Similarly, under French law, suppliers can be held responsible for terminating a distribution agreement without sufficient written notification, whether the supplier has complied with the notice period. A sufficient notification is determined by taking into account factors similar to those mentioned above. In other jurisdictions, such as Germany and Italy, reasonable notice periods are prescribed by law and range from 1 to 6 months, depending on the length of the relationship (including possible extensions). In legal orders, courts will generally respect the explicit terms of the distribution agreement between the parties. In the United Kingdom, Hong Kong, Singapore and Malaysia, the usual contractual rules apply to distribution agreements, so that if a contract is terminated or not renewed in accordance with its terms and conditions of termination, the courts will very rarely intervene. It is only in the absence of notice that the courts enter into an obligation of “appropriate notification” in light of the circumstances of the case. In the event that the supplier terminates the distribution contract in violation of its terms, the distributor will sue for breach and may claim damages for damages caused by termination or unlawful infringement. In the United States, the situation is similar, although a number of state laws (and at least one federal law) impose minimum termination periods for termination and often for non-renewal of distribution contracts4. In situations where termination is threatened or in the process of being processed, but is not yet complete, we can act quickly to try to stop a planned or pending termination. This gives the franchisee time to challenge the alleged grounds for dismissal. In cases where a court found an unlawful termination, we helped our clients claim damages for financial consequences, including years of lost future profits. We represent franchisees in litigation, arbitration and other forms of dispute resolution. We also challenged contractual provisions requiring franchisees to be subject to non-state litigation or unfair arbitration.
Given the diversity of approaches to termination of distribution agreements, it is important to be advised on the spot during the contract negotiation phase and before any termination decision is made. Below are some important points to consider. However, the validity of the termination provisions depends on the applicable legislation of the distribution contract.