Franchise Councils and Franchisee Associations: A Balancing
It is now good practice to structure the consultation between the franchisor and franchisees by establishing a franchise council or a franchisees’ association, especially in larger franchise organizations. Consultation on various practical issues, as well as in some cases on policy issues, can then take place centrally and efficiently. This also creates co-determination on the part of the franchisees. When the franchise council, or the board of the franchisees’ association, is democratically elected, this can make an important contribution to the absence of a so-called fictitious employment relationship, which has already been discussed earlier in this series.
In some franchise agreements, however, the authority of the consultative body goes very far. There are situations in which the consultative body acts, for example, as an intermediary in the transfer and sale of branches of franchisees.
It also happens that the consultative body is actively involved in the allocation of exclusive areas. In such situations, a limit comes into view. The larger franchise organizations in particular can make use of some exemptions from competition law under the so-called Block Exemption Regulation for vertical partnerships. They can do this on the basis of their verticality, which means that the franchisor and the franchisee are below each other in the supply chain. However, if the franchisees are given decision-making powers among themselves, for example by means of a franchise council, with regard to important elements of the franchise agreement, in particular competitively sensitive issues such as exclusive territories, then the cooperation takes on a horizontal character, i.e. a cooperation between parties that are side by side in the supply chain, which may lead to the exemptions referred to above no longer being applicable. Care must therefore be taken to ensure that franchise councils and franchisees’ associations guarantee structured and balanced consultation, but do not acquire too far-reaching decision-making power in the ins and outs of the franchise organization as such. Adequate franchise council regulations can prevent problems in that context. In these regulations, the powers of the franchise council must be clearly and clearly described, within the applicable competition law frameworks. This naturally also applies to the articles of association of a franchisees’ association, as well as the relevant provisions in the franchise agreement.
Ludwig & Van Dam franchise attorneys, franchise legal advice
![](https://ludwigvandam.megaconcept.nl/wp-content/uploads/2020/12/232court-min-400x222.jpg)
Other messages
Franchisor prohibits opening (franchise) company
A franchisor applied for interim measures to prohibit a franchisee from opening a franchisee's business.
Column Snack courier no. 8: “With 7 steps you comply with the privacy law”
Much has already been written about the General Data Protection Regulation (GDPR). The law has been applicable since 25 May, but many companies have not yet had their privacy policy in order.
Forced to switch to a different franchise formula at the existing location?
If a franchise formula ceases to exist, for example if it is incorporated into another organization, the question may be whether the franchisee is also obliged to be incorporated into
Column Franchise+ – 50 percent more franchise lawsuits
The 2018 Legal Franchise Statistics published by Ludwig & Van Dam Advocaten shows that there has been a 50% increase in the number of judgments in court cases rendered in 2017 compared to
A closer look at the intention to introduce franchising legislation
On May 23rd, State Secretary Mona Keijzer informed the House of Representatives about the imminent franchise legislation. The National Franchise Guide previously published this article.
Consumer Protection Applies to Franchisee
The consumer enjoys broad protection on the basis of the Civil Code.