{"id":149986,"date":"2026-10-07T11:19:56","date_gmt":"2026-10-07T11:19:56","guid":{"rendered":"https:\/\/www.legal500.com\/guides\/?post_type=comparative_guide&#038;p=149986"},"modified":"2026-10-08T12:56:15","modified_gmt":"2026-10-08T12:56:15","slug":"netherlands-franchise-licensing","status":"publish","type":"comparative_guide","link":"https:\/\/www.legal500.com\/guides\/chapter\/netherlands-franchise-licensing\/","title":{"rendered":"Netherlands: Franchise &amp; Licensing"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-149986","comparative_guide","type-comparative_guide","status-publish","hentry","guides-franchise-licensing","jurisdictions-netherlands"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">LXA Attorneys<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2023\/09\/LXA-Attorneys-logo.png\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">LXA Attorneys<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/www.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2023\/09\/LXA-Attorneys-logo.png\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Franchise &amp; Licensing laws and regulations applicable in Netherlands<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a legal definition of a franchise and, if so, what is it?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Dutch Civil Code (DCC) contains a separate title that applies to franchise agreements (\u201cthe Dutch Franchise Act\u201d). The Dutch Franchise Act does not contain a legal definition of franchise. However, the Dutch Franchise Act contains legal definitions of a franchise agreement, franchise formula, derivative franchise formula, franchisor and franchisee. These terms are defined as follows:<\/p>\n<p><strong>Franchise agreement<\/strong>: the agreement by which the franchisor grants a franchise right and obliges, against a fee to be paid, the franchisee to operate the franchise formula in the manner designated by the franchisor for the production or sales of goods or the provision of services.<\/p>\n<p><strong>Franchise formula<\/strong>: an operational, commercial and organisational formula for the production or sale of goods or the provision of services, which determines a uniform identity and appearance of the franchise companies within the chain where this formula is applied, and which includes at least:<\/p>\n<ol>\n<li>a trademark, design or trade name, house style or drawing; and<\/li>\n<li>know-how, being a body of practical information, not protected by an intellectual property right, resulting from the experience of the franchisor and from the research carried out by it, which information is secret, substantial and identified;<\/li>\n<\/ol>\n<p><strong>Derivative franchise formula<\/strong>: an operational, commercial and organisational formula that<\/p>\n<ol>\n<li>determines a uniform identity and appearance of the companies where this formula is applied;<\/li>\n<li>corresponds to a franchise formula in one or more distinguishing characteristics that are recognisable to the public; and which<\/li>\n<li>is used directly or through third parties by a franchisor to produce or sell goods or provide services, which are wholly or substantially the same as the goods or services covered by the franchise formula referred to under 2\u00b0;<\/li>\n<\/ol>\n<p><strong>Franchisor<\/strong>: a natural or legal person who is the owner or user of a franchise formula and, in the course of its profession or business, grants others the right to co-operate that formula;<\/p>\n<p><strong>Franchisee<\/strong>: a natural or legal person who operates a franchise formula in the course of its profession or business for its own account and risk.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any structuring considerations for foreign franchisors (e.g. use of master franchisees, local presence requirements)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Foreign franchisors are not obliged to establish themselves in the Netherlands or to appoint a local party as a franchisor via a master franchise agreement. A foreign franchisor may enter into agreements directly with Dutch franchisees from abroad. However, the (foreign) franchisor must bear in mind that the relationship with franchisees established in the Netherlands is governed by Dutch law, regardless of any choice to apply foreign law.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any requirements that must be met prior to the offer and\/or sale of a franchise? If so, please describe and include any potential consequences for failing to comply.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no legal requirements that must be met prior to the offer and\/or sale of a franchise. Please do note the disclosure requirements and the standstill period that have to be taken into account prior to the conclusion of a franchise agreement, as further explained in the answer to question 4.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any registration requirements for franchisors and\/or franchisees? If so, please describe them and include any potential consequences for failing to comply. Is there an obligation to update existing registrations?  If so, please describe.  Are there any practical or timing implications (e.g. typical registration timelines, delays in practice)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the Netherlands there are no registration requirements for franchisors and franchisees. However, all Dutch business structures must register at the Netherlands Chamber of Commerce in the Business Register (<a href=\"http:\/\/www.kvk.nl\/en\/\">www.kvk.nl\/en\/<\/a>). If any changes are made within the business structure (change of the members of the board included), these must also be registered in the Business Register.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any disclosure requirements (franchise specific or in general)? If so, please describe them (i.e. when and how must disclosure be made (is there a minimum disclosure period before signing or payment (e.g. cooling-off period)), is there a prescribed format, must it be in the local language, do they apply to sales to sub-franchisees) and include any potential consequences for failing to comply.   Is there an obligation to update and\/or repeat disclosure (for example in the event that the parties enter into an amendment to the franchise agreement or on renewal)? What are the consequences of late or incomplete disclosure?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are several franchise specific disclosure requirements that must be met prior to the conclusion of a franchise agreement. The most important one is the obligation of the franchisor to disclose all relevant information to the prospective franchisee, before entering into a franchise agreement.<\/p>\n<p>The franchisor is obliged to provide the prospective franchisee with all the (financial) information that is relevant to the prospective franchisee in order for it to make a well informed decision whether or not to sign the franchise agreement. The franchisor must provide:<\/p>\n<ul>\n<li>the concept franchise agreement including the attachments;<\/li>\n<li>an overview of all financial burdens occurring from the franchise agreement. This of course includes (franchise) fees to be paid to the franchisor, but also information on investments that the franchisor requires or may require from the prospective franchisee (including an indication of the extent thereof). Insofar as structural, recurring investments are involved, it should also be clear at what times during the term of the franchise agreement such investments must be made. The prospective franchisee should also be informed if the franchisor has reserved the right to unilaterally adjust current payment obligations or introduce new payment obligations;<\/li>\n<li>information about the way in which and the frequency of consultations between the franchisor and the franchisees and, if available, the contact information of the franchisee\u2019s representative body;<\/li>\n<li>the extent to which and the manner in which the franchisor, whether or not via a derivative franchise formula, can compete with the prospective franchisee (for instance through a webshop);<\/li>\n<li>the extent to which, the frequency with which and the manner in which the prospective franchisee can take note of turnover-related data that concern the prospective franchisee or are important for its business operations; and<\/li>\n<li>any information of which the franchisor knows or can reasonably suspect that is important to the prospective franchisee for the conclusion of the franchise agreement.<\/li>\n<\/ul>\n<p>In addition, the franchisor shall provide the prospective franchisee in good time with the following information, insofar as such information is available to it, to a subsidiary, or to a group company affiliated with the franchisor , and in so far as it is reasonably relevant to the conclusion of the franchise agreement:<\/p>\n<ol>\n<li>information on its financial position; and<\/li>\n<li>financial data relating to the intended location of the franchise company, or, in the absence thereof, financial data from one or more company or companies deemed comparable by the franchisor, whereby the franchisor makes clear on what grounds it considers them comparable.<\/li>\n<\/ol>\n<p>Usually, this information is combined in a so-called precontractual information document (PID).<\/p>\n<p>The franchisor must provide the prospective franchisee with all relevant information available at least four weeks prior to signing the franchise agreement (the standstill period). If the franchisor makes changes to the franchise agreement or offers a new franchise agreement, which is to the detriment of the prospective franchisee, during this aforementioned period, this considered as provision of new information. That causes the standstill period to start over from the day of provision on that new information. During the standstill period, the franchisor and the prospective franchisee can discuss the franchise agreement and make changes to the franchise agreement in favour of the prospective franchisee without triggering a new standstill period.<\/p>\n<p>In most cases the franchisor and prospective franchisee sign a letter of intent (LOI) in which they express their intention to start a franchise relationship before the franchisor discloses all relevant information to the prospective franchisee. At the signing of the LOI the franchisor provides the prospective franchisee with all relevant information.<\/p>\n<p>If the franchisor and the prospective franchisee do not comply with the standstill period of at least four weeks, and thus sign the franchise agreement earlier, the franchise agreement can be annulled (<em>vernietigbaar<\/em>) by the prospective franchisee. The statutory time limit for invoking to the right to annulment is three years. However, recent case law of a lower court indicates that a franchisee might not be able to annul the franchise agreement if no interest of the franchisee that the standstill period intents to protect was harmed by the violation of the standstill period. This judgment is however heavily debated amongst Dutch lawyers. We therefore strongly advise to take the standstill period into account.<\/p>\n<p>The standstill period does not apply to the conclusion of a successive franchise agreement regarding the same franchise formula between the same parties or to the conclusion of a successive agreement regarding the same franchise formula between the same franchisor and a wholly-owned subsidiary or an affiliated group company of the (former) franchisee.<\/p>\n<p>During the standstill period franchisor can also not:<\/p>\n<ul>\n<li>conclude with the prospective franchisee any other agreement deemed inseparable from the franchise agreement, except an agreement for confidentiality; or<\/li>\n<li>induce the prospective franchisee to make payments or investments related to the pending franchise agreement.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If the franchisee intends to use a special purpose vehicle (SPV) to operate each franchised outlet, is it sufficient to make disclosure to the SPVs' parent company or must disclosure be made to each individual SPV franchisee?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is advisable to disclose the aforementioned information to each specific SPV in due time. The information that has to be disclosed can be different for each franchised outlet. When the relevant SPV is informed accordingly, any debates about the mandatory disclosure of information can be avoided.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What actions can a franchisee take in the event of mis-selling by the franchisor?  What are the main legal grounds for such claims (e.g. misrepresentation, statutory disclosure breaches, unfair commercial practices)?  To what extent can liability be excluded or limited by non-reliance or entire agreement clauses or disclaimers in the franchise agreement, disclosure document or sales material?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In the event of mis-selling by the franchisor, a franchisee can potentially invoke error (<em>dwaling),<\/em> unlawful act (<em>onrechtmatige daad<\/em>) or breach of contract (<em>wanprestatie<\/em>).<\/p>\n<p>Depending on the circumstances of the case, a franchisee can invoke a certain remedy. A disclaimer in the franchise agreement, in a disclosure document or in the sales material can affect the outcome. For example, in the event a claim alleging error is excluded in the franchise agreement, the franchisee can\u2019t invoke error.<\/p>\n<p>A further statutory ground for mis-selling claims is article 6:194 DCC, as extended by the Wet Acquisitiefraude (in force since 1 July 2016). The Act targets misleading omissions situations where a franchisor withholds essential information or provides it too late or in an opaque manner. The Minister of Economic Affairs has confirmed that this Act can apply to pre-contractual information provided by a franchisor to a franchisee.<\/p>\n<p>The key procedural advantage over a dwaling claim is the reversal of the burden of proof under article 6:195 DCC: once a franchisee invokes article 6:194 DCC, the franchisor must prove the accuracy and completeness of the information it provided.<\/p>\n<p>The benchmark is the average informed and attentive entrepreneur, meaning that mere puffery or optimistic projections will not automatically qualify as a misleading commercial communication.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Would it be legal to issue a franchise agreement on a non-negotiable, \"take it or leave it\", basis?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes. It is legal to issue a franchise agreement on a non-negotiable \u201ctake it or leave it\u201d basis.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How are trademarks, know-how, trade secrets and copyright protected in your country?  Are there any specific requirements or risks relating to the licensing of know-how and trade secrets in a franchise context?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p><strong>Trademarks<\/strong><\/p>\n<p>Trademark protection in the Netherlands is obtained through (i) a Benelux trademark registration, covering the Netherlands, Belgium and Luxembourg, (ii) an EU trademark registration, covering all EU Member States, or (iii) an international trademark, which basically consists of a bundle of national trademark rights.<\/p>\n<p>Trademark licenses may be exclusive or non-exclusive. The franchise agreement should specify, inter alia, the licensed marks, territory, duration, permitted goods and services, use of digital channels and domains, quality controls, brand guidelines, sublicensing, enforcement and post-termination de-branding.<\/p>\n<p><strong>Know-how and trade secrets<\/strong><\/p>\n<p>Know-how is a broader commercial concept than a trade secret. It may include operational methods, manuals, recipes, pricing methods, supplier information, training materials and customer databases. Know-how is not, as such, an exclusive intellectual-property right. It is protected primarily through confidentiality and restricted-use obligations, the Dutch Trade Secrets Protection Act, general contract and tort law and in appropriate cases, overlapping copyright, database or other IP rights.<\/p>\n<p>Dutch franchise law treats know-how as a central element of a franchise formula. Article 7:911 of the Dutch Civil Code describes it as practical information that is not protected by an intellectual property right, derives from the franchisor\u2019s experience and research, and is secret, substantial and identified. The agreement and franchise manual should identify the licensed know-how with sufficient precision.<\/p>\n<p>Information qualifies as a trade secret under the Dutch Trade Secrets Protection Act only where, in substance (i) it is not generally known or readily accessible, (ii) it has commercial value because it is secret, and (iii) the holder has taken reasonable measures to preserve its secrecy. Reasonable measures may include NDAs, password protection, document classifications, access logs, encryption, staff policies, exit procedures and contractual restrictions on copying and disclosure. Failure to take such measures creates a material risk that statutory trade-secret protection will be unavailable.<\/p>\n<p><strong>Copyright<\/strong><\/p>\n<p>Copyright arises automatically, without registration, once an original work is created. In a franchise system, potentially protected works include franchise and operations manuals, training materials, software, website content, advertising and photographs, graphic designs, logos and store-layout. Copyright protects the work\u2019s original expression, not the underlying commercial idea, system, method or know-how. A franchise manual may therefore be protected against copying while the business method described in it remains unprotected by copyright.<\/p>\n<p>Ownership must be checked carefully. Materials created by employees may vest in the employer in certain circumstances, whereas rights in materials produced by independent contractors do not automatically vest in the commissioning party. The franchise agreement should therefore provide for a transfer (in advance), if desired.<\/p>\n<p>An assignment or exclusive copyright license must be recorded in an appropriate deed and covers only the rights expressly granted or necessarily implied. Non-exclusive licenses can be created less formally, but should nevertheless be documented. Moral rights may continue to limit certain alterations or uses even where the economic rights have been transferred or licensed.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any franchise specific laws governing the ongoing relationship between franchisor and franchisee? If so, please describe them, including any terms that are required to be included within the franchise agreement.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Dutch law explicitly states that the franchisor and the (prospective) franchisee must behave towards each other as a good franchisor and a good franchisee. This obligation applies to both the precontractual and the contractual phase. This rule of law is an elaboration on the general rule that parties must treat each other in a reasonable and fair manner. It is mandatory to behave accordingly, however it is not required to include an article about these obligations in the franchise agreement.<\/p>\n<p>Franchisor is obliged to inform the franchisee annually to what extent specific financial contributions made by the franchisee in accordance with the franchisor&#8217;s requirement during the previous financial year, cover the costs or investments that the franchisor intends or has intended to cover with those contributions.<\/p>\n<p>Consultations between the franchisor and the franchisee take place at least once a year.<\/p>\n<p>Furthermore, article 7:916 (1) DCC obliges the franchisor to provide a franchisee timely with:<\/p>\n<ul>\n<li>information about an intended amendment of the franchise agreement;<\/li>\n<li>information about investments required by the franchisor from the franchisee;<\/li>\n<li>a notification of a decision to use, directly by the franchisor or through third parties, a derived system, including an explanation of the content and purpose of the relevant derived system; and<\/li>\n<li>other information that the franchisor knows or can reasonably suspect to be relevant for the execution of the franchise agreement by the franchisee.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any aspects of competition law that apply to the franchise transaction (i.e. is it permissible to prohibit online sales or use of online marketplaces (e.g. Amazon, third-party platforms), insist on exclusive supply, fix or set maximum retail prices, operate dual distribution\/hybrid franchisor models)? If applicable, provide an overview of the relevant competition laws.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, there are multiple legal acts regarding competition law that apply to the franchise transaction. This consists both of domestic law and European law.<\/p>\n<p>The cartel prohibition is included in article 6 of the Dutch Competition Act (<em>Mededingingswet<\/em>) and article 101 (1) of the Treaty on the Functioning of the European Union (TFEU). The cartel prohibition prohibits agreements or contacts between businesses with the intention of hindering or restricting competition or creating false competition.<\/p>\n<p>However, franchise agreements can benefit from the \u2018safe haven\u2019 included in the Commission Regulation (EU) 2022\/720 (VBER), if the market share on the relevant market(s) of both the franchisor and the franchisee does not exceed 30% and if the franchise agreement does not include any hardcore restrictions. The European Commission explained the VBER in detail in the accompanying Guidelines.<\/p>\n<p>The VBER and accompanying Guidelines include rules regarding (amongst others) the prohibition of online sales, post-term non-compete clauses, resale prices, dual distribution and certain hybrid distribution models. A ban on the use of a specific online marketplace, such as Amazon, may in principle fall within the scope of the block exemption, provided that the franchisee can continue to use the internet effectively to sell the contract goods or services; by contrast, a restriction that prevents the effective use of the internet constitutes a hardcore restriction (article 4(e) VBER).<\/p>\n<p>In a dual distribution arrangement, the franchisor sells the goods itself at the downstream level and thereby competes with its franchisees. The VBER may nevertheless apply if there is a non-reciprocal vertical agreement and the conditions set out in article 2(4) of the VBER are met. In such cases, the block exemption applies only to the exchange of information that is directly related to the implementation of the franchise agreement and is necessary to improve the production or distribution of the contract goods or services (article 2(5) of the VBER).<\/p>\n<p>The VBER does not recognise a separate category of \u201chybrid franchisor model\u201d. A model in which the franchisor operates its own retail outlets or an online shop in addition to franchisees must, in principle, be assessed as dual distribution. However, if the franchisor also offers online intermediary services and, via that platform, competes in the relevant market for the sale of the goods or services offered thereon, the exception for dual distribution does not apply and the vertical agreement in question falls outside the scope of the block exemption (article 2(6) of the VBER). In that case, recourse may be had to the Dutch Competition Act and the TFEU.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any ESG, compliance or supply chain-related legal requirements impacting franchise systems?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no franchise-specific ESG or supply chain legislation in the Netherlands. However, several pieces of EU and Dutch legislation with broader application are increasingly relevant to franchise systems, particularly those operating at scale.<\/p>\n<p>The most significant development is the EU Corporate Sustainability Reporting Directive (CSRD), implemented in the Netherlands through the <em>Wet implementatie CSRD<\/em>. Large franchise groups and their parent companies that meet the applicable size thresholds are required to publish detailed sustainability reports covering environmental, social and governance matters in accordance with the European Sustainability Reporting Standards (ESRS). For franchise systems structured around a holding or parent entity that consolidates subsidiaries operating franchised locations, the reporting obligation attaches at group level. Franchisors whose networks include independently operating franchisees will generally not consolidate those franchisees for CSRD purposes, though the franchisor&#8217;s own operations and upstream supply chain must still be reported on where thresholds are met.<\/p>\n<p>Of direct relevance to supply chain structuring is the EU Corporate Sustainability Due Diligence Directive (CSDDD), which entered into force in 2024 and is to be implemented by EU Member States, including the Netherlands, in stages. The CSDDD requires in-scope companies to identify, prevent, mitigate and account for adverse human rights and environmental impacts throughout their chain of activities, including both upstream suppliers and, to a degree, downstream business relationships. Franchise agreements and the supply arrangements embedded within them may qualify as part of the franchisor&#8217;s chain of activities, particularly where the franchisor prescribes sourcing from specific approved suppliers or operates a centralised procurement model. Franchisors within scope should therefore review whether their franchise agreements contain adequate ESG representations, audit rights and termination triggers to enable compliance with their own CSDDD obligations.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are in-term non-compete and non-solicitation clauses enforceable and are there any limitations on the franchisor's ability to impose and enforce them?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Non-compete and non-solicitation clauses are common in franchise agreements.<\/p>\n<p>The Dutch Franchise Act does not contain requirements regarding in-term non-compete clauses and non-solicitation clauses.<\/p>\n<p>Furthermore, European competition law and more specific the Vertical Block Exemption Regulation, also contain provisions regarding competition restrictive clauses.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there an obligation (express or implied) to deal in good faith in franchise relationships?  If so, what practical effects does this have on the relationship between franchisor and franchisee?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Dutch Franchise Act states that franchisor and franchisee have to act towards each other as a good franchisor and a good franchisee. This duty not only covers the contractual phase, but also the precontractual phase.<\/p>\n<p>Both the franchisor and the franchisee shall act in all reasonableness and exercise due care towards each other, in the course of which the franchisor shall not only take into account its own interests, but also the interests of the franchise formula and the interests of the individual franchisee(s).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any employment or labour law considerations that are relevant to the franchise relationship? Is there a risk that the staff of the franchisee could be deemed to be the employees of the franchisor? What level of operational control may a franchisor exercise without creating employment or agency risk?  What steps can be taken to mitigate this risk?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is an employment law consideration which is relevant to the franchise relationship. Although we estimate these risks to be small, there is a risk that (1) the relationship between the franchisor and the franchisee qualifies as an employment relationship and a risk that (2) the franchisee\u2019s employees qualify as employees of the franchisor. These risks arise when the relationship(s) between (1) the franchisor and the franchisee and\/or (2) the relationship between the franchisor and the franchisee\u2019s employees exhibit(s) the characteristics of an employment agreement (in short: performing personal labour, for a salary payment, under authority\/\u201cemployers control\u201d), despite the intention of the parties to (1) enter into a franchise agreement and\/or to (2) enter into an employment agreement between the franchisee and the employees. Decisive in this matter is\/are the factual relationship(s) between the parties and how the parties behave towards each other, not the (name of the) contractual relationship(s) and\/or the intention of the parties.<\/p>\n<p>For example, if the franchisor exercises a significant degree of (employer\u2019s) control over (1) the franchisee (and \u2013 for example \u2013 actually determines the day-to-day operations of the business) (<em>gezagsverhouding<\/em>) and\/or (2) the franchisee\u2019s employees (for example by giving direct instructions on how to perform their duties), this may indicate an employee-employer relationship. However, mostly the franchisee itself will decide how to run the day-to-day business and gives instructions to its employees on how to perform their duties and the franchisor will only broadly define the general formula of the franchise companies. Other important criteria concern the (financial) risk of the franchisee (<em>ondernemersrisico<\/em>), the obligation to perform work personally and the dependency of 1 or 2 clients. In addition, in practice, a legal entity (B.V., N.V., etc.) is not easily pierced through to assume an employment relationship with another legal entity. In order to prevent the franchisor from being considered the employer of the franchisee and\/or the franchisee&#8217;s employees, it is important to properly contractually define the relationship between the franchisor and the franchisee as \u201cfranchise\u201d relationship and \u2013 most of all \u2013 act accordingly in practice.<\/p>\n<p>When a franchisee qualifies and\/or the franchisee\u2019s employees qualify as employee(s) of the franchisor, several legal and financial consequences arise, the most important of which are:<\/p>\n<ul>\n<li>the franchisor may be sued by the franchisee\u2019s employees for compliance with all employment law obligations applicable, such as, but not limited to, paying (minimum) wages and (minimum) holiday allowance and continued payment during holidays and illness.<\/li>\n<li>the franchisor may be sued by third parties (including the tax authorities) for all tax and financial obligations applicable, such as payment of taxes, social security contributions, pension contributions, etc.<\/li>\n<li>if the relationship between the franchisee and the franchisor qualifies as an employment agreement, the franchisor cannot easily terminate the franchise agreement, but a dismissal procedure may be necessary.<\/li>\n<\/ul>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a risk that a franchisee could be deemed to be the commercial agent of the franchisor? What steps can be taken to mitigate this risk?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In some types of franchise relationships, there is a risk that the relationship between the franchisor and the franchisee can also be classified as an agency agreement. In the Netherlands, the agency agreement, like the franchise agreement, is a governed by specific laws (articles 7:428 &#8211; 7:445 DCC). If the relationship between franchisor and franchisee meets the specific characteristics of an agency agreement (article 7:428 DCC), the parties are also bound by the specific legislation on commercial agency. This may affect, for example, the notice period, the right to damages and the right to goodwill compensation. It is not uncommon that franchise agreements contain elements of an agency agreement.<\/p>\n<p>In order to mitigate the risk that a franchisee could be deemed the commercial agent of the franchisor, it is of upmost importance to embody in the franchise agreement that the franchisee deals for one\u2019s own account and risk. A commercial agent mediates the formation of agreements between principal (in this case the franchisor) and third parties (clients). If the franchisee independently enters into agreements with clients and becomes a contracting party itself, the key element of commercial agency is not met; mediation\/assistance in the conclusion of agreements between the franchisor and a client.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any laws and regulations that affect the nature and payment of royalties to a foreign franchisor and\/or how much interest can be charged? Are there any requirements for payments in connection with the franchise agreement to be made in the local currency?  Are there any restrictions on structuring payments (e.g. royalties vs service fees vs mark-ups)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There are no laws and\/or regulations that affect the nature and payment of royalties to a foreign franchisor.<\/p>\n<p>There are also no requirements for payments in connection with the franchise agreement to be made in euros.<\/p>\n<p>The franchisor may choose to operate on the basis of a lump-sum fee or separate fees. A lump-sum fee may, for example, comprise an entry fee, a management fee, a marketing fee, an IT fee, etc. If the franchisor opts for a lump-sum fee, the franchisor must provide the franchisee with a breakdown of how the fees have been used. In short, the franchisor is free to choose how this is structured, provided that the franchisor allows the franchisee to inspect the details.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to impose contractual penalties on franchisees for breaches of restrictive covenants etc.? If so, what requirements must be met in order for such penalties to be enforceable?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is possible to impose contractual penalties on franchisees for breaches of restrictive covenants. It is common in franchise agreements to impose contractual penalties on breaches by franchisee of for example non-compete clauses, non-solicitation clauses and secrecy clauses.<\/p>\n<p>There are no requirements that have to be met in order for such penalties to be enforceable.<\/p>\n<p>The effect of a contractual penalty depends on the wording of the penalty clause, so it should be carefully drafted. For example, if a penalty clause does not stipulate that damages can be claimed in addition to the penalty, the incurred penalty will replaces damages.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What tax considerations are relevant to franchisors and franchisees? Are franchise royalties subject to withholding tax?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Franchisors and franchisees operating a business in the Netherlands are subject to the Dutch tax system. The type of tax to be paid in the Netherlands partly depends on the legal form chosen. Especially if a foreign franchisor contracts with a Dutch (master) franchisee, it is advisable to seek tax advice. The Netherlands has had a Withholding Tax Act since 2021, but this legislation does not seem to be designed for a withholding tax on franchise fees.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">How is e-commerce regulated and does this have any specific implications on the relationship between franchisor and franchisee?  For example, can franchisees be prohibited or restricted in any way from using e-commerce in their franchise businesses?  Are there any rules regarding online sales within or outside a franchisee\u2019s territory?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>E-commerce is regulated by the Vertical Block Exemption Regulation (VBER). The VBER stipulates that a franchise agreement that directly or indirectly, in isolation or in combination with other factors controlled by the parties, has the object of preventing the effective use of the internet by the franchisee or its customers to sell the goods or services to particular territories or customers, is considered to be a hardcore restriction.<\/p>\n<p>However, restrictions relating to the use of particular online sales channels, such as online marketplaces or the imposition of quality standards for online sales are allowed, provided that they do not indirectly have the object of preventing the effective use of the internet by the franchisee to sell the products or services in particular territories or to particular customers.<\/p>\n<p>The franchisee may, via its publicly accessible online shop, engage in passive sales to customers both within and outside its territory. The franchisor may only prohibit the franchisee from actively approaching customers (including through targeted online advertising) in territories or customer groups that have been legally and exclusively allocated to the franchisor itself or to a maximum of five other exclusive franchisees.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the applicable data protection laws and do they have any specific implications for the franchisor\/franchisee relationship?   In particular, what are the key data protection considerations in a franchise relationship, including: (a) allocation of controller\/processor roles; (b) use of customer databases; (c) cross-border data transfers; and (d) marketing and CRM activities?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Data protection laws in the Netherlands can be found in the national Telecommunications Act and the GDPR Implementation Act. The framework of data protection laws can be found in the General Data Protection Regulation 2016\/679 (GDPR). These laws have no specific implications for the franchisor-franchisee relationship. The general obligations under the GDPR apply to this relationship.<\/p>\n<p><u>Controller and processor roles<\/u><\/p>\n<p>The obligations and responsibilities of franchisor and franchisee regarding the processing of personal data depend on whether the franchisor and franchisee are considered as (joint) data controllers and\/or processors, which depends on the specific circumstances of the case.<\/p>\n<p>The qualification of each party depends on who determines the purposes and means of the personal data processing in question. Three scenarios commonly arise in a franchise context: separate controllership, joint controllership or a controller\/processor relationship.<\/p>\n<p><u>Customer database<\/u><\/p>\n<p>Customer databases in a franchise network raise several data protection issues. Access to a customer database must comply with the GDPR, regarding e.g. providing proper information about the access to data subjects and adhering to the\u00a0principles of purpose limitation and data minimization.<\/p>\n<p><u>Cross-border data transfers<\/u><\/p>\n<p>In international franchise networks, personal data may flow from a country within the European Economic Area to a country outside this area. This constitutes a transfer to a third country under Chapter V of the GDPR and requires an appropriate transfer mechanism, such as an adequacy decision, the use of standard contractual clauses or (for franchise networks on a large scale) binding corporate rules.<\/p>\n<p>International franchise networks should take into account the one-stop-shop mechanism and identify a lead supervisory authority. If such franchise networks process data that is covered by the GDPR, but the network is not located in the EU, an EU representative must be appointed.<\/p>\n<p><u>Marketing and CRM activities<\/u><\/p>\n<p>The rules on marketing and CRM activities are based on the implementation of the ePrivacy Directive and the GDPR. Email marketing is only allowed with the prior consent of the data subject or without consent, within certain limits, to existing customers. The use of the mechanism of consent must adhere with the principle of purpose limitation and the GDPR rules for legitimate consent. The franchisor and franchisee must specify which party is responsible for obtaining and maintaining consent, how consent is shared and documented, what marketing activities the consent entails and how to effectuate an opt-out system if used. If a CRM system involves automated profiling, the controller of this profiling must make sure to follow the restrictions set out in the GDPR.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is the franchisor permitted to restrict the transfer of (a) the franchisee's rights and obligations under the franchise agreement or (b) the ownership interests in the franchisee?  Can the franchisor impose conditions on transfers (e.g. approval rights, fees, qualification criteria)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>It is permitted for franchisor to restrict the transfer of franchisee\u2019s rights and obligations under the franchise agreement and to restrict the transfer of the ownership interest in the franchisee. It is very common to include those types of restrictions in the franchise agreement. The franchisor is also permitted to impose conditions on such transfers. It is common to include qualification criteria.<\/p>\n<p>However, clauses that (i) prohibit the transfer and\/or pledge of commercial monetary claims or (ii) aim to prevent the transfer\/pledge of commercial monetary claims (such as including a consent requirement) are null and void. This applies to new contracts from July 1<sup>st<\/sup>, 2025, and to existing contracts from October 1<sup>st<\/sup>, 2025.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what extent can a franchisor impose audit rights, reporting obligations, and operational controls on a franchisee, and what legal limits apply?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Dutch Franchise Act does not contain any specific, exhaustive restrictions on audit rights, reporting obligations and operational controls. In principle, freedom of contract applies and the parties are free to agree on these matters themselves. However, this freedom is not unlimited: the obligations and their enforcement must be reasonable and serve a legitimate purpose, such as monitoring operations, ensuring uniform application or the further development of the franchise formula.<\/p>\n<p>In practice, it is customary for the franchisee to report periodically and to provide its annual accounts or other relevant financial data, particularly where the franchisor is unable to monitor the development of operations via a centralised accounting, till or monitoring system.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Does a franchisee have a right to request a renewal on expiration of the initial term? In what circumstances can a franchisor refuse to renew a franchise agreement? If the franchise agreement is not renewed or it if it terminates or expires, is the franchisee entitled to compensation? If so, under what circumstances and how is the compensation payment calculated?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no law that stipulates that a franchisee has a right to (request) a renewal on expiration of the initial term. However, the franchisee can always ask the franchisor to renew the franchise agreement. In principle the franchisor is not obliged to renew an expiring franchise agreement. Freedom of contract prevails. If the franchise agreement does not include any clauses regarding the right for the franchisee to renewal of the franchise agreement, the franchisee has no such (contractual) right.<\/p>\n<p>However, the franchisor and the franchisee can include such a right of renewal in the franchise agreement. Such a renewal right is usually conditional. Common conditions are that the franchisee must not be in default of its obligations under the franchise agreement and must be willing to renew in accordance with the model franchise agreement used at that time.<\/p>\n<p>In principle, the franchisee is not entitled to any compensation for the mere fact that the franchise agreement expires after the term and is not renewed.<\/p>\n<p>If the franchisor takes over the franchisees business upon expiry or termination of the franchise agreement, the franchisor might be held to pay the franchisee a goodwill compensation.<\/p>\n<p>The franchise agreement must include provisions about the way to determine (i) whether there is any goodwill in the business of the franchisee, (ii) if so, what the size of the goodwill is and (iii) how much of this goodwill can be attributed to the franchisee.<\/p>\n<p>The franchise agreement must also include that goodwill, that can reasonably be attributed to the franchisee, will be reimbursed to the franchisee in the event the franchisor acquires the business upon ending of the franchise agreement. For the goodwill payable it does not matter whether the franchisor acquires the franchise business of the franchisee in order to operate the franchise business itself or in order to sell it to a third party with whom the franchisor enters into a franchise agreement.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any mandatory termination rights which may override any contractual termination rights? Is there a minimum notice period that the parties must adhere to?  Are there any requirements regarding notice periods and opportunities to remedy breaches before termination?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no mandatory termination right that overrides any contractual termination rights nor is there a minimum notice period parties must adhere to.<\/p>\n<p>The Dutch Franchise Act does not contain any specific rules regarding the termination or dissolution of a franchise agreement. It therefore does not provide for any franchise-specific mandatory right of termination that would override contractual termination rights, nor does it prescribe a minimum notice period or a general period for rectification. For these matters, one must refer to the franchise agreement and general contract law. With regard to termination, the contractual provisions and general contract law take precedence. However, depending on the nature and duration of the agreement and the circumstances of the case, the principles of reasonableness and equity may require a sufficiently compelling ground for termination, a reasonable notice period or an offer of compensation. This may also apply where the agreement itself provides for a right of termination.<\/p>\n<p>Where performance is neither permanently nor temporarily impossible, the defaulting party must, in principle, first be in default. This usually requires a notice of default setting a reasonable period for rectification or performance. A prior opportunity to remedy the situation is not required where default occurs without a notice of default, for example in the cases referred to in article 6:83 DCC or where performance is permanently impossible.<\/p>\n<p>The parties may deviate from this in the franchise agreement by specifying the types of breaches that will result in default taking effect immediately and without the need for a formal notice of default, and which will allow the agreement to be terminated with immediate effect. Such provisions are, for example, included in the event of breaches of a confidentiality clause or a non-competition clause applicable during or after the term of the agreement.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any intangible assets in the franchisee's business which the franchisee can claim ownership of on expiry or termination, e.g. customer data, local goodwill, etc.<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>There is no specific legislation regarding this subject. Whether the franchisee can claim ownership of any intangible assets in the franchisee\u2019s business on expiry or termination of the franchise agreement depends on the agreements between the franchisor and the franchisee.<\/p>\n<p>The franchise agreement must include provisions about the way to determine (i) whether there is any goodwill in the business of the franchisee, (ii) if so, what the size of the goodwill is and (iii) how much of this goodwill can be attributed to the franchisee and (iv) how the goodwill that is attributed to the franchisee will be reimbursed to the franchisee in the event the franchisor acquires the business upon ending of the franchise agreement. It does not matter whether the franchisor acquires the franchise business of the franchisee in order to operate the franchise business itself or in order to sell it to a third party with whom the franchisor enters into a franchise agreement.<\/p>\n<p>Whether a franchisee can claim the customer data upon termination of the franchise agreement also depends on the contractual arrangements. The franchise agreement may include agreements on the franchisor&#8217;s right to insight into and transfer of customer data. If the franchisor wants the right to approach the customers independently, the franchisee should also make agreements with the customers on this point.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What post-termination obligations are typically enforceable (e.g. de-branding, return of confidential information, non-compete, non-solicitation) and how readily are such post-term restrictions enforced in practice?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>A post-term non-compete clause that does not comply with all the aforementioned criteria is considered to be void.<\/p>\n<p>There is an ongoing discussion as to whether post-term non-solicitation clauses must meet the aforementioned criteria for post-term non-compete clauses.<\/p>\n<p>After the termination of a franchise agreement, various post-term non-compete obligations can be distinguished, which vary in degree of statutory regulation and enforceability. The Dutch Franchise Act explicitly regulates two post-term obligations: the post-term non-compete clause and the goodwill compensation. Other obligations, such as confidentiality, de-branding, and non-solicitation, are governed by general contract law.<\/p>\n<p><strong>Post-term non-compete clauses<\/strong><\/p>\n<p>Post-term non-compete clauses are governed by the Dutch Franchise Act. A post-term non-compete clause is legally valid and can be invoked by the franchisor if it meets the following criteria:<\/p>\n<ul>\n<li>the clause has to be in writing;<\/li>\n<li>the limitation solely applies to the goods or services that compete with the goods or services covered by the franchise agreement;<\/li>\n<li>the clause is essential in order to protect the know-how transferred by the franchisor to the franchisee;<\/li>\n<li>the term of the clause may not exceed one year following termination of the franchise agreement; and<\/li>\n<li>the geographical area cannot be larger than the area in which the franchisee operated the franchise formula on the basis of the franchise agreement.<\/li>\n<\/ul>\n<p>A clause that does not meet these conditions is void by operation of law under article 7:922 DCC, whereby the invalidity affects only the clause in question and not the franchise agreement as a whole. The mandatory nature of article 7:920(2) DCC means that a void post-term non-compete clause cannot be enforced, regardless of whether it would have been considered a trivial restriction under competition law.<\/p>\n<p><strong>Goodwill compensation<\/strong><\/p>\n<p>The relevant legal provision regarding goodwill reads as follows (article 7:920(1) DCC):<\/p>\n<p><em>\u201cThe franchise agreement stipulates, in any event:<\/em><\/p>\n<p><em style=\"font-size: 1rem\">a. the method by which the following is determined:<\/em><\/p>\n<p><em>1\u00b0 whether there is goodwill in the franchisee\u2019s business;<\/em><\/p>\n<p><em>2\u00b0 if so, what its scope is; and<\/em><\/p>\n<p><em>3\u00b0 to what extent this is attributable to the franchisor;<\/em><\/p>\n<p><em style=\"font-size: 1rem\">b. the manner in which goodwill reasonably attributable to the franchisee is to be compensated to the franchisee upon termination of the franchise agreement, if the franchisor takes over the franchise business of the franchisee in question in order to continue that business independently, or to transfer it to a third party with whom the franchisor enters into a franchise agreement.\u201d<\/em><\/p>\n<p>Article 7:920(1) DCC requires the parties to include a specific goodwill provision in the franchise agreement in advance. This provision must specify how it is to be determined whether goodwill exists, how much it amounts to, and what proportion of it stems from the franchisor\u2019s franchise formula and what proportion from the franchisee\u2019s efforts and performance. The parties may agree on a method of calculation themselves or have the valuation carried out by an independent expert.<\/p>\n<p>This provision does not automatically entitle the franchisee to a goodwill payment in the event of every termination. The statutory obligation to pay compensation applies only where the franchisor takes over the franchise business and either continues to operate it themselves or subsequently transfers it to a new franchisee. Only that portion of the goodwill which can reasonably be attributed to the departing franchisee must then be compensated. Goodwill arising from the reputation and strength of the franchise formula need not be compensated to the franchisee.<\/p>\n<p>It is also possible to exclude goodwill. In that case, the franchisor states that the goodwill is attributable in full to the franchisor.<\/p>\n<p><strong>Confidentiality and confidential information<\/strong><\/p>\n<p>The Dutch Franchise Act does not restrict the franchisor&#8217;s ability to enter into confidentiality agreements regarding commercially sensitive information that is provided by the franchisor to the franchisee on a confidential basis. However, the contractual confidentiality obligation cannot have the effect of rendering the franchisee&#8217;s right to obtain assistance or advice illusory, although the franchisee may be required to impose on its advisor the same confidentiality obligations that the franchisor imposes on the franchisee. Although the project documents primarily address confidentiality in the pre-contractual phase, it follows from general contract law that contractual confidentiality obligations are also enforceable post-term, provided they are not unreasonably restrictive.<\/p>\n<p><strong>Good franchisorship as a limiting principle<\/strong><\/p>\n<p>The standard of good franchisorship (article 7:912 DCC) may also influence the manner in which post-term obligations are enforced. The explanatory memorandum notes that it may be inequitable for a franchisor to terminate the franchise agreement on the one hand while requiring the franchisee to comply with a (sub)lease agreement on the other, and at the same time invoking a post-term non-compete clause. This standard may entail that the simultaneous enforcement of a sublease agreement and a non-compete clause is unreasonable, depending on the circumstances of the case.<\/p>\n<p><strong>De-branding, non-solicitation and penalty clauses<\/strong><\/p>\n<p>The Dutch Franchise Act does not contain any provisions regarding de-branding (the removal of brand identifiers), non-solicitation clauses (prohibitions on poaching staff) or penalty clauses as separate obligations following the termination of the agreement. However, it is common practice for the franchise agreement to stipulate that, upon termination of the franchise agreement, all branding from the entire premises must be removed so that it is no longer apparent that the premises were part of the franchise system. A penalty clause may be attached to this provision in the contract. In addition, it is also possible to include a non-competition clause (recruitment restrictions) in the franchise agreement.<\/p>\n<p><strong>Enforcement in practice<\/strong><\/p>\n<p>As regards actual enforcement, the note following the report on the legislative bill indicates that the number of published judgments in franchise cases is limited: several dozen judgments are published annually, with the actual number estimated to be one-third to one-half higher because not all judgments are published. For every lawsuit that is filed, approximately nine cases never reach a court. In addition, it is noted that franchisees are sometimes reluctant to go to court out of fear of repercussions on the business relationship. The legislature established the mandatory character of the Dutch Franchise Act precisely in order to strengthen the franchisee&#8217;s legal position and lower the threshold for litigation. Enforcement of the regulations nevertheless remains the responsibility of the parties themselves, as the government has no separate role in this purely private-law relationship.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there a national franchising association? Is membership required?  If not, is membership commercially advisable? What are the additional obligations of the national franchising association?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Nederlandse Franchise Vereniging (NFV) (Dutch Franchise Association) is an organization in the Netherlands, established in 1972. The purpose of the NFV is to serve as a platform for dialogue, collaboration, and advocacy within the franchise sector in the Netherlands. It provides a forum for discussing industry issues, sharing best practices, and working on matters of mutual concern.<\/p>\n<p>Membership in NFV is voluntary and commercially advisable. Membership in NFV is open to franchisors and to associated members, who are professionals associated with the franchise industry. Members reach the status of qualified member through a selection process to determine whether the franchisor meets the criteria set by the NFV for recognized membership. Joining the NFV allows members to access various benefits, including:<\/p>\n<p>&#8211; Networking opportunities with other member professionals in the franchise industry;<\/p>\n<p>&#8211; Access to industry information, insights, and best practices;<\/p>\n<p>&#8211; Representation and advocacy on matters related to franchising, including legal and regulatory issues;<\/p>\n<p>&#8211; Educational resources and events focused on improving franchise operations;<\/p>\n<p>&#8211; Information about becoming a franchisee for franchisors qualified brand is displayed on the NFV website.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are foreign franchisors treated differently to domestic franchisors? Does national law\/regulation impose any debt\/equity restrictions?  Are there any restrictions on the capital structure of a company incorporated in your country with a foreign parent (thin capitalisation rules)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Foreign and domestic franchisors are treated the same.<\/p>\n<p>There is no national law\/regulation which imposes any debt\/equity restrictions.<\/p>\n<p>There are no restrictions on the capital structure of a company incorporated with a foreign parent.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Must the franchise agreement be governed by local law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Dutch Franchise Act is mandatory law. All franchisees with an enterprise established in the Netherlands are subject to the Dutch Franchise Act. The Dutch Franchise Act aims to provide a minimum protection for a Dutch franchisee. Parties are allowed to agree on the applicability of the laws of a foreign country. However, that does not affect the applicability of the Dutch Franchise Act.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What dispute resolution procedures are available to franchisors and franchisees?  Are there any advantages to out of court procedures such as arbitration versus litigation, in particular if the franchise agreement is subject to a foreign governing law?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Dutch legal system offers several different options to settle a legal dispute. In case of a dispute parties can (i) seek relief at a Dutch court, or opt for alternative dispute resolution, which includes (ii) mediation, (iii) binding advice or (iv) arbitration.<\/p>\n<p>In case of the choice for a Dutch court, there are two types of proceedings: the \u2018normal\u2019 proceedings on the merits and a preliminary relief proceedings.<\/p>\n<p>Unlike arbitration, proceedings on the merits can take a long time. In most cases, it takes at least a year for the court to issue a judgment from the moment against which a summons is issued. In cases with an urgent importance it is possible to start a preliminary relief proceedings. In these proceedings the court will give a provisional judgment.<\/p>\n<p>A form of alternative dispute resolution is mediation. If parties want to continue their business relationship after resolving the current conflict, mediation can be the way to go. The aim of mediation is to find a solution that suits both parties.<\/p>\n<p>Another form of alternative dispute resolution is arbitration. Arbitration offers multiple advantages over proceedings before the Dutch courts. One of the advantages of arbitration is that it takes place behind closed doors and that, in the event a judgement is published, the names of the parties are anonymized. Furthermore, the judgement in arbitration is given much faster than a judgement in court.<\/p>\n<p>Arbitration also has disadvantages. The main disadvantage concerns the high costs, especially if 3 arbitrators are appointed. The costs of the arbitrators are significantly higher than the court fees payable in normal court proceedings. Thereby, the costs of arbitration are usually advanced by the applicant for arbitration and borne by the party ruled against. This includes (at least part of) the lawyer&#8217;s fees incurred by the other party. These high costs can be a barrier.<\/p>\n<p>In international cases, arbitration can also be an interesting option. In countries outside the EU an arbitration award is often easier to enforce than a Dutch court order. Arbitral awards are recognized in the 156 countries that have signed the 1958 New York Convention.<\/p>\n<p>Key differences between arbitration and proceedings before a Dutch court are that proceedings before a Dutch court are public and that the judgment is published. In such cases, the judgment is accessible to everyone. Depending on the interests at stake in a dispute, these differences may be seen as advantages or disadvantages.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Must the franchise agreement and disclosure documents be in the local language?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>No, although you could argue that on the basis of the duty to act as a good franchisor, a franchisor is obliged to conclude a franchise agreement with a franchisee in a language that the franchisee understands. In most cases the franchise agreement will be concluded in the Dutch or English language.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible to sign the franchise agreement using an electronic signature (rather than a wet ink signature)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Yes, that is possible. The franchise agreement can be agreed in any form. However, it is standard business practice that the franchise agreement is agreed in writing.<\/p>\n<p>Furthermore, the Dutch Franchise Act stipulates that a post-term non-compete clause can only be invoked by the franchisor in the event the clause is agreed in writing (both a physical and a digital clause suffice). If a post-term non-compete clause is not agreed in writing, it is void.<\/p>\n<p>We would also like to mention that a signed franchise agreement, either signed electronically or a wet ink signature, is considered desirable for the purposes of evidence.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do you foresee any significant commercial or legal developments that might impact on franchise relationships over the next year or so?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The Dutch Franchise Act was scheduled for evaluation in 2025. However, the evaluation has not taken place as of right now. To assess the effectiveness of the Dutch Franchise Act, the government will consult with representatives from franchise associations to determine whether objectives like creating a more level playing field have been achieved. If the evaluation reveals that certain goals have not been met, modifications to the Dutch Franchise Act may be considered.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">9302<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/149986","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/www.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=149986"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}