The effects of the COVID-19 pandemic are still omnipresent in Germany. The courts have yet to resolve some legal issues, including the issue of payment of commercial rent. One example is whether franchisees and franchisors as tenants can reduce or even suspend their rent payments due to widespread government-ordered shutdowns. This article presents a brief summary of the current situation and sets out the implications for the franchise industry in particular.
The Jena Higher Regional Court recently held that a clause which allows a franchisor to adjust the franchise fee at the beginning of each quarter and does not clearly disclose to the franchisee the scope of the fee increase mechanism is in breach of the law regarding general terms and conditions, which applies to standard-form contracts and thus standardised franchise agreements. The decision shows that caution is needed when drafting fee adjustment clauses.
The courts have yet to resolve some legal issues concerning the COVID-19 pandemic, including whether tenants can reduce or even suspend their rent payments due to widespread government-ordered shutdowns. More than 20 court decisions have been handed down on this subject, and the opinions expressed vary widely. Even the German law that entered into effect on 31 December 2020 via an expedited legislative procedure does not provide final, generally applicable clarity on this issue.