Qualification of a dealership agreement: franchise or selective distribution?

The predecessors of the importer/manufacturer had entered into agreements with their dealers and repairers for the sale and repair of vehicles of the Opel, Peugeot, Citroën and DS brands. These agreements were terminated in 2021 and replaced by new agreements. VODN and VGPCN argued that these agreements were franchise agreements according to Article 7:911 of the Dutch Civil Code, which entails certain rights and obligations.

The court ruled that the agreements could not be considered franchise agreements. The main reasons for this are:

1. Franchise Formula: a franchise agreement requires a specific franchise formula that determines a uniform identity and appearance of the businesses within the chain. The court found that the operational, commercial and organisational requirements imposed on the dealers were not sufficient to constitute a uniform franchise formula. Many dealers operated under their own name and had their own identity, which does not fit a franchise formula.
2. Selective Distribution: the agreements between the dealers and the importer/manufacturer were seen more as part of a selective distribution system. This system imposes certain qualitative requirements on dealers to be allowed to sell the products, but this does not automatically mean that it is a franchise. The court emphasised that this form of distribution has been common in the automotive industry for decades and was not considered a franchise.
3. Compensation Element: for a franchise agreement, it is essential that a fee is paid for the right to operate a franchise formula. The court found that the financial benefits received by the importer/manufacturer from the dealers and repairers could not be seen as such a fee.

The ruling of the Amsterdam Court of Appeal confirms that not all agreements between dealers and importers/manufacturers can automatically be considered franchise agreements. This has important implications for the automotive industry, where selective distribution is a common system. The ruling emphasises the importance of clear criteria for what can and cannot be considered a franchise, thereby protecting both the rights of dealers and the obligations of importers/manufacturers.