The Netherlands is a growing market for franchising, with over 900 ventures currently operating within the country across diverse sectors including professional services, food, retail, hospitality and health.
Franchising in the Netherlands is governed by the Dutch Franchise Act, which came into effect in 2021 and is implemented in Title 16 of Book 7 the Dutch Civil Code. The Act regulates pre-contractual disclosure, consultation rights and obligations related to termination to protect franchisees; and includes consent rights for franchisees in cases where the franchisor intends to amend the franchise formula or introduce a derivative formula that may cause financial disadvantage to the franchisee.
General contract law, competition law and intellectual property law also apply. The European competition regulations can influence franchise agreements, particularly regarding exclusivity and pricing restrictions.
Compliance with consumer protection laws is also important. Although franchisees are not 'consumers' in the strict legal sense, under certain circumstances they may benefit from consumer protection rules by analogy, particularly where the franchisee is an individual operating a small business and holds a weaker negotiating position. In these cases, some of the terms commonly found in franchise agreements, such as excessive penalties or exclusions of liability, may be considered unfair and therefore unenforceable.
There are no specific legal requirements under Dutch law regarding the legal form of either a franchisor or a franchisee. A franchisor can operate as a private limited company (BV) or a public limited company (NV), among other forms.
There is no requirement for the franchisor to be a local entity or wholly owned by Dutch nationals. International franchisors can establish Dutch subsidiaries or operate under foreign corporate structures.
Tax considerations often influence the choice of structure. In practice, Dutch franchisors tend to opt for the BV structure due to their limited liability and flexible governance. This preference is not specific to franchising and the BV remains a widely adopted legal form in the Netherlands. The selection of a legal structure should be guided by the specific circumstances and strategic and business needs of both the franchisor and the franchisee. Compliance with Dutch corporate law and registration requirements is necessary.
The same goes for the franchisee. A franchisee can operate as a sole proprietorship (eenmanszaak), partnership (VOF) or BV, depending on business needs.
Another structure for a franchisor-franchisee relationship is a cooperative (coöperatie), in which the franchisor operates as a cooperative entity and its members, the franchisees, as independent legal entities, such as a BV or a general partnership (VOF).
The franchise agreement must provide:
Goodwill may be due to the franchisee if the franchise agreement terminates and the franchisor then takes over that franchise, either to continue that business independently or transfer it to a third party with whom the franchisor concludes a new franchise agreement.
If the franchisor intends to make a change in the franchise formula by way of a contractual provision, without modifying the franchise agreement, the franchisor may need the franchisee’s consent if specific conditions are met.
Non-compete clauses are allowed but must comply with Dutch and EU competition laws. Under Dutch franchise law, a non-compete obligation is only valid if explicitly agreed in writing between the parties, as part of franchise agreement.
Post-term non-compete clauses must be agreed upon in writing, only apply to goods or services that compete with the goods or services covered by the franchise agreement, be indispensable to protect the know-how transferred from the franchisor to the franchisee, may not exceed one year from the end of the franchise agreement and, in geographical scope, not be wider than the area within which the franchisee has operated the franchise formula under the franchise agreement. The restriction may not extend beyond the goods or services that were provided under the franchise relationship: for example if the franchisee was solely active as a mortgage advisor, the non-compete cannot extend to unrelated financial services.
Dutch and EU competition laws prohibit franchisors from setting minimum resale prices for franchisees. Franchisees must be free to determine their own pricing to maintain fair market competition. Recommended retail prices and price guidance are allowed, but strict price fixing is illegal. Anti-competitive pricing restrictions can lead to regulatory penalties.
There is no mandatory minimum or maximum term for franchise agreements. Parties are free to negotiate contract duration and renewal terms. Automatic renewal clauses should be clearly specified in agreements and franchisees must be given adequate notice before termination or non-renewal.
Franchise agreements do not need to be registered with a local authority in the Netherlands. However, agreements governed by Dutch law must comply with Dutch contract law.
Although Dutch law does not strictly require so, agreements for local transactions are concluded in Dutch, but can be in English for international agreements. Branding compliance, including trade marks and trade dress, must align with intellectual property regulations. Franchisors must maintain transparent communication with franchisees regarding contract terms. Industry-specific formalities may also apply.
The Dutch Franchise Act mandates pre-contractual disclosure to prospective franchisees. Franchisors must provide detailed financial, operational and contractual information before signing an agreement. A four-week standstill period applies before signing, during which the draft franchise agreement may not be amended to the detriment of the franchisee, and no investments or payments may be requested in anticipation of the agreement being signed. This reflection period allows franchisees to assess the terms and make an informed decision free of commercial pressure.
Trade marks are registered with the Benelux Office for Intellectual Property (BOIP) and can be extended to EU-wide protection through the EUIPO. Franchisors should ensure trade marks are properly registered and licensed in franchise agreements. Trade mark infringement can be pursued through civil enforcement or opposition procedures either at the BOIP or EUIPO. Strong trade mark protection safeguards brand identity in franchising, and proper use and control of trade marks within agreements are crucial.
Know-how, trade secrets and confidential information may be protected under the Dutch Trade Secrets Protection Act when falling within the definition of a “trade secret”. Unlike intellectual property rights, trade secrets are not considered 'rights in rem' (zakelijke rechten), but are classified as relative rights (persoonlijkheidsrechten) under the Trade Secret Protection Act, which provides remedies against unlawful acquisition.
A franchising formula, for example when set out in a franchising handbook, could potentially be protected under copyright law when it is the franchisor's “own intellectual creation”. Subject to these the legal formalities, copyright may also apply to marketing materials, software and training content within franchises. Design rights and patents may be relevant for product-based franchises. Non-disclosure agreements help secure proprietary business methods and franchisors should structure agreements to safeguard their intellectual property assets and other confidential information.