Unlawful termination of dealer agreement
Court of Appeal in The Hague
The Court of Appeal in The Hague recently ruled in a case in which an importer and distributor of a car brand had terminated an agreement with one of its dealers. The cancellation in itself is not contested by the dealer. During the term of the agreement, the dealer starts a dealership for another car brand and informs the terminating importer and distributor of the first car brand about this in writing. Shortly afterwards, the first car brand terminated the dealer agreement on the grounds that the dealer had not complied with the contractual requirements for the use of separate sales space. The dealer denies that this is contrary to the concluded agreement.
The parties litigate in court, after which an appeal is lodged with the court. It ruled that the activity of the dealer to start a second car brand is not in conflict with the previously concluded agreement and that the dealer suffered damage for several reasons. This damage was caused, among other things, by the car brand cutting off the lines of communication, appointing a new dealer, and the fact that the car brand provided the new dealer with promotional material that enabled the latter to function as a new dealer.
With regard to the extent of the damage, the Court of Appeal also considers the necessary and in this case refers the case back to the docket.
The wrongful termination could have been prevented if the parties had carefully consulted about the scope of the new activities in relation to the existing dealership and perhaps had made good agreements in this regard. The dealer has now been disadvantaged by cancellation, which turned out to be unjustified and unlawful.
Mr Th.R. Ludwig – Franchise lawyer
Ludwig & Van Dam Franchise attorneys, franchise legal advice Would you like to respond? Mail to ludwig@ludwigvandam.nl
Other messages
Judge anticipates Franchise Act: no mandatory formula change (without threshold value)
The District Court of Amsterdam ruled that a Blokker franchisee is not obliged to renovate the store in accordance with the latest formula principles, as instructed by Blokker.
Interview Mr. J. Sterk and mr. C. Rutten in Franchise+: “Call to the automotive sector: prepare yourself well for the new Franchise Act” dated October 2, 2020
The new Franchise Act has a broad effect, also in the automotive sector. But are people aware of it enough?
Article The National Franchise Guide – “Corona discount of 50% on the rent” – mr. AW Dolphijn – dated September 15, 2020
Disappointing turnover due to the corona crisis may mean that the rent is halved, even if the rent is partly turnover-related.
Article Franchise+ – “Franchisor uses “derivative formula” (without his knowledge)” – mr. AW Dolphijn – dated September 9, 2020
Many franchisors will not be aware of the fact that they use a "derived formula" as referred to in the Franchise Act.
Article Franchise+ – “Obligations and rights of the starting franchisee” – mr. AW Dolphijn – dd
What should you pay attention to as a starting franchisee, what are your obligations and what are your rights when concluding the franchise agreement?
Article Mr. C. Damen – Three conditions for the right to customer compensation for the agent upon termination of the agency agreement – dated August 26, 2020
In the agency relationship between an agent and a client (the principal), the parties record their cooperation agreements in an agency agreement. When the principal enters into the agency agreement