Franchise disputes

What we do

The franchise relationship is a long-term commitment between the franchisor and the franchisee. Since 2021, new legislation regarding franchise relationships has come into effect. The Franchise Act brings about changes for existing franchise relationships. For new franchise relationships, the Franchise Act presents various points of attention. We assist both franchisors and franchisees during various phases of the franchise relationship. When legal proceedings need to be initiated in court, our team can represent the franchisor or franchisee.

Franchise disputes as part of Litigation

At its core, a franchise dispute is a commercial dispute concerning a long-term partnership formalized in a franchise agreement. Within our Litigation / Disputes , we therefore approach these conflicts not only from the perspective of franchise law, but primarily from the perspective of how to strengthen your position in negotiation, mediation, summary proceedings, or main proceedings. Our mixed teams of lawyers and in-house counsel assist both the franchisor behind a national or international formula and the individual franchisee – from a large retail group to the baker on the corner operating their establishment under a well-known formula.

The Franchise Act (Articles 7:911 to 7:922 of the Dutch Civil Code)

Since January 1, 2021, the Franchise Act has been in effect, included in Section 7.16 of Book 7 of the Dutch Civil Code (Articles 7:911 through 7:922 BW). This Act largely defines the playing field on which franchise disputes are fought out. The core provisions are:

• Article 7:911 of the Dutch Civil Code – the definition of the franchise agreement and the scope of application of the Act.
• Article 7:912 of the Dutch Civil Code – the obligation for parties to act towards each other as a “good franchisor” and a “good franchisee”; an open standard that is decisive in many disputes.
• Article 7:913 of the Dutch Civil Code – the pre-contractual duty to provide information and the standstill period of at least four weeks before the agreement is concluded.
• Article 7:920 of the Dutch Civil Code – the rules regarding goodwill at the termination of the agreement and the strict conditions for a valid post-contractual non-compete clause.
• Article 7:921 of the Dutch Civil Code – the right of the franchisee(s) to consent to substantial changes to the formula above an agreed threshold.
• Article 7:922 of the Dutch Civil Code – the mandatory nature: deviating to the detriment of the franchisee is in principle void.

Because large parts of the law are mandatory, a clause that does not meet statutory requirements (for example, a non-compete clause lasting longer than a year) can easily be struck down in legal proceedings. We rigorously assess which provisions are tenable in your case.

Common franchise disputes

In practice, we see the same types of disputes recurring time and again:

• Incorrect forecasts and error – the franchisee fails to achieve the projected turnover and claims that he contracted based on a flawed turnover forecast (error, Article 6:228 of the Dutch Civil Code, or breach of the duty to provide).
• Breach of the duty to provide information or standstill – discussion regarding pre-contractual documentation and the four-week period of Article 7:913 of the Dutch Civil Code.
• Goodwill compensation – at the end of the partnership, disagreement arises regarding the amount of goodwill attributable to the franchisee (Article 7:920 of the Dutch Civil Code).
• Non-compete and non-solicitation clauses – the franchisor wishes to hold the departing franchisee to a non-compete clause; the franchisee disputes its validity.
• Amendment of the formula – conflict regarding a unilateral adjustment of the formula or the fee, and regarding the right of consent under Article 7:921 of the Dutch Civil Code.
• Termination and dissolution – disputes regarding the termination of the agreement, notice periods and the consequences thereof.
• Overdue payments and operations – collection of franchise fees, use of intellectual property and compliance with the manual.

Which court has jurisdiction?

Which court handles a franchise dispute depends on the nature of the claim and what the parties have agreed upon. The franchise agreement typically contains a choice of forum clause or an arbitration or dispute resolution mechanism. If the dispute also involves a tenancy component – ​​for example, because the franchisor sublets the premises to the franchisee – the sub-district court (tenancy) may have jurisdiction, whereas purely contractual disputes often belong before the civil chamber of the district court. Urgent matters, such as compliance with a non-compete clause or cessation of the use of the formula, are suitable for summary proceedings. We determine the correct course of action in advance so that you are not unsuccessful in a jurisdictional defense.

Our approach and strategy

A franchise relationship is meant to last. Therefore, where possible, we first opt ​​for a solution that restores the partnership or settles it amicably: a well-substantiated formal notice, negotiation, or mediation. If that fails, our lawyers litigate decisively—in court, on appeal, or in arbitration. Because our in-house counsel understands the commercial and operational sides of the franchise system, our legal strategy aligns with your business interests, whether you are protecting the system or safeguarding your investment as a franchisee. See also our pages on franchise agreements and franchise and tenancy law.

Frequently asked questions about franchise disputes

Does the Franchise Act also apply to my old contract?
Yes. The Franchise Act entered into force on 1 January 2021; for the provisions regarding goodwill, non-competition, and the right of consent (Articles 7:920 and 7:921 of the Dutch Civil Code), a transitional period applied until 1 January 2023, after which existing agreements must also comply.

My turnover is falling far short of the forecast – do I have a case?
Possibly. If the franchisor has provided a flawed or overly optimistic forecast, this may constitute error or a breach of the duty to disclose. We assess the substantiation of the forecast and your evidentiary position.

Is my non-compete clause valid?
Pursuant to Article 7:920 of the Dutch Civil Code, a post-contractual non-compete clause is only valid if it is in writing, is indispensable to protect the transferred know-how, lasts no longer than one year, and is geographically limited to your area of ​​operation. If the clause does not meet these requirements, it is void.

Should I try mediation first?
It is not always mandatory, but often advisable. Many franchise agreements include a dispute or escalation clause. We advise on the route that leads to a result fastest and most cost-effectively in your situation.