In a recent ruling of the Dutch Supreme Court, the key question is whether a franchisor can terminate a franchise agreement without offering compensation. The company Leen Bakker decided to terminate a franchise agreement with a franchisee for commercial reasons. It had been determined in the agreement that termination was possible if the franchisor could not reasonably be required to have the agreement continue. Leen Bakker decided to terminate the agreement without offering compensation, which led to a legal debate on whether the termination was lawful.
In this case the question is whether it is fair and reasonable to make an offer of compensation along with the termination of the contract. Even though the absence of such an offer does not render the termination unlawful, it may still affect the level of compensation payable. The same is true if the notice period is longer than agreed in the contract; even then there may be entitlement to damages.
How free is the franchisee in terminating an agreement, and when is it mandatory to offer compensation?
Martine de Koning describes in her annotation, published in JOR 2025/100, how the Supreme Court formulates clear criteria for terminating a franchise agreement and under what circumstances compensation is permitted. Please read the full annotation via this link (in Dutch). Do you not have access and want to know more? Please feel free to contact Martine de Koning.
