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
Fine for franchisor because aspiring franchisee is foreigner
On 5 July 2017, the Council of State, ECLI:NL:RVS:2017:1815, decided whether, in the case of (proposed) cooperation between a franchisor and a prospective franchisee, the franchisor
Article in Entrance: “Company name”
“I came up with a wonderful name for my catering company and incurred the necessary costs for this. Now there is another entrepreneur who is going to use almost the same one. Is that allowed?"
The bank’s duty of care in franchise agreements
On 23 May 2017, the Court of Appeal in The Hague, EQLI:NL:GHDHA:2017:1368, had to rule on the question whether the bank should have warned a prospective franchisee in connection with the
Article in Entrance: “Standing up”
“Can I fire an employee with immediate effect if he steals something trivial, such as food that has passed its expiration date?”
Arbitration clause in franchise agreement sometimes inconvenient
On 20 July 2016, the District Court of Gelderland, ECLI:NL:RBGEL:2016:4868, ruled on the validity of an agreement in a franchise agreement, whereby disputes would be settled
Supermarket letter – 18
Can an entrepreneur be obliged to operate a different supermarket formula?