15-12-2023

On June 2, 2023, the Belgian Supreme Court has ruled in a matter concerning the breach of “pre-contractual information obligations” in a franchise agreement.

Pursuant to Article 3 of the Law of December 19, 2005 concerning “pre-contractual information in commercial cooperation agreements”, (as revised by article 4, 2° of the law of April 2, 2014), a pre-contractual information document has to be provided by the “stronger party” to the “weaker party”, before entering into a (new or amended) commercial cooperation agreement. Additionally, during a one-month reflection period, no commitment can be made. In case of non-compliance, the “weaker party” can invoke the nullity of the agreement, until two years of the conclusion thereof.

In the concerned matter, a “Carrefour” franchisee (whose operations ceased in 2009 due to the unprofitable operation of the store not meeting the promised turnover), was taken to court by the franchisor for outstanding debts and lease payments. The franchisee claimed the nullity of the franchise agreement based on the fact that the reflection period was not met.

On May 12, 2016, the court of first instance ruled that the reflection period started from the day after the provision of the pre-contractual information document and ended one month later. The court clarified that 'one month' should be understood in its everyday sense, leading to the conclusion that the pre-contractual information obligation had not been fulfilled (one day short).

The Antwerp Court of Appeal confirmed this judgement and stated that the franchisee had not waived its right to claim nullity and did not abuse its right by seeking nullification. The Court further ruled that all legal actions and/or agreements between the parties resulting from the franchise agreement, or closely related to it (such as the lease agreement), are null and void too. Additionally, the Court of Appeal decided that the franchisor was not only required to “reimburse” expenses paid to the franchisor, but also to “compensate” the franchisee for the damages suffered (including expenses paid to third parties). The franchisee had to be fully restored to his original position, as if the agreements were never closed.

The franchisor appealed to the Supreme Court, arguing that the Law only provided for the nullity of the agreement and that no additional “compensation” could be awarded. However, the Supreme Court confirmed the Court of Appeal’s decision.

The franchisor argued that “restitution” could not apply to already rendered services that could not be reversed. However, the Supreme Court rejected this argument. Where previously rendered services cannot be restituted “in kind” (because impossible or unreasonable), the value thereof is to be assessed on the day of restitution.

This case-law shows that failure to comply with the “pre-contractual information obligations” (even if the reflection period was only one day short) can have very serious consequences.