12 April 2017

Franchisor also exposed to liability in case of negligent forecasts

This article is available in Dutch. Click here to read it.

The Dutch Supreme Court has slightly amended the liability regime for franchisors in cases of incorrect forecasts. Until this judgement, a franchisor could be liable when providing the franchisee with an incorrect forecast, but only in certain circumstances. Those circumstances included knowledge of the errors and subsequent failure to notify the franchisee. This was based on case law where the forecast had been provided by a third party. The position was that a franchisor was entitled to have legitimate confidence in a forecast provided by a third party. To successfully sue the franchisor for tort, the claimant had to prove that the franchisor was aware of the errors.

However, in its recent judgment the Supreme Court made a distinction between forecasts provided by a third party and forecasts provided by the franchisor himself. If the franchisor has prepared the forecasts, he may be liable for errors if they are caused by negligence. No actual knowledge of the errors is required for the franchisor’s liability. Franchisors should therefore be aware that their liability threshold has been somewhat lowered.