franchise contract-competition ban

contrato de franquicia

The delimitation of the local and within-competition ban on franchise agreements make unnecessary the proof of identity of the activities and transmission of know-how

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Ban-competition of services under franchise is required although rendered are not identical, come or not know how the franchiser, when you have limited space and time of that obligation in the contract.

a franchise agreement was signed between two commercial companies. a clause of non-competition was agreed in the contract. It use local object and franchise services to the termination of the contract was prohibited during the following year.

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 31 July 2009 a franchise agreement between Esthetic Medicine MEDITERRANEA SL as franchiser and INFINITY CLINIC SL was signed (onwards, INFINITY) as franquiciada. The contract activities were waxing and beauty treatments.

The contract contained a clause on the Ban-competition. The franchised could not, during the year following the completion of the contract, develop the activity in the same place where the franchise exploded.

After more than five years of the contract, it ended.

The franchised activity continued to develop under contract on the premises where the franchise was installed. And this, because it considered that it was not before a franchise agreement because there is no transmission know how by the franchiser.

The franchiser filed suit against INFINITY. He requested compensation 35.594,68 euros in damages and lost profits.

Primera Instancia

The 19 October 2017, the Court of First Instance No. 4 of Catarroja, partially estimated the claim against INFINITY. He condemned the entity defendant to pay the applicant the amount of 10.040,65 euros. Plus legal interest from the date of filing.

Provincial Court

INFINITY appealed based on four reasons:

  • Incongruity extra small Instance
  • Error in assessing the evidence regarding the administration of know how and developing their own differentiated know-how which the applicant took advantage.
  • Error in assessing the evidence regarding the incorrect interpretation of the covenant limitation of liability contained in the stipulation 20.3. f).
  • Error in assessing the evidence because damage assessment concepts were taken into account for the loss of earnings.

The 10 May 2019 section 8 of the Provincial Court of Valencia handed down its judgment No 262/2019.

On the transmission of know how the defendant and development, for this, of its own difference know how which it has taken advantage of the applicant

The appealing understood proved that the applicant lacked know how when he signed the franchise agreement. He alleged that the plaintiff had not shown that convey some kind of know how the franquiciada. And, the lack of evidence prevented the application of the non-competition clause Post-contractual.

Since November 2012, INFINITY contract with mercantile updated so that this will lend support functions for the operational management of clinical. As, these functions are not performed the franquiciadora. He developed his own and the defendant store management system. The defendant had to use external services to address the lack of attendance by the applicant. This through outsourcing services management and control Store, as well as own marketing policy.

The appellant argued that, the evidence produced at the hearing it was found the existence of a know how itself by the appellant, different and unique to the applicant.

He added that the contested judgment itself recognized that certain departments attendance were created after the contract. Specifically, the "franchisee support department" was not created until 9 months after signing the contract. And, the first training from the franchised received one year and eleven months after signing the contract. The burden of proof transmission know how He fell on the plaintiff. And, there was no evidence of such transmission.

The plaintiff meanwhile, He defended the decision appealed. It had been established the existence of a franchise agreement and exploitation by the defendant Business. The operation lasted more than five years, without objection during this period show that would conclude the absence of such transmission know how the defendant. For this, showed that, after completion of the contract the defendant deliberately developed on the premises covered by the contract activity. And, thereby it infringed the terms of obligations.

About, Hearing that it was determined from the terms of the contract to determine whether there was error in the assessment of the evidence by the judge.

Clause 13 the franchise agreement includes the clause "no competition" which he is what gave rise to the claim of the franchiser. This clause determined that: “During the period of one year counted from the termination of this contract or from its resolution for any reason, or the withdrawal of brands, labels and any distinctive sign of the Franchisor, Franchisee may not individually continue to exercise the same activity in the establishment that had exploited the franchise and referred to in this contract ".

Clause completed by 20, which stated that "Notwithstanding the termination of this Agreement, whatever the cause, the following mutual obligations will remain in force:... the franchisee may not exercise, in no case, por sí mismo, by another identical nature activities ..., similar or related to that which is the subject of presents Franchise Agreement, keeping to such a ban for a (1) after the date of termination of the contractual relationship that binds the parties year, all referring exclusively to the building in which the Franchisee had been developing clinical activity DEPILHAIR ".

On the basis of the terms above, the Court rejected the plea. What is claimed it was compensation for post-contractual breach of the defendant. And this to continue exerting the same activity in the establishment in which they had exploited the franchise. Said end had been accredited. The activity was held in the same establishment, and it was clear that the place was one in which the defendant had been carrying out its activity as a franchisee.

He concluded the hearing that "regardless of the methods applied for the treatments offered are not identical, come the know-how of the franchiser, one developed by the franchised own, or a different, because it is not what penalize non-competition clauses entered into the contract at issue.

On the error in the assessment of the evidence based on the incorrect interpretation of the agreement limiting liability stipulation 20.3.f) contract

This clause provided that "In case of violation of previously set, the courts will decide in the absence of agreement between the parties, and once the intervention of experts rejected, the damage occasioned to pop the Franchisor, setting quantities serve to compensate the actions of the Franchisee ".

The Juzgadora Instance stated in its judgment that "is emerging evidence that the damage would be determined in the event no agreement between the parties and once rejected the intervention of experts, which it has not happened…not only because it has an expert from, but court at the request of both ".

the appealing opposed to understand that the arrangement and the intervention of experts were two alternative mechanisms court phase. No clause referring to the intervention of experts in judicial phase. He said the pact could not be interpreted disclaimer. The intervention of experts in judicial defused the same, because otherwise never would deploy its effects this clause. The only plaintiff was entitled to claim compensation in respect of damage emerging. Concepts should be excluded from compensation for loss of earnings.

It opposed the applicant. How much, the conduct of the defendant broke the contractual agreements entered into voluntarily. Pechar had consequences for the indemnification provided therein.

The Court ruled that the first instance judgment was correct on this point. Emerging damage be determined in the event that there is no agreement between the parties and once rejected the intervention of experts, which did not happen.

The judging Instance dismissed the item for loss of earnings and estimated only partially and loss of customers in the amount of 10.040,65 euros.

Regarding the concepts of lost profits and damage emerging, the Court cited the STS 12 November 2009, The rapporteur Xavier O'Callaghan, by which "Lost profits is integrated into the compensation to be paid to the creditor of an obligation it has been culpably breached by the debtor, according contemplates the art. 1106 of the CC and reiterated jurisprudence ". Thus STS 5 November 1998 He added "Loss of profits has economic significance, You try to obtain compensation for loss of earnings failed to receive, different concept of property damage ... ".

Lost profits, as damage emerging, It should be tested. So good, in this one fit include benefits, concrete and proven that the injured had received (STS 30 June 1993).

For Hearing,  the conclusion reached by the judging instance was correct. She had not accused the concepts related to lost profits. Loss of customers was not considered by the expert as lost profits, but as no economic damage.

Therefore,the Court dismissed the appeal. He confirmed the decision appealed.

Conclusion

There will be failure-competition if he has pursued the activity in the period and space that was banned in the contract. All, regardless of whether the services provided are not identical to the previous or originating from the know how the franchisor.

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