Strict Integration Of Franchisee Does Not Render Agreement Immoral

International Law Office:

Background
In its judgment of September 7 2009 the Higher Regional Court of Dusseldorf clarified in unexpectedly clear form that even a strict integration of a franchisee by contractual provisions which leave him or her only limited commercial discretion is not subject to any legal objection if these provisions are necessary, for example, for the maintenance of quality standards, typical of the system.

This judgment is interesting not only because of the clarity of the wording, but also because of the legal spectrum covered. After finding that a purchase obligation was admissible under cartel law, the court undertook a comprehensive review of immorality (Section 138 of the Civil Code) and of the law on general terms and conditions (Section 307 of the Civil Code). In this way the court not only corrected the unfortunate effects of the lower court’s comments, but also ensured greater legal certainty with regard to typical provisions in franchise agreements. Such provisions are neither immoral nor unreasonable within the meaning of the law on general terms and conditions.

Facts… read full article.