Transfer of business with ‘preferred supplier’ of franchisees
On 13 June 2017, the Amsterdam Court of Appeal ruled in interlocutory proceedings, ECLI:NL:GHAMS:2017:2144, on the question whether employees of a ‘preferred supplier’ of the franchisees designated by the franchisor have automatically become employees of the newly appointed ‘ preferred supplier’.
Shell has entered into franchise agreements with service station operators. This stipulates that the franchisees are obliged to purchase certain administrative services from a party designated by Shell, called Centric. Shell has also appointed another party, namely KPMG.
The employees of Centric, who performed the relevant administrative services for Shell franchisees, demanded that there be a transfer of undertaking, in the sense that the employees in question have now automatically become employees of KMPG under the law (section 7:662 ev BW).
The Court of Appeal ruled that the client has remained the same, the same clientele (the franchisees) are being served and the activities have been transferred without interruption from Centric to KPMG. However, the question is whether the identity of the “economic unit” concerned has been preserved. This is not the case if there is labour-intensive activity that does not involve the transfer of any significant assets. The Court of Appeal ruled that the mere digital access to Centric’s digital (transaction) systems by KPMG cannot be regarded as such an asset. The Court of Appeal concludes that there is no transfer of undertakings and that Centric’s employees have therefore not been employed by KPMG.
The question of whether there was a transfer of undertaking is important for the franchise relationship, because a transfer of undertaking from one ‘preferred supplier’ to another could conceivably have a cost-increasing effect, which could have repercussions on the franchisor and/or the franchisee. When a franchisor designates a new ‘preferred supplier’ for its franchisees, account must be taken of the possibility that there could be a transfer of business between the old and new ‘preferred supplier’. In addition, the question arises whether Article 2.3 sub g of the Dutch Franchise Code would simply allow the designation of a ‘preferred supplier’ here.
mr. AW Dolphijn – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice. Do you want to respond? Go to dolphijn@ludwigvandam.nl .
Other messages
Directors’ liability in the event of an incorrect forecast
On 4 February 2015, the Rotterdam District Court rendered a judgment on, among other things, the question of whether the director of a selling legal entity was liable.
C1000 loses appeal for inspection of C1000 deal
C1000 loses appeal for inspection of C1000 deal
Supermarket letter – 9
The C1000 Association loses appeal for inspection of the C1000 deal
Interim dissolution of the franchise agreement by the franchisee in the event of loss-making operation possible?
The Court of Appeal recently rendered a judgment in a matter that is very relevant to the franchise practice.
Those who are orienting themselves as a candidate franchisee can contact the association of franchisees, the BVFN.
Those who are orienting themselves as a candidate franchisee can contact the association of franchisees, the BVFN.
mr. Strong litigates for C1000 entrepreneur with wrong prognosis
mr. Strong litigates for C1000 entrepreneur with wrong prognosis