News

Summary:

After a long run-up, the Franchise Act is expected to become reality within soon. Franchisors are well advized to anticipate this upcoming law which will most likely have a very brief transitory period.

Content and Introduction of Act:

The Franchise Act has been adopted by the Dutch Parliament on 16^th of June. The Franchise Act is presently under study by the Senate. See for our analysis of the merits of this act: https://parkeradvocaten.nl/nieuwe-regels-over-franchising-in-aantocht-deel-ii/

In addition to the Franchise Act, members of the parliament proposed two amendments. One of this amendments (no. 11) states that when franchisees are established outside the Netherlands, the binding nature of the Franchise Act does not apply, even not when Dutch law is applicable to the franchise agreement. The amendment further states with regard to franchisees established in the Netherlands, the provisions of the Franchise Act cannot be deviated from to their disadvantage, regardless of the law that governs the franchise agreement.

For companies engaged in franchising – under specific circumstances this will also apply to licensing or selective distribution models similar to franchising – it is important to know that the transition period for effective contracts is – only – 2 years and that for new contracts the act is expected to enter into force in full and integrally as of the date of entry into force of the new act. Secretary of State Mrs. Mona Keijzer recently informed, when franchisors insisted on a longer transition period, that franchisors have already been aware or should be aware of this legislative process for a long time and have and had every opportunity to anticipate this.

And so, waiting and remaining idle does not seem to be an option (anymore) for franchisors. They are well advised to review their franchise contracts and processes, in particular the information towards candidate franchisees to see whether they meet the expected franchise legislation.

Status and Expected Entry into Force:

A plenary debate was planned for the Franchise Act on 9 June 2020. Consecutively to the plenary debate, Parliament has voted in facor of the Franchise Act on 16^th of June 2020. It is intended by the Ministry of Economic Affairs that the Franchise Act will enter into force per 1 January 2021.

For more information: https://www.tweedekamer.nl/kamerstukken/wetsvoorstellen/detail?id=2020Z02672&dossier=35392