Unilateral amendment of the franchise agreement by the franchisor allowed? – dated April 7, 2020 – mr. K. Bastian

Terms in a franchise agreement are sometimes for several
open to interpretations. By ruling of March 19, 2020, the
Preliminary Relief Judge of the Overijssel District Court, location Almelo, in more detail
on the interpretation of a franchise agreement and whether unilateral
change on the part of the franchisor was allowed or not.

Facts

Central to the discussion was the question of whether it was the franchisor
permitted certain announced changes/adaptations to the formula
to be implemented on the basis of the agreement between the parties
franchise agreement.

The franchisees believed that it was up to the franchisor
under the franchise agreement was not permitted unilaterally
to implement announced changes without the consent of the
franchisees. The franchisor argued that it was authorized to do so
to implement the proposed changes, including as an argument
that the proposed changes were necessary for the formula and the
franchisees no, at least a limited, disadvantage from those changes
would experience.

The assessment

The question of whether the franchisor is allowed – in view of the provisions in
the franchise agreement – ​​the announced changes across the formula
should be answered in the light of the contractual
agreements regarding formula changes in conjunction with the others
provisions of the franchise agreement, according to the judge.

From the provision that the franchisor is permitted to apply the franchise formula
to change and develop further, could not be done without further ado in this case
deduced that changes can be implemented further than the
franchise agreement offers the opportunity, unless this happens with
permission from the franchisees. The articles do
franchisor has the freedom to adjust the formula, but from there
does not follow that a unilateral additional increase/adjustment is also subject to that
provision falls. If it was the franchisor’s intention to
such change unilaterally – therefore without the consent of the
franchisees – had this explicitly stated in the
franchising agreement. Now this not in the
franchise agreement is included, no
(additional) unilateral right to amend.

As to whether the proposed changes were necessary
for the continuity of the franchisor and that no (or limited)
would have an impact on the turnover and/or profit margin of the franchisee,
the preliminary relief judge comes to the conclusion that this is not in short
case can be determined. The question of whether the franchisor pursuant to
the alleged (unforeseen) circumstances would be entitled to unilateral
to make changes to the franchise agreement requires further investigation
investigation of the facts and provision of evidence, for which preliminary relief proceedings are not suitable
is.

The preliminary relief judge therefore comes to the conclusion in the present interlocutory proceedings
judges that the franchisor is not allowed to make purchases and
selling price changes without the consent of the franchisees
feed. All other claims of the franchisees are rejected.

Conclusion

The Court in preliminary relief proceedings makes it clear once again that for the answer
of the question of how to interpret the franchise agreement, it is not
purely concerns the linguistic interpretation of the provisions in the agreement,
but also the sense that the parties in the
given circumstances, it is reasonable for both parties to comply with these provisions
and what they could reasonably expect from each other.
This once again underlines the importance of the Haviltex standard.

This statement also makes it clear that the unilateral implementation of
changes even in these uncertain times (for example because some things
is necessary for the continuity of the formula) but not without further ado
is permitted, unless expressly stated in the franchise agreement
possibility.

This statement illustrates once again how important it is to
franchise relationship, both from franchisors and from
franchisee perspective, on the basis of a clear and
unambiguously worded franchise agreement.

mr. K. Bastiaans – franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice. Want
you respond? Go to bastiaans@ludwigvandam.nl