Newsflash

Franchise Act adopted today.

30 June 2020 – Annelies van Zoest, Tessa de Mönnink

Time has come. The first Netherlands Franchise Act has been adopted by the Senate. As of 1 January 2021, the Act enters into force. A transition period of 2 years will apply  to several drastic rules such as a non-competition clause, right of approval franchisees and goodwill valuation. Waiting until 2023 is out of the question. Before that time, new (or renewed) franchise agreements applicable to franchisees active in the Netherlands territory will have to comply with the Franchise Act as of 1 January 2021.

The Franchise Act will reinforce the position of franchisees and imposes detailed duties upon the parties, inter alia, in the field of:

– Exchange of information in the precontractual phase including a 4 weeks stand-still period

– Implementation of interim changes with right of approval by a majority of franchisees

– Consultation structures with the board of franchisees

– (Financial) compensation in the post contractual phase and  goodwill valuation

All national and international franchise organizations having franchisees in the Netherlands must comply with the law and shall not derogate from it. Non-compliance may result into court actions. Some rules are mandarory law which means that in case of non-compliance such contractual arrangements may be void and therefore not enforceable

So franchisors, let’s get started!

Franchise organizations will have to take timely action, and will not only have to review their existing (format) contracts such as franchise agreements, pre-disclosure and other precontractual arrangements , but also have to review and adapt manuals and actual operations where necessary. For some subjects, mutual consultation with the (boards of) franchisees has  to take place so time up to 1 January 2021 is rather short. Our secretary of State Mona Keijzer, who proposed the bill, said about this short time that franchise organizations have already known for years that this act is imminent and that they could have prepared themselves for it already for a long time.

For organizations working with a (selective) distribution system it cannot be ruled out that the Franchise Act could also apply. As to the applicability of this act, the court will assess the actual situation and not the title of the contract.

It would be our pleasure to assist your organization in implementing the required changes for compliance with the new act. Please do not hesitate to contact us for an introduction call, a webinar and/or a roadmap including cost specifications.

Annelies van Zoest – [email protected] – tel.: 020-820 3350 / 06-12801588
Tessa de Mönnink – [email protected] – tel.: 020-820 3351 / 06-46086934

 

Annelies van Zoest

Partner/lawyer

Tessa de Mönnink

Partner/lawyer