Franchise Act: no anticipation by court

23 March 2021 – Annelies van Zoest

As of 1 January 2021, the Dutch Franchise Act is in force. This Act regulates the relationship between franchisors and franchisees, mainly to protect the legal position of franchisees. This is new legislation for all parties involved and brings many changes. We are all eager to find out how the judges will eventually interpret and apply this Act in case law. In recent months, many franchise organizations have been busy adjusting their internal processes and the agreements with their franchisees to the new Act.

In some lawsuits last year, franchisees requested the judges to anticipate on this new Act. For example, in the field of information provision and support, franchisees claimed that their franchisor should have acted in accordance with the Franchise Act earlier. The Preliminary Relief Judge in Amsterdam has anticipated the law by ruling of 30 September 2020 on the Act in favor of a franchisee. This caused some criticism in the world of franchising. How can one retrospectively assess the acts of a franchisor against a law that did not even exist at the time? (See: ECLI:NL:RBAMS:2020:4799)

Recently, we turned the tide for a leading franchise chain in the food sector. In a full civil court proceedings before the District Court of Amsterdam, it was successfully argued that the court could not hold the franchisor to the pre contractual obligations in the new Franchise Act, because it concerned a relationship that had already been entered into in mid-2018. The court ruled that it had no reason to apply the new statutory regulation, because the Act has a deferred effect of two years for existing agreements and, moreover, there were no circumstances compelling the franchisor to comply with the later statutory obligations when concluding the agreements in mid-2018. So no anticipatory effect!

This ruling has been welcomed by many franchisors and will hopefully put an end to the uncertainty as to whether their actual behavior in the past years can be held against the new strict Franchise Act of 2021.

Annelies van Zoest