Unreasonable compensation at the end of the franchise agreement – dated September 17, 2019 – mr. AW Dolphin
This is stipulated in some franchise agreements the franchisee always owes the franchisor at least a certain amount of costs upon termination of the franchise agreement. On 20 August 2019, the Arnhem-Leeuwarden Court of Appeal ruled, ECLI:NL:GHARL:2019:6745, that in the event that such costs are unreasonably onerous. The the departing franchisee therefore did not have to pay it.
The franchise agreement required the franchisee to always pay a minimum of € 5,400 in back-office costs upon termination of the franchise agreement. Franchisee has the annulment of this provision is invoked because it is considered general terms and conditions be considered and it would be unreasonably onerous (see Article 6:233, preamble and under a BW). The franchisee had argued that it back-office system was not functioning and that the height of the relevant costs are disproportionate to the actual costs. The franchisor had not contradicted this. That is why the court assumes that these costs for the franchisee upon termination of the franchise agreement is indeed unreasonably onerous, so the stipulation rightly nullified and the amount is not due on that ground.
It is not inconceivable that, if the franchisor had objected substantively to the unreasonable objection, the Court of Appeal would also have come to the same conclusion.
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
Post non-competition ban on services and sales franchise
When a franchise agreement ends, many franchisees encounter a prohibition in the franchise agreement to perform similar work for a period of time thereafter
The concept of the Franchise Act: impact for franchisors and franchisees – dated February 5, 2019 – mr. AW Dolphin
Ludwig & Van Dam Advocaten believes that if the draft of the Franchise Act actually becomes law, a lot will change for franchisors and franchisees.
Buy franchise business and the laid off sick employee from 7 years ago
The question is whether a Bruna franchisee, when selling the franchise company to Bruna, should have stated that seven years ago an employee had left employment sick.
Court prohibits Domino’s unilateral area reduction when extending franchise agreements – dated January 28, 2019 – mr. RCWL Albers
On January 9, 2019, the District Court of Rotterdam rendered a judgment in a lawsuit initiated by the Association of Domino's Pizza Franchisees and all its members (almost all Domino's franchisees).
Lien of the franchisee
Can a prospective franchisee invoke a right of retention to reclaim an entry fee if a franchise agreement is not concluded after the pre-agreement has been concluded?
Supermarket letter – 24
Draft Bill Law Franchise