreement?
Interview Franchise+ – mrs. J. Sterk and AW Dolphijn – “Reversal burden of proof in forecasts honored by court”
The new Acquisition Fraud Act indeed appears to be relevant for the franchise industry, according to this article from Franchise+.
Franchisor convicted under the Acquisition Fraud Act
For the first time, a court has ruled, with reference to the Acquisition Fraud Act, that if a franchisee claims that the franchisor has presented an unsatisfactory prognosis
Agreements Related to the Franchise Agreement
On 31 October 2017, the Arnhem-Leeuwarden Court of Appeal issued similar judgments for nineteen franchisees (ECLI:NL:GHARL:2017:9453 through ECLI:NL:GHARL:2017:9472).
Column Franchise+ – mr. J. Sterk – “Franchisee does body check better than franchise check”
A gym embarks on a franchise concept that offers “Body Checks” and discounts to (potential) members in collaboration with health insurers.
Seminar Mrs. J. Sterk and M. Munnik – Thursday, November 2, 2017: “Important legal developments for franchisors”
Attorneys Jeroen Sterk and Maaike Munnik of Ludwig & Van Dam Advocaten will update you on the status of and developments surrounding the Dutch Franchise Code and the Acquisition Fraude Act.