Buren provides comments on draft legislation regarding franchise agreements

On 12 December 2019, the government published draft legislation on franchise agreements, and provided the public an opportunity to provide comments and suggestions.

On behalf of Buren, Damiën Berkhout, Marc van der Velden and Yanthe Helle provided comments and suggestions on 30 January 2019. You can find the letter here. The letter is in Dutch.

The key general comments by Buren:

1. We applaud the legislative intention to introduce a formal definition of what constitutes a “franchise agreement”, as this will help parties better determine their legal rights and duties.
2. We conclude that the draft legislation is currently missing the necessary empirical underpinning. This is problematic, because due to this it is quite possible that key elements of the draft legislation are built upon an incorrect assumption. The draft legislation assumes that a disparity in bargaining power between franchiser and franchisee causes a host of problems on the marketplace and that the government must provide significant legislative protection to the franchisees. However, the explanatory memorandum to the draft legislation does not provide relevant evidence for this assumption. Due to this, the proposed protection seems excessive.
3. The stated legislative objective is to provide a balance between on the one hand protection for the franchisees and on the other hand the ability of parties to contract freely. We fear that the balance has been lost. The draft legislation significantly restricts the freedom to contract and the freedom to conduct a business. Without a further explanation to the draft legislation, the proposed restrictions are in our view excessive. We suggest to the government to amend the draft legislation and to allow for more contractual freedom for parties.

In the letter Buren provides various suggestions to enhance the draft legislation.

If you have questions regarding franchising, do not hesitate to contact the specialists at Buren.