Dutch Franchise Act compliance for international franchisors
The Dutch Franchise Act applies to your Dutch franchisees
Since 1 January 2021, the Dutch Franchise Act (Wet franchise) governs every franchise agreement involving franchisees established in the Netherlands. It is mandatory law. For franchisees based in the Netherlands you cannot deviate from it to their disadvantage, even if your agreement is governed by foreign law. That point surprises many international franchisors.
The act was written to strengthen the position of the franchisee. It rests on four pillars: pre-contractual disclosure, changes to an existing agreement, ongoing consultation, and how the partnership ends. Below is the plain-language version. For the full explainer, read the Dutch Franchise Act, explained.
Four-week pre-contractual disclosure
Before a franchisee signs, you must share a defined set of information at least four weeks in advance. This is a standstill period. During those four weeks you may not sign. You may not change the draft to the franchisee's disadvantage. And you may not push the franchisee to invest or pay.
The required information includes the draft agreement and its appendices, all fees and required investments, how consultation works, your financial position, and financial data on the intended location or a comparable one. In the Netherlands this is usually delivered as a Pre-contractual Information Document (PID).
What your agreement must contain
The act sets mandatory content. Your agreement must define how goodwill is determined, and how goodwill attributable to the franchisee is paid out when you take over their business. A post-term non-compete clause is only valid if it is in writing, limited to competing goods or services, needed to protect your know-how, no longer than one year, and no wider than the area the franchisee operated in.
Consent and consultation during the agreement
You must consult your franchisees at least once a year. If you want to change the formula, or run a derivative formula, and that asks for investment or risks turnover loss above a threshold set in the agreement, you need the prior consent of the Dutch franchisees concerned, or a majority of them. If no threshold is set in the agreement, consent is always required.
How we make you compliant
We adapt your existing franchise agreement and disclosure to Dutch law. We build your PID. We align your franchise manual and your recruitment process. We also help you localise the formula for the Dutch market. Where specialist legal sign-off is needed, we work with vetted Dutch franchise lawyers.
Related services: the Pre-contractual Information Document and drafting franchise contracts.