Additional option with a flexible BV

The legislation surrounding the flexible private company (BV) offers franchisors several additional options to make franchise structures less complicated and extensive. This does not compromise an agile management, the effectiveness, and the involvement of participants. For example, doctors and physiotherapists are increasingly collaborating. It's a sign of the times. The government wants to control costs, the number of health insurers is limited and they are very powerful, they want to sign contracts, and the individual doctor must face all these challenges. Meanwhile, the requirements for the profession are becoming more stringent. Therefore, chains are emerging in various forms of specialized medical care.

What structures did you frequently see before?

These chains sometimes have a branch structure with only employees, and you also see forms of collaboration according to a franchise model. Often, that franchise model is then combined with a model of joint participation between the formula owner and the doctor in the local branch. This involves agreements laid down in the franchise agreement, combined with agreements in the shareholder agreement and the statutes. All quite complicated.

A franchisor wants to remain the boss of the formula, ensure that his franchisees do not simply walk away with the formula, and he wants the authority to expel malicious franchisees from the franchise. You might think: just provide enough added value. It's not that simple. The added value of collaboration in medical care mainly lies in better work processes, better procedures, and protocols. Marketing and brand experience play a (still) modest role. In the first few years, the central organization must invest a lot and nett in the local branch in the form of guidance for improving the internal organization. This must be recouped in the later years. You don't want the franchisee to say after two years: thanks for the training and goodbye.

You also see that franchisees are (co-)owners of the formula. Besides being an owner of the formula, they are also a customer of the formula. How do you manage that? You keep it manageable by having clear role separation between formula management and the general meeting of shareholders. To keep the organization manageable, the franchisee does have a right to profit but is not allowed to interfere with the strategy and course of the formula in his role as a shareholder. Previously, complex structures were devised with share certificates and a trust office foundation to fulfill these wishes (as much as possible). A lot of paperwork and complicated arrangements.

The solution: Flexible BV

With the flexible BV, it's much easier to arrange things. It is possible to create different types of shares in the articles of association of a BV: with and without voting rights. A well-functioning solution can be to provide franchisees with non-voting shares with profit rights and the franchisor with shares with voting rights and a (limited) profit right. The franchisees do have meeting rights by law but are not allowed to participate in voting at a shareholders' meeting. They can participate in discussions in the franchise council.

Let's go back to the local branch. Even if both the franchisor and the franchisee participate in the local branch, the flexible BV offers new possibilities. A useful new 'tool' is the ability to impose statutory obligations on shareholders. In collaboration within a franchise structure, this might involve the obligation to be party to and respect the franchise agreement. This creates a good link between the franchise agreements in the franchise agreement and the shareholding. A violation of the franchise agreement can lead to an obligation to offer shares at a low value, potentially coupled with a penalty. Additionally, shareholder rights (such as profit rights and meeting rights) may be suspended until the franchisee complies with the agreements again!

The new flexible BV can also be bent entirely in the opposite direction. We all know the franchise council, which has an advisory role towards the franchisor. It works well in practice, but formally there is usually only the right to advise the franchisor.

In healthcare, for example, doctors are co-owners of the organization and the formula. Within the new flexible BV legislation, it is possible for these franchisees to all hold non-voting shares. That's one side of the situation. On the other hand, these participants/franchisees can form their own body within the BV, namely the meeting of non-voting shareholders. This sub-meeting can be assigned authorities at will, such as agreeing to the annual plan for the coming financial year. You come close to a cooperative structure without its disadvantages. What we have immediately achieved in this situation is that the franchisees have united within the franchise organization without needing to establish a separate association.

In summary, the new legislation around the flexible BV offers a large number of new opportunities for franchisors in the service sector, who are more dependent on the agreements once made because no branded goods are produced and delivered.

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