Conflict management in franchising

Conflicts within the franchise relationship

The franchise relationship is a long-term collaboration between parties with partly parallel and partly opposing interests. It is precisely this long-term commitment that makes conflicts sensitive: a dispute over fees, a change to the formula, or disappointing sales figures can put the entire collaboration under pressure. An initial reaction is often decisive in such cases. An unintended admission, the wrong tone, or a position taken too hastily can be used against you later in legal proceedings. A timely and careful assessment of the position is therefore essential.

Who do we work for?

We assist both franchisors and franchisees. On the franchisor's side, we advise on managing disputes, preventing escalation, and protecting the franchise system. On the franchisee's side, we advise on recovering damages, defending against claims, and exercising legal rights. Our role varies depending on the position, but the goal is always a workable and legally sound outcome.

Common franchise conflicts

Practice reveals a number of recurring conflicts. Disputes regarding the interpretation of the agreement, for example concerning exclusivity, territory, or the scope of obligations. Conflicts regarding fees and purchasing conditions, particularly in the case of increases or amended purchasing agreements. Disputes regarding disappointing sales figures and the accuracy of forecasts provided in advance. Conflicts regarding changes to the formula and the right of consent. And disputes surrounding termination, with goodwill and the non-compete clause being sensitive points. Each type of conflict requires its own legal assessment and approach.

Dispute resolution routes

A franchise dispute can be resolved through various channels. Consultation and negotiation typically form the starting point, possibly within the statutory annual consultation. Mediation can be effective when the collaboration must continue and both parties are seeking a solution. Summary proceedings offer a solution in acute situations, such as an impending unilateral amendment or a threatened termination. Full proceedings are appropriate for disputes of principle regarding the interpretation of the agreement, damages, or the validity of a clause. Some franchise systems have their own dispute resolution committee or arbitration.

The role of the Franchise Act in conflicts

The Franchise Act has strengthened the position of the franchisee on a number of points and offers points of reference in the event of conflicts. The mutual duty of care (Article 7:912 of the Dutch Civil Code), the duty to provide information, the right of consent regarding amendments (Article 7:921 of the Dutch Civil Code), the goodwill arrangement (Article 7:920 of the Dutch Civil Code), and the limits to the non-compete clause play a role in many disputes. Provisions that deviate from mandatory legal protection to the detriment of the franchisee may be void or voidable. When assessing a conflict, we always take the statutory frameworks into account.

Our working method

We first assess the agreement, the draft documentation, the correspondence, and the nature of the dispute. Subsequently, we determine whether the most effective route lies in consultation, mediation, summary proceedings, or main proceedings. A combined approach often pays off: a solid legal foundation in the background, with a negotiation track in the foreground that leads the parties to a workable outcome. The decision to proceed is only made once the alternatives have been mapped out.

Mediation: maintaining cooperation

In many franchise disputes, parties wish to continue the collaboration. Public proceedings damage the relationship and are costly, whereas the fundamental principles of franchising—connection and cooperation—align well with mediation. Under the guidance of an independent mediator, parties seek a business-like, sustainable solution themselves, which is shorter and less expensive than legal proceedings. Moreover, mediation is confidential, ensuring that the franchise formula and mutual relationships remain out of the public eye. We assess whether mediation has a chance of success in your situation and safeguard your legal position in the background, so that you sit at the table with a strong foundation.

Disputes committee, binding advice and arbitration

Many franchise agreements and formula codes contain their own dispute resolution mechanism: a dispute resolution committee that provides binding advice, or an arbitration clause that excludes the ordinary courts. It is important to read this mechanism carefully in advance, as it determines where, how, and within what timeframe you must submit your dispute. A franchisor can be held to its own dispute resolution mechanism, even if it does not function properly in practice. We assess whether a dispute resolution committee or arbitration clause is valid and binding, or whether the path to the ordinary courts (or mediation) is open, and which route best serves your interests.

Duty to complain and statute of limitations: acting in a timely manner

In franchise disputes, acting quickly and carefully pays off. Anyone wishing to rely on a breach of contract by the other party must lodge a complaint within a reasonable time after discovery (the duty to complain under Article 6:89 of the Dutch Civil Code). If you lodge a complaint too late, you may lose your rights. In addition, limitation periods apply: a claim for damages generally lapses five years after you became aware of the damage and the liable person (Article 3:310 of the Dutch Civil Code), and a claim for performance after five years (Article 3:307 of the Dutch Civil Code). A dispute regarding a faulty forecast or a disputed fee increase must therefore be recorded in writing in a timely manner. We determine early on which time limits are running and, where necessary, draft a letter to interrupt the limitation period to safeguard your claims.

Weighing evidence, costs, and chances of success

Whether you are a franchisor with an international group or a franchisee with a single location — from a retail chain to the baker on the corner — a conflict ultimately revolves around evidence and feasibility. He who asserts must prove: in a dispute concerning a flawed forecast, a breach of the duty of care, or a deficiency in operations, substantiation with figures, correspondence, and documentation is decisive. Against this stand the costs, the turnaround time, and the impact on the relationship. We make a realistic assessment of your evidentiary position and chances of success in court in advance, so that you can make an informed choice between settlement, mediation, or litigation, and avoid ending up in a costly procedure unnecessarily.

Collective conflicts and the franchise council

Not every conflict is individual. A change to the franchise formula, a new fee structure, or a revised purchasing policy often affects all franchisees simultaneously. In such cases, collective advocacy is often more effective and cost-efficient than separate legal proceedings. We assist both individual parties and collective bodies, such as a franchise council, and advise on the right of consent and structured consultation. Read more about the broader approach to collective disputes on our page Conflict Management and (Collective) Advocacy.

Conflict management within our franchise practice

Conflict management does not stand alone, but is part of our broad range of Franchise Legal Advice. A dispute is often linked to the underlying agreements and the legal frameworks. Therefore, we also consider the pre-contractual forecast, the statutory obligations of the franchisor, the non-compete clause , and the termination of the franchise formula. Our mixed teams of lawyers and in-house counsel combine litigation experience with practical knowledge of franchise practice, for clients ranging from international corporations to the entrepreneur around the corner.