Transfer of the franchisor
Most franchise agreements include a comprehensive transfer arrangement for the benefit of the franchisee, detailing how the franchisee may transfer its business to a third party if it so desires. However, the franchisor can also transfer his company, although franchise agreements often contain little or nothing about this. A provision that sometimes recurs is that the franchisor is free to transfer his business to a third party, provided that this does not affect or encumber the rights of the franchisees in any way. That is of course also correct and summarizes the point in a nutshell: ideally, a franchisee will not notice a takeover or sale of the franchisor’s business.
However, this does imply that both the selling party and the acquiring party must realize that the rights of the franchisees cannot actually be challenged. Incidentally, this is a principle that arises from contract law itself and therefore also applies if the franchise agreement does not expressly contain a provision to that effect. In practice, it sometimes happens that franchise organizations are transferred to third parties while there are conflicts within that organization between the franchisor and one or more franchisees. Perhaps unnecessarily, it should be noted in that context that the transfer of the franchise organization does not imply the end of that conflict. It is then one of the two: either the acquiring party will in so many words, made known to the franchisee(s) involved, also “take over the conflict”, or the selling party will declare in so many words that it is responsible for the further settlement of the that conflict, in both cases including the settlement of any compensation obligations and the like. In this context, it is good franchising practice to inform all franchisees, including those involved in the conflict, of the intended transfer and its consequences in a timely manner, in the broadest sense of the word, so that both the business operations in a broad sense the franchisees, as well as the handling and further settlement of the conflict as a result of the acquisition.
Ludwig & Van Dam franchise attorneys, franchise legal advice
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Ludwig & Van Dam Legal Franchise Statistics 2018
Ludwig & Van Dam attorneys are the only periodic publishers of franchise statistics on franchise disputes based on all published court decisions.
Ludwig & Van Dam in De Nationale Franchisegids 2018
The basis of a franchise relationship is the franchise agreement. This contains a number of conditions that the parties must comply with.
Ludwig & Van Dam Advocaten exhibitor (no. 2) at the franchise fair Onderneem ‘t! dated 19 & 20 April 2018
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Duty of care franchisor in the pre-contractual phase
The District Court of Limburg ruled on 6 April 2017, ECLI:NL:RBLIM:2016:2843, that the franchisor has a duty of care towards the prospective franchisee in the pre-contractual phase.
Franchisee avoids joint and several liability in private
In a judgment of 28 March 2018, ECLI:NL:RBROT:2018:2913, the District Court of Rotterdam ruled on the meaning of the clause in the franchise agreement stipulating that