The establishment of a franchise association
"The right to associate is recognized." Article 8: Freedom of association (Dutch constitution).
Franchisees in the Netherlands also have the right to associate. This is found in many larger franchise organizations, which also have a franchise council. A franchise association is established by the franchisees. It has a board that can subsequently join the franchise council, provided the franchisor recognizes and agrees with the association.
What is a franchise association?
A franchise association is an organization where preferably all franchisees are members. The board of the organization represents the interests of all franchisees towards the franchisor. The association has statutes and (possibly) internal regulations. Additionally, it is registered in the trade register at the Chamber of Commerce (KvK). This registration creates a legal entity, making it a serious discussion partner for the franchisor.
Franchise association as an independent legal entity
Because a registered association at the KvK is a legal entity, it can also request contributions from its members (franchisees) and enter into obligations. A practical application of this structure can be that the association provides certain services to its members or hires third parties such as external franchise consultants for advice and guidance when deemed necessary.
Franchise association has a board
The board of the association is appointed from among the members. The board consists of at least a chairperson, a secretary, and a treasurer. In principle, all members have voting rights in the general members' meeting. In large associations, a members' council may be elected, which is authorized to represent the members in certain cases.
Membership can be mandated in the franchise contract
We recommend that franchise organizations require every franchisee to be a member of the association when it exists. It is up to the franchisor to include this in the franchise agreement. Franchisees then have the same rights, obligations, and authorities within the association. This also ensures that all franchisees contribute financially to the association. When membership is not mandated, there is a risk of two camps forming, which does not benefit mutual cooperation.
Legal rules for franchise associations
The rules applicable to an association are regulated by law. These legal rules can be quite complicated and include provisions regarding:
- The statutes
- The board
- Convening members' meetings
- Voting rights
- Liability for the policies pursued
- Et cetera
The formation of a franchise association
Formation of a preparatory committee
A preparatory committee, consisting of several franchisees and ideally one or a few members of the franchise management, prepares for the formation of the franchise association. The following matters need to be prepared:
- Choosing the consultation structure.
- Adjusting the franchise council regulations for franchise consultation.
- Drafting statutes for the franchise association.
- Searching for candidates for the board.
- Organizing the founding meeting.
- Drafting and recording the founding decision.
Founding meeting
During the founding meeting, the founding decision is taken, and the board is chosen. The board members will, in many cases, also take a seat in the franchise council.
As you can see, setting up an association involves quite a bit. We therefore advise you to always seek expert advice. Koelewijn & Partners has years of experience in establishing franchise associations and is happy to help you navigate the (legal) requirements.
