The Supreme Court sets strict requirements for franchise forecasts
A ruling by the Supreme Court on Friday casts a new light on the provision of profit and turnover forecasts to aspiring franchisees.
When Is a Franchisor Liable for a Misforecast? More than 15 years ago, the Supreme Court indicated that the franchisor is acting unlawfully if it provides a forecast that it knows contains serious errors and conceals those errors. Since then, it has been held in lower case law that the franchisor only acts unlawfully if the franchisor has deliberately made and left an incorrect assumption.
On 24 February 2017, the Supreme Court (ECLI:NL:HR:2017:311) indicated that a franchisor can also act unlawfully if the forecast contains errors, without the franchisor being aware of those errors. So this is a lower standard.
Only if a franchisor has the forecast drawn up by an external party does the heavier standard of good judgment apply. In that case, the franchisor may generally (also) rely on the correctness of the forecast drawn up by the third party. The franchisor only acts wrongfully if he knows about errors in the forecast, but conceals this from the prospective franchisee.
Franchisors will have to be (even more) wary of errors in forecasts provided to aspiring franchisees. In addition to the Dutch Franchise Code and the Acquisition Fraude Act, franchisees are also supported by the Supreme Court to enforce their rights.
mr. J. Sterk and mr. AW Dolphin
Ludwig & Van Dam attorneys
Other messages
Supermarket letter – 26
Supermarket Newsletter No. 26
Link franchise agreement and rental agreement uncertain? – dated October 14, 2019 – mr K. Bastiaans
It is no exception within a franchise relationship that the parties agree that the franchise agreement and the rental agreement are inextricably linked.
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.