By franchise, it is meant the authorization given by a pre-existing company to a group or an individual who is willing to carry out determined activities, such as being an agent for that company’s products.

A franchise involves a franchisor and a franchisee. The franchisor is the person establishing the company, its trademark and its name. The franchisee is the person that decides to do business under the franchisor’s name and therefore enters into agreement with the latter. The franchise agreement will then contain all the necessary obligations and rights of both parties and will set out the conditions of the franchise.

The agreement can envision the franchisor granting trade name, services, products, assistance and support in operations and quality-control and distribution of the products. The agreement could also envision a less extensive provision of services by the franchisor, leaving a greater degree of decision-making power to the franchisee.

  • In The Netherlands, from a legal perspective, there is no specific law yet that regulates franchising. Hence, other than past court decisions, the set of laws regulating it are tenancy law, competition law and the European Code of Honour on Franchising of 1972. In other words, there is no specific legal framework. In other Countries this can be present, for instance in the US the franchise is regulated at federal level with the Federal Trade Commission and also at State level (24 States have their own franchise rules).
  • As per associations, in The Netherlands there exists the Dutch Association of Franchise (NFV), member of the European Franchise Federation. Starting a franchise means deciding to venture into a business that can be highly profitable. Why? Because it comes along with a certain degree of business-safety. The franchisee will have a recognized brand name, will have headquarters to refer to and an assisting research and development team.

The franchising market in The Netherlands is extensive, well developed and competitive. Hundreds of companies with thousands of franchises are present in Dutch territory, in industries that range from food to the hotel business.

However, some legal pitfalls in franchising can indeed happen: disclosure documents, trademark protection, exit plan and investment concerns are only few of the matters for which legal assistance is sought.