The establishment of a franchise association
"The right to association is recognized." Article 8: Freedom of association (dutch constitution).
Franchisees in the Netherlands have the right to associate. This is often seen in larger franchise organizations that also have a franchise council. A franchise association is founded by the franchisees. The association has a board that can become part of the franchise council, provided the franchisor recognizes and agrees with the association.
What is a franchise association?
A franchise association is an organization in which ideally all franchisees are members. The board represents the interests of all franchisees towards the franchisor. The association has statutes and (possibly) internal regulations. Additionally, the association is registered in the Trade Register at the Chamber of Commerce (KvK). This creates a legal entity that serves as a serious discussion partner for the franchisor.
Franchise association is an independent legal entity
Because an association registered with the KvK is a legal entity, it can also request contributions from members (franchisees) and enter into obligations. A practical application of this association structure could be that the association provides certain services to its members or hires third parties like 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 meeting. In large associations, a members' council may sometimes be elected to represent the members in certain cases.
Membership can be mandatory in the franchise contract
We recommend that franchise organizations require every franchisee to be a member of the association when it exists. It's up to the franchisor to include this in the franchise agreement. Franchisees then have the same rights, duties, and powers within the association. All franchisees also contribute financially to the association. When membership is not mandatory, there is a risk of two camps forming, which can hinder mutual cooperation.
Legal rules for franchise associations
The rules for an association are legally regulated. These legal rules can be quite complex and include provisions regarding:
- The statutes
- The board
- Convening members' meetings
- Voting rights
- Liability for implemented policies
- Et cetera
Establishing a franchise association
Forming a preparatory committee
A preparatory committee, consisting of several franchisees and ideally one or more members of franchise management, prepares the establishment of the franchise association. The following tasks need to be prepared:
- Choosing a consultation structure.
- Adjusting the franchise council regulations for the franchise consultation.
- Drafting statutes for the franchise association.
- Searching for candidates for the board.
- Organizing the founding meeting.
- Drafting the founding resolution and recording it in minutes.
Founding meeting
During the founding meeting, the founding resolution is adopted, and the board is elected. The board members will, in many cases, also take seats on the franchise council.
As you can see, establishing a franchise association involves quite a lot. We therefore advise you to always seek expert advice. Koelewijn & Partners has years of experience in establishing franchise associations and would be happy to help you navigate the (legal) requirements.
