{"id":30267,"date":"2025-01-30T14:04:14","date_gmt":"2025-01-30T14:04:14","guid":{"rendered":"https:\/\/thelegalcompany.nl\/?p=30267"},"modified":"2026-09-02T16:28:42","modified_gmt":"2026-09-02T16:28:42","slug":"franchisor-sidelines-franchisee-but-ends-up-losing-itself","status":"publish","type":"post","link":"https:\/\/thelegalcompany.nl\/en\/franchisor-sidelines-franchisee-but-ends-up-losing-itself\/","title":{"rendered":"Franchisor sidelines franchisee, but ends up losing itself"},"content":{"rendered":"

In the world of franchising, where partnership and cooperation are central, trust is an essential ingredient. In a recent ruling by the Limburg District Court, this trust was lacking on the part of a franchisor, who as a result prematurely ended the collaboration with the franchisee. This was done without the franchisor being authorised to do so under the franchise agreement. The franchisee did not let the matter rest, and went to court to seek compensation for the damage suffered. The court sided with the franchisee and ruled that the franchisor had committed an attributable failure to perform the franchise agreement.<\/p>\n

In this blog we discuss this ruling, illustrating the importance of clear arrangements in the franchise agreement and of performance in accordance with it.<\/p>\n

<\/strong><\/p>\n

Deviations from the franchise agreement by the franchisor.<\/strong><\/h4>\n

On 6 May 2021, a franchisor and franchisee entered into a franchise agreement for operating a branch under a well-known concept. Under this agreement, the franchisee had to pay an initial franchise fee of \u20ac16,995, find a suitable location for operating the branch, and the franchisee’s branch manager had to complete a training programme. During performance of the agreement, problems arose when the franchisor demanded that the franchisee also complete the training programme personally. The location put forward by the franchisee was also rejected by the franchisor, which the franchisor was entitled to do under the agreement. If no agreement was reached on a location, the franchisor was even entitled \u2014 subject to refunding the franchise fee \u2014 to terminate the agreement.<\/p>\n

However, the franchisor’s rejection had nothing to do with the location itself. The franchisor gave as its reason that, due to the COVID situation at the time and local competitive conditions, it no longer considered it responsible at all to let a franchisee open a new location. And as a result, it no longer had any confidence in a fruitful collaboration with the franchisee.<\/p>\n

<\/strong><\/p>\n

The court’s ruling: franchisor attributably failed to perform.<\/strong><\/h4>\n

The franchisee did not let the matter rest, and brought legal proceedings against the franchisor in which he sought repayment of the franchise fee already paid, and claimed lost profits. The court agreed and ruled that the franchisor’s statement could be interpreted as a declaration that the franchisor would no longer perform the agreement. This was classed as an attributable failure to perform.<\/p>\n

The franchisor’s defence that the franchisee had failed to perform the franchise agreement (because he did not meet the training requirements) did not succeed. After all, he was entitled under the franchise agreement to appoint a branch manager \u2014 his brother, in this case \u2014 and the brother did meet the training requirements.<\/p>\n

The court ruled that the franchise fee paid by the franchisee was not classed as “damage”, because it would have been owed in any scenario, but the court did recognise that the franchisee had missed a genuine opportunity to make a profit as a result of the franchisor’s conduct.<\/p>\n

 <\/p>\n

Conclusion.<\/strong><\/h4>\n

This ruling underlines that franchisors (and, of course, franchisees too) must continue to act carefully within the bounds of the franchise agreement. Imposing additional unrealistic requirements and too quickly withdrawing trust can lead to liability.<\/p>\n

We can help you screen franchise agreements and draft them. Contact us directly via info@thelegalcompany.nl<\/a> or call 020 345 0152.<\/p>\n

This article was published on 30 January 2025.<\/em><\/p>\n

Would you like to stay informed on this topic and all other relevant business developments regarding employment law, contract law, corporate law and privacy law, and receive legal tips & tricks from our corporate lawyers? Sign up here<\/a> for The Legal Alert!<\/em><\/p>\n

Nothing changes as much as legislation and regulations. Please note that our blogs may no longer align with current legislation and regulations and may therefore be outdated. If you have questions or an issue relating to this blog, or wish to obtain legal assistance, please contact us.<\/em><\/p>\n","protected":false},"excerpt":{"rendered":"

In the world of franchising, where partnership and cooperation are central, trust is an essential ingredient. In a recent ruling by the Limburg District Court, this trust was lacking on the part of a franchisor, who as a result prematurely ended the collaboration with the franchisee. This was done without the franchisor being authorised to […]<\/p>\n","protected":false},"author":2,"featured_media":24488,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"page_builder":"","iawp_total_views":0,"footnotes":"","_et_pb_custom_css":""},"categories":[29,32],"tags":[],"class_list":["post-30267","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-contractenrecht","category-ondernemingsrecht"],"acf":[],"_et_pb_custom_css":"","yoast_head":"\nFranchisor sidelines franchisee, but ends up losing itself - The Legal Company<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/thelegalcompany.nl\/en\/franchisor-sidelines-franchisee-but-ends-up-losing-itself\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Franchisor sidelines franchisee, but ends up losing itself - The Legal Company\" \/>\n<meta property=\"og:description\" content=\"In the world of franchising, where partnership and cooperation are central, trust is an essential ingredient. 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