{"id":9660,"date":"2019-09-10T09:00:37","date_gmt":"2019-09-10T07:00:37","guid":{"rendered":"https:\/\/www.legalmondo.com\/?p=9660"},"modified":"2020-01-05T20:45:26","modified_gmt":"2020-01-05T19:45:26","slug":"germany-franchising-standard-form-contracts","status":"publish","type":"post","link":"https:\/\/www.legalmondo.com\/fr\/2019\/09\/germany-franchising-standard-form-contracts\/","title":{"rendered":"Germany &#8211; Franchising standard form contracts"},"content":{"rendered":"<p>To create a homogeneous franchise system where all franchisees have to comply with the same requirements, <strong>franchisors typically use standard form franchise contracts <\/strong>\u2013 i.e. contracts pre-formulated drafted and provided by the franchisor for a multiple number of franchisees.<\/p>\n<p>Within Germany, such franchise contracts <strong>have to comply with the quite strict German laws on standard form contracts <\/strong>(even in B2B). As a rule of thumb, such standard form contracts <strong>must be reasonable in order to be valid<\/strong>. Vice versa, they are <strong>void if they unreasonably disadvantage the franchisee<\/strong>, especially if<\/p>\n<ul>\n<li>they are not compatible with essential principles of law, or<\/li>\n<li>restrict essential rights or duties arising from the nature of the franchise contract to such an extent that the contractual purpose is endangered.<\/li>\n<\/ul>\n<p>The <strong>same goes for handbooks, guidelines or other manuals<\/strong>: they all qualify as standard form contracts under German law (<a href=\"https:\/\/www.gesetze-im-internet.de\/englisch_bgb\/englisch_bgb.html#p0915\" target=\"_blank\" rel=\"noopener\">sec.\u00a0305 (1) German Civil Code<\/a> [\u201c<u>BGB<\/u>\u201d]).<\/p>\n<p><strong>Moreover<\/strong>, franchise contracts must <strong>not excessively restrict the franchisee<\/strong>\u2019s economic freedom. <strong>Worst case risk<\/strong> \u2013 as recently reconfirmed by the Federal Court \u2013: the <strong>entire franchise contract is void<\/strong>!<\/p>\n<p><em>\u201cA franchise agreement is null and void in its entirety because of infringing <\/em><a href=\"https:\/\/www.gesetze-im-internet.de\/englisch_bgb\/englisch_bgb.html#p0417\" target=\"_blank\" rel=\"noopener\"><em>sec.\u00a0138 BGB<\/em><\/a><em> if the franchisee&rsquo;s economic freedom is excessively impaired due to a large number of provisions which advantage the franchisor unilaterally and disadvantage the franchisee, for which no even approximately appropriate compensation is granted to the franchisee (&#8230;). This <strong>requires an overall assessment<\/strong> of the contractual agreement and the circumstances leading to the conclusion of the contract. <strong>Indications<\/strong> of an immoral gagging of the franchisee may be a provision with stipulates the <strong>franchisor\u2019s authority to collect debts<\/strong>, thus enabling the franchisor to redirect payments to the franchisor, <strong>as well as<\/strong> <strong>contractual provisions restricting the franchisee\u2019s economic freedom beyond<\/strong> what is typical for such a distribution system.\u201d<\/em><\/p>\n<p>(Decision of 11.10.2018, Case No.\u00a0<a href=\"http:\/\/juris.bundesgerichtshof.de\/cgi-bin\/rechtsprechung\/document.py?Gericht=bgh&amp;Art=en&amp;az=VII%20ZR%20298\/17&amp;nr=89087\" target=\"_blank\" rel=\"noopener\">VII ZR 298\/17<\/a>, para.\u00a017 [own translation] \u2013 regarding a \u201clicensing contract\u201d for realtors).<\/p>\n<h2><strong>Practical advice<\/strong><\/h2>\n<ol>\n<li>This new decision by the Federal Court <strong>confirms the rather restrictive, rather franchisee-friendly decisions <\/strong>handed down by German courts in the past (e.g. the Federal Court\u2019s Decision on fast food chains of 12.11.1986, Case No.\u00a0VIII ZR 280\/85, para.\u00a010).<\/li>\n<li>To <strong>minimize the risk of invalidity<\/strong>, franchisors ideally observe the relevant <strong>statutory requirements on standard form contracts<\/strong> and the relevant <strong>case law on franchise contracts<\/strong>. According to the latest decision above, <strong>special care<\/strong> should be taken when the franchise contract provides for the <strong>franchisor\u2019s power to collect debts<\/strong>. A way out could be the choice of another law \u2013 if the franchisor is based outside Germany (cf. Art.\u00a03 <a href=\"https:\/\/eur-lex.europa.eu\/legal-content\/EN\/ALL\/?uri=celex%3A32008R0593\" target=\"_blank\" rel=\"noopener\">Rome-I-Regulation<\/a>).<\/li>\n<li>For guidance on <strong>franchisors\u2019 advertising and pricing campaigns<\/strong> and compliance with antitrust law, check out the article \u201c<a href=\"https:\/\/www.legalmondo.com\/2019\/02\/franchise-systems-ad-campaigns-low-prices-can-come-costly\/\">Franchise systems: ad campaigns with low prices can come costly!<\/a>\u201d.<\/li>\n<\/ol>\n","protected":false},"excerpt":{"rendered":"<p>To create a homogeneous franchise system where all franchisees have to comply with the same requirements, franchisors typically use standard form franchise contracts \u2013 i.e. contracts pre-formulated drafted and provided by the franchisor for a multiple number of franchisees. Within Germany, such franchise contracts have to comply with the quite strict German laws on standard [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":9661,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[249],"tags":[220],"class_list":["post-9660","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-franchising","tag-germany"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.legalmondo.com\/fr\/wp-json\/wp\/v2\/posts\/9660","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legalmondo.com\/fr\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.legalmondo.com\/fr\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.legalmondo.com\/fr\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/www.legalmondo.com\/fr\/wp-json\/wp\/v2\/comments?post=9660"}],"version-history":[{"count":4,"href":"https:\/\/www.legalmondo.com\/fr\/wp-json\/wp\/v2\/posts\/9660\/revisions"}],"predecessor-version":[{"id":12264,"href":"https:\/\/www.legalmondo.com\/fr\/wp-json\/wp\/v2\/posts\/9660\/revisions\/12264"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.legalmondo.com\/fr\/wp-json\/wp\/v2\/media\/9661"}],"wp:attachment":[{"href":"https:\/\/www.legalmondo.com\/fr\/wp-json\/wp\/v2\/media?parent=9660"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.legalmondo.com\/fr\/wp-json\/wp\/v2\/categories?post=9660"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.legalmondo.com\/fr\/wp-json\/wp\/v2\/tags?post=9660"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}