Conflicts in Franchise



Franchise agreements often generate legal disputes between franchisor and franchisee.

In most cases, conflicts in franchise agreements generated by that business does not meet the expectations and voluntarily or involuntarily, will stop paying royalties and demand arises in court.

As example of the situation, serve for Expofinques, resolved by judgment of the Court of Palma de Mallorca in sentence 17 October 2014.

Expofinques S.L. He had made three franchise agreements with the company Portfolio Palma Northwest S.L.. (hereafter CPN) to three estate agents. CPN obligations had been personally endorsed by the members of this society. When problems arise, defaults on the deferred portion of the entry fee occur, software license, of royalties for transfer of elements of office and property portfolio, as well as operating variables royalties and advertising, consisting of a 8% and 2% Billing.

And it was impossible to reach agreement, Expofinques claims before the Court, suing guarantors (Sra. Amanda and Sr. Arthur) and CPN.

The defendant, Sra. Amanda, in its capacity as guarantor says that having ceased the respondent company must terminate the guarantee. Also requests that are declared resolved franchise agreements and that the amounts claimed are moderated changed circumstances, under clause matters stand and by the article 1.103 C.C..

Defendants, Sr. Arthur and CPN allege that the contracts were signed under pressure, consisting of not real simulations and franchisees deceived that the company was in losses and acted in bad faith by the plaintiff. They say that the corresponding effective benefits are not given the franchise fee that offices were operational and did not benefit from the work of the franquiciadora but instead, It hurt them entry into bankruptcy. Finally notes that defaults occurred because there were benefits and which was accepted by the plaintiff. Nullity of contracts is alleged.

The case is very similar to what usually happens in most conflicts between franchisee and franchisee.

The Court of First Instance substantially estimated the original and is jointly condemn the defendants to pay 143.681 euro to bear the costs. Ms Amanda's counterclaim is dismissed against Expofinques.

The defendants stand appeal before the Provincial Court.

The Court considers that even if it is a contract of adhesion or uniformed, not necessarily imply the invalidity or illegality of its clauses. Nor has disputed that the contract was imposed as an alternative to dismissal. Moreover, it not only signed a contract, but three, between July and December 2006.

The loss situation of the company, does not imply that the defendants deceived. The contracting are but prosumers, who enjoyed freedom of contract. The defendant CNP and its partners, deployed its activity during 3 attesting years without complaint or resolution attempt against franquiciadora. Is not evidence that the situation of loss of the company concealed to force the defendants to hire. The defendants were professionals so they can not claim ignorance of the market situation. And, Mr. Arthur was hired to expand Franchises so you can not claim ignorance or lack of contractual freedom. Last, others Franchisees yes they had renegotiated their contracts.

The existence of fraud is dismissed for not disputed that the plaintiff deceive defendants (art. 1269 C.C.).

The argument is equally possible that the franchise agreements were awarded with absolute simulation, without cause and that the provisions of Article 1.275 C.C. no effect: The contracts are due and lawful and spread their effects over three years.

As for Ms.. Amanda, your request is rejected extinction of co-signers. The application requires resolution who exercises has not previously violated its obligations. As regards the moderation of the amounts owed by application of the clause "matters stand"Judicial restraint or Article 1.103 C.C. the judgment of the Supreme Court cited 30 June 2014 and considering that the crisis was unpredictable and therefore accepted. The amount payable must be correspondingly reduced to the sharp drop in business caused by the housing crisis. CPN debt is reduced to Expofinques 64.395 euros.

Finally the audience discard the "Abuse of rights" , "own acts" and "late exercise of rights" alleged by Ms.. Amanda that the requirements of the doctrine of the Supreme Court regarding the same are not given.

Ultimately, the Provincial Court partially upheld the appeal, sentencing the defendants to pay 64.395 euros to the franquiciadora.


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