act legal Netherlands

New Dutch Franchise Act imposes new rules: timely advise is key The franchise market is full of dynamism, with the new Dutch Franchise Act being a major driver. But challenges around sharp rising costs and inflation also set the sector in motion. According to partners Katinka Verdurmen and Dirk van den Berg of Amsterdam based act Fort Advocaten (“act FORT”), both specialised in franchise, it is important for franchisors and franchisees to address these issues in a timely and joint manner. "We are the appropriate sparring partner in this respect." Staff shortages, rising energy costs; it causes headaches for retailers. So do rent increases, sometimes as high as over 14 per cent in the Netherlands. Verdurmen: "Entrepreneurs in the franchise market also have to deal with this.  We do see, however, that franchisors, who rent out premises to their franchisees, are much more thoughtful than regular landlords. After all, those franchisors are also entrepreneurs, who know what other challenges the franchisees are coping with, and then often do not pass on the full 14 per cent inflation correction." It marks the franchise market after the introduction of the Franchise Act, in which there is generally good cooperation. But it also marks act FORT, which is a leading firm in the franchise sector. Van den Berg: "We advise both franchisors and franchisees, locally in the Netherlands and internationally. act FORT is part of act legal. A growing alliance of independent, medium-sized law firms in nine European countries. We can therefore also help formulas that want to expand in Europe or that already work in multiple European markets. The communication with our international colleagues is direct. As is the communication with our clients. That is how we like to work. We like to be in close contact with our clients, and preferably as timely as possible. Sometimes we are called in ad hoc. That is not a problem, but we prefer to be involved at an early stage, so that we can participate in developing the strategy and approach to an issue. Especially in complex cases, it happens that different aspects of the business are affected. In that case it is also convenient that our various areas of expertise can becalled in." Added value act FORT has a multidisciplinary approach. "Take the merger of two formulas, for example, or the arrival of a new condition regime; that also involves corporate law, employment law and real estate law. By involving the specialists within our firm, we often come up with out-of-the-box solutions that add value for our clients", Verdurmen says. "The reason act FORT’s lawyers are sometimes called in late is that parties argue that lawyers are expensive. "But if we join the process early on, it actually saves costs. We then "walk along" in the process and that is where we can add value and help parties take better decisions. If we are called in at a later stage we first have to go through an entire file, find out how agreements or e-mails should be interpreted, and speak to many different people. That takes time at a moment when things often have to be done quickly, and it costs money.” Rules Verdurmen: "At act FORT, we notice that, despite all the challenges, franchisors and franchisees have plenty of ambitions and want to invest in the formula. But the new Franchise Act does set rules to that.” As a specialist in franchise law, she knows those rules exactly. "As do my colleagues, by the way. For example we can tell franchisors exactly what steps they need to take to get everything right. And what they can do if franchisees dig in their heels. Or vice versa." Indeed, the new law contains a consent regulation. Van den Berg: "This regulation covers the situation where the franchisor wants to implement a change in the franchise formula that does not require amending the franchise agreement. If the franchisor thereby requires an investment from the franchisee, imposes a payment obligation on him, requires him to incur costs or foresees a loss of sales for the franchisee, the franchisor must first obtain the consent of the majority of all franchisees if this exceeds a certain threshold amount. Precisely for this consent, it may be useful to establish a franchise association, if one does not already exist. The franchisor can also do so, and we then advise in this process. We also regularly think with them when determining the threshold amounts below which this consent is not necessary." Timely advise Because of the broad advise we offer, and the fact that we look ahead, act FORT has many long-term relationships. Verdurmen: "That is an advantage, because of the long cooperation we often know very well what people expect from us. The tone of voice, for example, is then familiar to us. If a letter needs to go out quickly, we draft it, and it is often hit in one go. That way we can move quickly. Big or small, it doesn't matter to us. We like to think along, and like to look over our client’s shoulder. The new law requires contracts to be reviewed. What exactly does the contract say? What are the consequences of certain passages? As a franchisee, you shouldn't think too lightly about that. It can haunt you for the entire duration of the contract. The fee, the rules around formula changes, look at it carefully. And certainly when the relationship is still good, there are chances to adjust things in good consultation. But be timely about it," Van den Berg advises. Verdurmen adds. "And include us early on. After all, we know the rules of the game and can tell both franchisors and franchisees exactly what steps to take to keep everything on track.” About act Fort Advocaten (“act FORT”) act FORT is a mid-size law firm in Amsterdam, specialised in corporate and real estate law, with a special focus on franchise. The firm has a strong position in the retail, real estate and hotels & leisure industries. act FORT is ranked in The Legal 500, in the categories Industry Focus: Retail, Dispute Resolution: Commercial Litigation and Real Estate. Dirk van den Berg Dirk van den Berg is a partner and lawyer at act Fort Advocaten. He has specialised in real estate law, franchise law, lease law of business premises and distribution law. He advises a large number of entrepreneurs in the petrol station industry, including in contracts with oil companies. [email protected] Katinka Verdurmen Katinka specialises in tenancy and franchise law. She advises both landlords and tenants, franchisors and franchisees. For example, in drafting lease and franchise agreements, setting up franchise organisations, establishing franchise associations and in the transfer, termination and amended continuation of franchise relationships. She also works for real estate developers, investors and brokers, therefore she knows the retail sector from different perspectives. [email protected] Interview: Martijn Louws