Franchisors beware; under Dutch law a franchise agreement is not always terminable under the franchise agreement’s termination provisions

A franchisor (Leen Bakker) entered into a franchise agreement with a franchisee in 1995. Pursuant to that franchise agreement, the franchisee operates a home furnishings store under the Leen Bakker franchise formula. A termination clause in the franchise agreement provides, inter alia, that termination takes place with a term of 13 months, and that the franchisor may only terminate the franchise agreement if it cannot reasonably be required to continue the agreement.

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In practice: FAQ’s most frequently asked questions about the Dutch Franchise Act

In our previous newsletters, we discussed the introduction of the Dutch Franchise Act (the “Act” or “Franchise Act”). This Act is effective as of 1 January 2021 and is of mandatory law. Some legal obligations were subject to an implementation deadline until 31 December 2022. This deadline has now expired.

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FRANCHISE ALERT: January 1, 2023 is the deadline for implementation of the Dutch Franchise Act. Is your franchise agreement compliant?

The Dutch Franchise Act went into effect on January 1, 2021. The Act is mandatory law and franchisors and franchisees were required to conduct themselves in accordance with the Act as of that date. Specific contractual adjustments also had to be implemented immediately in new franchise agreements and renewal agreements.  A two-year transition period applies to current franchise agreements. This expires on January 1, 2023. Franchise organizations still have three months to comply with the implementation obligation.

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