THE NETHERLANDS: Draft Franchise Law.

Tessa DE MONNINK | NETHERLANDS | 2017-04-19

Tessa DE MONNINK

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Stakeholders may give their view and opinion on the draft franchise law during a period of 6 weeks via: https://www.internetconsultatie.nl/franchise. The consultation period ends on 25 May 2017.

According to the draft franchise law, the – much criticized – Dutch Franchise Code (version of 2016) will be mandatory to apply for franchise formulas. Please see for a copy of this code: https://www.rijksoverheid.nl/documenten/rapporten/2016/02/17/de-nederlandse-franchise-code   

The Dutch Franchise Code (DFC) not only stipulates pre-contractual disclosure obligations, as are common in many jurisdictions worldwide, but also extensively governs the franchise relationship as such, including many rather severe obligations on the franchisor. The franchise law stipulates there is a possibility for franchisors to deviate from the DFC, insofar the DFC is not applicable. However such deviation needs to be made explicitly and motivated in writing. The franchisee can argue – at whatever stage – that such deviation has not been properly motivated, or that the deviation is burdensome for the franchisee, in which event a court can rule such deviation void and can hold the franchisor liable for all damages as a result hereof.

 

All initiatives so far from franchisors – but also from franchise experts and scholars – to oppose the DFC have failed. The Minister of Economic Affairs is of the opinion that the franchisors in the Netherlands have too much negotiation power and the new franchise law has been explicitly initiated to protect the franchisees being the “weaker” parties.

It is important for stakeholders to form an opinion about the draft franchise law, to inform other stakeholders about this important development and to submit their views in the consultation process. This seems to be the only – and possibly last – chance to influence the legislative process. It is already clear that the new franchise law will have a material impact on franchise relationships in the Netherlands.

 

Tessa de Mönnink, IDI franchising expert for Netherlands

 

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