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Franchise, distribution and agency

Commercial alliances become a consideration when parties wish to record the legal nature of their cooperation, such as franchising, distribution or agency.

Legally speaking there is a significant difference between franchise, distribution and agency. The most effective marketing option can be chosen in function of the type of product or service and the parties’ requirements.

Franchise

Franchise can be defined as a close cooperation between legally independent businesses, whereby the franchisee enters into a business agreement with a franchise organisation, the franchiser, at his own expense and risk and for a fee.

The Netherlands Civil Code does not yet contain any specific legislation in respect of a franchise agreement. A franchise agreement is governed by general contract law. The relationship between the franchiser and the franchisee is also explored in case law.

LVH Franchise desk, a team of specialists

The LVH Franchise desk has a team of specialists with wide-ranging experience in advising franchisers, franchisees and franchise associations.

Specialised in legal areas

Besides the general regulations, which results from contract law, the LVH Franchise desk specialises in specific legislation and regulations that apply to franchise relationships, such as contract law, landlord and tenant law, competition law, intellectual property rights, bankruptcy law, administrative law, litigation, employment law and company law.

Focus on the sectors
  • Food & Horeca (catering & deliveries, fast food, coffee bars & lunchrooms, restaurants and supermarkets);
  • Non-food (automotive, books, magazines & gifts, consumer goods, chemist & perfumery and fashion);
  • Services (financial services, Internet, communication & telecom recruitment and working with kids);
  • Healthcare, Sport & Wellness (beauty & wellness, medical care, elderly care and sport & fitness).
A selection of the activities that we perform for franchisers, franchisees and franchise associations
  • Draft and/or advise on franchise agreements and/or lease or subletting agreements;
  • Advise and negotiate at the start and further development of franchise formulas;
  • Advise and support the existing franchise relationship;
  • Advise and litigate in disputes resulting from the franchise relationship;
  • Advise and support during sale, purchase and lease projects;
  • Advise, negotiate and litigate in the area of operating forecasts, E-commerce, business transfer, interim termination and continuing franchise agreements and issues regarding regional exclusivity, non-competition and confidentiality.
Distribution

In a distribution agreement, the distributor operates as the reseller of the supplier's products. The distributor has an independent position and the supplier is obliged to supply the products to the distributor.

Agency

In an agency agreement, the agent brokers agreements between the manufacturer and third parties on the instructions of the manufacturer.

LVH Franchise desk

Our solicitors are able to advise you on the type of commercial cooperation that is best suited to your specific situation. We can provide you with the corresponding agreements and contracts. If there is a change or an interim termination of this type of long-term relationships or if problems arise in the cooperation, our solicitors will be pleased to assist.    

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Bank has limited duty of care in respect of the franchisee

On 23 May 2017, the The Hague Court of Appeal gave a judgment in respect of a bank's duty of care regarding an ex-franchisee. In short, the Court of Appeal is of the opinion that it was not established that the bank neglected its duty of care by not warning the franchisee about the poor financial position of the franchiser.

Introduction of the Franchise Act does not produce a rosy future for franchise formulas

I have written about the Netherlands Franchise Code (NFC) before and explained its contents. In that context, I noted briefly that Minister Kamp sent a white paper for the Franchise Act to the Dutch House of Representatives. The white paper concerns special regulations for a franchise agreement and is open for consultation up to 25 May 2017, inviting stakeholders and interested parties to express their opinion.

Netherlands Franchise Code (NFC)

On 12 April 2017, the outgoing Minister of Economic Affairs published a bill which legally embeds the NFC. It is possible to respond to the bill until 25 May 2017. By legally embedding the NFC, the Minister wants to strengthen the position of franchisees and bring more balance to the interests of franchisees and franchisors.

Possible statutory basis for the Dutch Franchise Code

Minister Kamp of Economic Affairs is looking into the possibility of enshrining the Dutch Franchise Code in the law. This is stated in a letter he has written to the Dutch House of Representatives. It means the Franchise Code may come to play a role in legal proceedings involving franchise disputes.

Peter Verheijden

commercial cooperations, mergers and acquisitions, employment law and employer representation 

+31 (0)10 209 27 76 verheijden@lvh-advocaten.nl

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