Landmark Case Sets Out Franchisors’ Post-Contractual Obligations

International Law Office:

In Greece, there is no case law concerning a franchisor’s post-contractual obligations towards its franchisees. Consequently, it is unclear how franchisees should dispose of any remaining stock after the termination of a franchise agreement. The existence of remaining stock may cause problems for both franchisees and franchisors and result in damage. In a recent case before the Court of Athens, the court ruled on the issue for the first time.

The franchising agreement had expired after five years, as specified in the franchisor’s original agreement, and was not renewed. As part of the agreement the franchisee had been obliged to retain a certain quantity of the franchisor’s stock in its store. As a result, following the termination of the franchise agreement, the franchisee had a substantial stock of merchandise which it could no longer dispose of. The stock was marked with the franchisor’s trademark and was therefore useless to the franchisee. Furthermore, the franchisee had leased storage space exclusively for the storage of this merchandise.

The former franchisee filed an action against the franchisor for the value of the unwanted stock, in addition to the costs of leasing the storage space, plus interest. More.

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