franchise contract and penalty clause

contrato de franquicia


The penal clauses in franchise agreements should be interpreted restrictively

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The penal clauses in franchise agreements can only be applied when strict circumstances are fulfilled in them. In cases of mere “similitude” You can not demand payment.

In the case discussed in this entry,  a franchise agreement with a ban-competition was held. Terminated the contract, the former franchisee opened a similar business. The franchiser understood that it had breached the non-competition pact and demanded payment of the amount provided in the penal clause.

Fact background,,es,Juan Alberto and Paulina filed suit against FTA,,es,Asset Securitization Fund,,es,requesting the declaration of nullity for abusive of the floor and ceiling clauses contained in the novation contract of the mortgage loan of,,es,with the corresponding refund of amounts unduly collected,,es,The Securitization Fund Management Company,,es,Beech,,es,acting on behalf of FTA, he responded to said claim alleging that he lacked passive legitimacy since the entity had no legal personality and that it constituted only a private and open fund and that therefore the passive legitimization corresponded to BBVA as successor of Catalunya Banc that was the Company fund constituent,,es

The 29 July 2013, NO MORE VELLO S.L., as franchiser, He signed a franchise agreement with Dña. Berta, as franquiciada.

The contract stipulated an obligation on the franchisee not compete for a year after the contractual termination. In case of default of a penalty was set 100.000 euros.

Non-competition agreement that included the pursuit of "identical nature, similar or related with that which is the subject of this franchise agreement ".

After leaving the franchise, Ms. Berta established in an area close another business fotodepilación.

The franchiser filed a claim for payment of the penal clause in the franchise agreement.

Primera Instancia

The 3 May 2018 judgment was handed down by the Court of First Instance No. 67 Madrid. Upheld in part the application made by NO MORE VELLO against Dña. Berta.

It was stated that the defendant had breached the post-contractual obligation not to exercise jurisdiction in the following the end of the year franchise agreement and sentenced him to pay the plaintiff the amount of 10.000 euros. This amount was far below the 100.000 euros provided for in the franchise agreement.

Provincial Court

Against the previous resolution appeal was filed by the plaintiff and defendant.

NO MORE VELLO considered unfair restraint of the penalty clause (art. 1154 CC). This is because the failure of the defendant was full and unquestionable. Undertook not to exercise the photo depilation in the post-contractual period of one year and breached that obligation.

Ms.. Berta, and the embroidery, challenged the judgment. He argued that not met the requirements for full validity and enforceability of the penalty clause. His service was not performed with the machine supplied by the plaintiff and know how thereof. The service was carried out with a machine owned by Dña. Berta from a different manufacturer. He had not used the know how also it not transmitted, nor he injured or endangered.

The 27 March 2019 la Audiencia Provincial de Madrid, section 25 th, gave judgment, No.. 134/2019. 

He centered the subject of debate in the scope and effectiveness of the criminal post-contractual non-competition clause.

The general doctrine penalty clauses are contained in the STS 30 March 2016. This statement noted that "penalty clauses have two essential functions, such as coercive or warranty and indemnity or liquidating. The guarantee function occurs because the existence of the penalty clause enjoins the debtor to fulfill its obligations ...The penalty clause liquidating fulfills its function (art 1152 CC), as it replaces the compensation for damages in case of default, exempting the creditor from the need to prove the existence and extent of injury.

He added that, cumulative effect produced only the penalty clause and mediate exceptionally compact express. If these requirements were met, the creditor could claim as much as it agreed compensation for damages and tested.

So good, penalty clauses should be interpreted restrictively (SAP Madrid, 11th section, 1 June 2018). Era any extensible criterion incompatible assumptions of similarity.

First Stipulation of the contract fixed its object, so that it was operating a facility under the brand System, applying the methods and procedures. So good, at the Exhibition of the contract is determined that "the object of the Franchisor as its own concept, composed of a "know-how" specific, substantial, secret and identifiable: The system".

more comprehensive detail of what was "The System" was needed.

Fifth it Made in a machine provided by the claimant mentioned. This provided mere mention one more fact to highlight the importance of technical object (the system).

So, common before and after the contract was photodepilation data. But this activity was used technical nature in the abstract.

The other possibilities, regarding the contract clause, were the nature "similar or related ". The Court made the following points against the ambiguity of the term:

  • Similarity or connection was an issue with a strong technical component. You could not leave the appreciation of the interested party. a technical reference for knowing whether the activity was equal to or looked but was necessary "a technical and scientific support that serves to assess the situation not mere opinions”.
  • In the litigious case not available acreditasen evidence that the essential technical aspects to declare the contractual object. Therefore, It could not say that the contractual object was exercised by Dña. Berta after the contract ends, because it was not delimited with precision.

So, it was the applicant who claimed the application of the penalty clause. And, it was for those extreme test. Evidence not provided.

The Court concluded that, It was intended for a subjective assessment, applying a penalty clause by a broad interpretation to generic assumptions similar.

It was not credited the identity of the subject matter, and other criteria, by presenting the abstract nature. And, therefore, were incompatible with the application of a penal clause should be interpreted restrictively.

Therefore, the Court dismissed the appeal filed by NO MORE VELLO, and demand. Upheld the objection raised by Ms.. Berta. The resolution was revoked instance and acquitted Dña. Berta of the applicant's claims.


The penal clauses noncompete covenants included in franchise agreements They must be interpreted restrictively. They can not be applied to similar cases, but only those specifically defined. And should be subject to proof by the party requesting application.

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