In a dispute with your franchisor, your position is not determined by the contract alone. The statutory franchise rules include, among other things, disclosure obligations, a pre-contractual standstill period, rules on support and conditions for certain changes and non-compete clauses. However, disappointing turnover does not automatically entitle you to damages or immediate termination.
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Written by Onur Arslan, attorney at Arslan Advocaten. Registered in the specialisation register of the Netherlands Bar for employment law and personal injury. Last updated: 17 September 2026.
For a franchisee, several obligations are often interlinked: the franchise agreement, the lease, financing, purchasing and staff costs. A dispute about the franchise formula can therefore quickly affect the entire business. Map out the various contracts and time limits before you stop payments or close the outlet.
This explanation concerns franchising under Dutch law, with particular attention to franchisees established in the Netherlands. In cross-border relationships, the effect of a choice of law and of mandatory protection must be examined separately. The actual working relationship helps determine whether the franchise rules apply.
Is your relationship legally a franchise
Under Article 7:911 of the Dutch Civil Code (BW), franchising is about operating a franchise formula in the prescribed manner in return for payment. The formula includes, among other things, a uniform identity or appearance and relevant know-how. An agreement does not have to be literally called a “franchise” to fall within the rules.
An ordinary distribution relationship or a stand-alone trade mark licence, on the other hand, is not automatically a franchise. Examine which rights, obligations, support and working methods have actually been agreed. The way in which the formula is managed in practice is also relevant.
That classification matters for the protection that applies. Distribution and agency are partly governed by different rules. A template contract from another type of cooperation may therefore be the wrong starting point.
Information before you sign
The franchisor must provide the prospective franchisee with relevant information in good time. Think of the draft agreement with its annexes, financial obligations, required investments and the way in which consultation and the provision of information will take place. Available financial information about the intended location or comparable businesses may also be relevant.
The precise obligation follows from Article 7:913 of the Dutch Civil Code. There is no general guarantee as such that a particular turnover will be achieved. However, incorrect, incomplete or misleading information may have legal consequences. So keep presentations, calculations and the assumptions used for your decision.
The prospective franchisee must also provide relevant financial information and carry out investigations within reasonable limits. The statutory protection does not entirely remove that personal responsibility. Ask questions about unclear assumptions and record the answers before you invest.
The four-week standstill period
The information required by law must in principle be provided at least four weeks before the franchise agreement is concluded. During this period, restrictions apply to concluding the agreement and agreements inextricably linked to it, to making changes to the franchisee’s detriment and to prompting related payments or investments.
An appropriate confidentiality agreement may be an exception to the prohibition on concluding linked agreements. In addition, the law contains specific exceptions for subsequent agreements within the same formula and for the parties or group relationships described. Those exceptions must be applied precisely.
This standstill is not a general cooling-off period allowing you to cancel an already signed franchise agreement after the event without reason. It is protection before the contract is concluded. In the event of a possible breach, it must be assessed which legal consequences and remedies fit the facts.
Assessing a disappointing forecast
Compare the figures provided in advance with the actual developments. Which turnover, costs, staffing levels and rent were used as assumptions? Was it a forecast, historical figures from another location or merely an illustrative calculation? The presentation and explanation are important.
Then examine why the result differs. An incorrect assumption about visitor numbers is something different from unexpected market conditions or your own operational choices. For a damages claim, the legal basis, causal link and loss must be substantiated. The mere difference between promised and achieved turnover is not automatically recoverable loss.
Have financial calculations reviewed by an expert where necessary. Also keep information that is not in your favour, such as warnings about uncertainty or your own departures from the business plan. A balanced file makes clear which complaints are genuinely tenable.
Support during the relationship
Article 7:919 of the Dutch Civil Code obliges the franchisor to provide the assistance and commercial and technical support that can reasonably be expected in relation to the formula. This is not an unlimited guarantee of business success, but it can give rise to specific obligations.
State clearly what support you need. Describe the problem, the consequences and the help that you believe falls within the formula. Think of training, technical support, operational guidance or clarification of working methods. Keep the response and the arrangements made.
If you never report that support is lacking, you may later face an evidential problem. Conversely, a general newsletter is not always an adequate response to a specific technical problem affecting the operation of the business. The content of the formula and the circumstances determine what can reasonably be required.
Information and consultation after the start
The duty to provide information does not end on signing. The law contains rules on proposed changes, required investments and other information relevant to performance. Consultation must also take place at least once a year.
In addition, the franchisor must provide annual information on the relationship between certain contributions paid by franchisees and the costs or investments for which those contributions were intended. Think, for example, of a collective contribution with a defined purpose. Check the statutory scope and how it has been worked out in the contract.
Turn consultation into a usable record. Document the agenda, questions, decisions and commitments. If a franchisee council or representative body acts on your behalf, it must be clear what powers it has. Not every informal consent given by a representative automatically replaces the consent required by law and contract.
Mandatory investments and changes to the formula
A dispute often arises when a new shop fit-out, software or working method is imposed. First examine whether the contract permits the change and what costs or effects on turnover are expected. Ask for specific substantiation and a timetable.
Article 7:921 of the Dutch Civil Code may require prior consent for certain changes to the formula, or for operating a derived formula, with the financial consequences described by law above an agreed threshold. The rules offer alternatives: consent of a majority of the franchisees established in the Netherlands within the formula, or of each of the franchisees established in the Netherlands who are affected by it.
If the relevant threshold has not been set, the statutory consent rules apply without that financial floor. However, not every change automatically falls under exactly the same rules. Have the nature of the proposal, the contractual power and the expected consequences assessed together.
Competition from a derived formula
A franchisor may develop a new concept, sales channel or related formula. Whether that is permitted, and what information or consent is required, depends on the law, the agreement and the actual overlap. Online sales may have a different effect from a new physical outlet.
Substantiate what loss of turnover you expect and why. Compare target group, product range, location, marketing and customer flows. A general fear of competition is less persuasive than a specific analysis of the announced concept.
Also check existing exclusivity arrangements. They may contain an independent obligation alongside the franchise rules. At the same time, arrangements on market sharing and prices must comply with competition law. A dispute about exclusivity therefore sometimes requires several legal assessments.
May you suspend franchise fees
A breach by the franchisor may, in certain circumstances, give rise to a right to suspend performance, but not every grievance justifies stopping all fees. Examine the connection between the obligations, the seriousness, proportionality and any contractual restrictions.
A complete stop on payments may itself lead to grounds for termination or a penalty if it is unfounded. Separate out the disputed items and record which specific obligation has not been fulfilled. Consider paying the undisputed part and agreeing an arrangement on the remaining dispute.
Also read suspending work or payment. For a franchise outlet, you also need to consider how the lease, purchasing and access to systems are interlinked. A single measure can affect several contracts.
Termination and goodwill
The franchise agreement must set out how it is determined whether goodwill exists, how much it amounts to and to whom it can be attributed. The law also requires an arrangement for compensating goodwill attributable to the franchisee in the situation described, in which the franchisor takes over the business in order to continue it itself or transfer it to a new franchisee.
It does not follow that the same goodwill amount is automatically payable on every termination. The manner of termination, the takeover and the contractual arrangements are important. Valuation, debts, investments and the transferability of the business also play a role.
Have the valuation method and assumptions agreed in advance. A discussion about goodwill becomes more difficult once the business has already been transferred and the underlying figures are no longer accessible. Keep turnover, margins, customer data where lawful, investments and relevant comparisons.
Non-compete clause after termination
Article 7:920 of the Dutch Civil Code sets conditions for a clause that restricts the franchisee after the end of the agreement. Among other things, it must be in writing, relate to competing goods or services and be indispensable for protecting the know-how transferred. There are also limits on its duration and geographical scope.
The duration may not exceed one year, and the area may not be wider than the area in which the franchisee operated the formula under the agreement. That does not mean that every one-year clause is automatically valid: the other conditions must also be met.
Examine any associated penalty separately. A dispute about the main restriction partly determines whether a penalty can arise. Do not start competing activities without an assessment just because you consider the clause too broad; have its scope and possible adjustment reviewed in good time.
The file for a franchise dispute
Gather the agreement with all its annexes, the operations manual and its versions, pre-contractual information, forecasts and correspondence. Add annual accounts, monthly reports, investment requests, invoices and minutes of consultations.
For each complaint, make an overview of the arrangement, the actual deviation, your report, the response and the consequence. Separate disappointment about the result from specific contractual or statutory breaches. Also note which solution you want: information, support, adjustment, compensation or an exit.
Check time limits and the choice of forum. Arbitration, mediation clauses or a choice of foreign law may affect the route. At the same time, have it assessed which Dutch protective rules continue to apply despite a choice of law.
Sample request for information and consultation
Subject: proposed investment and consequences for our outlet
On [date] you announced that our outlet must carry out [measure]. According to your proposal, the investment amounts to [amount]. We request that you explain the contractual basis, the financial substantiation, the timetable and the expected consequences for turnover and operations.
We would also like to know how you are applying the information requirements and any consent requirements under the franchise agreement and the statutory franchise rules. We would appreciate receiving the relevant documents in a form that allows future reference.
We propose to discuss this on [date]. Until the information has been assessed, our response does not constitute consent to the proposed investment or change. We will continue to assess our existing obligations in accordance with the agreement and reserve our rights.
A letter of this kind does not automatically stop a contractual time limit from running. If a deadline has already been imposed, have it assessed whether a formal objection, a formal demand or interim relief is needed. In the meantime, keep documenting specific steps taken to mitigate loss.
Fictitious example of a refurbishment obligation
A franchisee is instructed to refurbish its outlet completely within three months. The formula contains a change clause, but the contract does not set a clear financial threshold for statutory consent. The business owner still has a loan outstanding for the previous fit-out.
The assessment is about more than whether renewal is commercially desirable. It must be examined which change is being introduced, which costs are required, what information has been provided and how consent has been arranged. The existing financing and timetable are also relevant to a workable solution.
The parties may discuss a phased refurbishment or an adjusted financial arrangement. Whether the business owner is obliged to agree depends on the legal assessment. The example is fictitious and is no substitute for an examination of your own formula and agreement.
A solution with workable arrangements
In a settlement, the franchise, lease, stock, staff, financing, accounts and use of the trade mark must all fit together. An agreement on the franchise fee alone may leave other problems unresolved. Specify which agreements end and which continue.
Record payments, transfer, goodwill, confidentiality and any post-termination restrictions. A full and final discharge must match the matters that have actually been examined. Also check whether third parties, such as the landlord or lender, need to cooperate.
Through corporate law for business owners you can have the dispute and a possible solution assessed. Send not only the main contract but also the operations manual, the pre-contractual information and the recent change proposals. That overall picture often determines the workable route.
Keep the franchise agreement and the lease separate
A franchisee sometimes leases the premises from the franchisor or an affiliated company. The end of the franchise does not necessarily mean that the lease ends on the same date. Conversely, losing the location may make it impossible to operate the formula. Both contracts must therefore be considered together.
Check links between the contracts, termination conditions, subletting and guarantees. Special tenancy protection rules may apply to business premises. A provision describing the commercial connection does not automatically override those rules. Have the termination route established separately for each contract.
Also take into account fixtures and fittings, financing and ownership of equipment. A refurbishment may have been paid for by the franchisee while certain installations have legally become part of the building. That may affect compensation or a transfer.
In the event of an exit, draw up a joint timetable for handover of the premises, stock, staff, branding and technical access. Shutting down the till system too early, for example, can complicate the final settlement. An arrangement is only workable when the legal end dates and the practical steps are aligned.
Frequently asked questions
Can I cancel a signed franchise agreement within four weeks?
The statutory standstill in principle concerns the period before the agreement is concluded. It is not a general cancellation period after the event. In the event of a breach, the consequences and appropriate remedies must be assessed separately.
Is the franchisor liable if turnover is disappointing?
Not automatically. Examine the information provided, any errors, your own duty to investigate and the causes of the result. Damages require a legal basis, a causal link and a substantiated calculation of loss.
Do I have to accept every new investment?
That does not simply follow from participating in the formula. The contract, the duty to provide information and possibly Article 7:921 of the Dutch Civil Code are relevant. The nature of the change, financial thresholds and required consent must be examined.
Am I always entitled to goodwill on termination?
No. The law requires an arrangement for goodwill and for compensation in certain takeover situations. The manner of termination, the contribution of the parties and the contractual arrangements help determine whether any amount is payable and, if so, how much.
Is a one-year non-compete clause always valid?
No. In addition to the maximum duration, other requirements apply, including that it is in writing, protects know-how and has a limited geographical scope. The clause must meet all applicable conditions.
Can I stop paying all franchise fees during the dispute?
That can involve considerable risks. Suspension requires a legal basis and an appropriate scope. Have the breach, the connection between the obligations and the contractual restrictions assessed, and pay the undisputed part where it is owed.
Sources and legal basis
- Dutch Civil Code, Book 7: Articles 911 to 922.
- Franchise Act in the Bulletin of Acts and Decrees (Staatsblad): original statutory text and structure.
- Ondernemersplein on the franchise rules: practical guidance; the statutory text determines the precise conditions.
- Dutch Civil Code, Book 6: including rules on breach, suspension, mistake and rescission.
