International Law

FRANCHISE AGREEMENTS UNDER THE LAWS OF ARUBA (II)

By Karel.Frielink

Case law regarding termination

It can be concluded from a Netherlands Antilles case regarding failed negotiations for the continuation of a license agreement (franchising) (Antillean Family Foods NV vs Mc Donald?s Corporation, Supreme Court, February 26, 1993, NJ 1993, 289), that under certain circumstances the termination of an agreement may constitute an obligation (to negotiate a renewal of contract or) to pay damages / compensation.

Possible areas of relevance are: the contents of the agreement and the circumstances under which the agreement was entered into; the amount invested by the franchisee and the extent to which the investment was recouped; the (economic) position of the franchisee in relation to that of the franchisor; the reason for terminating the agreement; the interest of the whole franchise and the policy of the franchisor with regard to (other) franchisees within the organization of the franchisor; and the question of whether the franchisor has made a reasonable offer (that was subsequently not accepted by the franchisee) with respect to the conditions under which the agreement could be renewed.

It should be noted that although the abovementioned case occurred under Netherlands Antilles, not Aruban law, it is likely that it also applies, to a certain extent, if not fully, to Aruban law, as both legal systems are based on the same legal concepts and share the same Supreme Court.

Karel Frielink / Ursus van Bemmelen
Dutch Antilles Attorneys / Lawyers

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Full post as published by Karel's Legal Blog on April 04, 2009 (boomark / email).