Mandatory franchise council?
Not in all cases does the franchise agreement contain a reference to the franchise council or a comparable body. Are franchisor and franchisee required to maintain such a council or similar body?
Strictly speaking, it is not necessary for a franchise council to be present. However, it is advisable to have proper and careful consultation in some way between franchisees and franchisor. There is more than one reason for this. A balanced franchise relationship is one of the elements that emphasize the independence of the franchisee, in order to prevent a disguised employer/employee relationship (fictitious employment). In that context, careful consultation about purchasing, marketing, training, etc. is of eminent importance. A good franchisor is therefore wise to set up and keep a mature franchise council alive. Ideally, the franchise council should be democratically composed.
Obviously, preventing a disguised employer/employee relationship is not the only, otherwise defensive, motive for setting up a franchise council or similar consultative body. After all, it is in the interest of all involved that proper consultation takes place on a regular basis on the above subjects, so that this can lead to improvements for the benefit of the entire franchise organization.
In addition, significant revisions of the franchise formula, for example consisting of a general restyling, accompanied by substantial investments, are simply unfeasible if there is not at least a consensus on this among the franchisees. In order to create this support, a franchise council is also very important in that context. In this way, everything can be carefully considered before individual coordination and agreement with the franchisees can take place.
Forms other than a franchise council can work just as well. It is important that a representative representation of the franchisees forms a serious discussion partner for the franchisor and that the advice and recommendations of the consultative body are of course taken to heart.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Supermarket letter – 26
Supermarket Newsletter No. 26
Link franchise agreement and rental agreement uncertain? – dated October 14, 2019 – mr K. Bastiaans
It is no exception within a franchise relationship that the parties agree that the franchise agreement and the rental agreement are inextricably linked.
Termination of franchise agreement in case of changes in leased retail space – September 27, 2019 – mr. AW Dolphin
Termination of a franchise agreement in light of a substantial change in the leased retail space.
Article De Nationale Franchisegids: “Distribution of (potential) customers prohibited?” – September 17, 2019 – mr. AW Dolphin
Within many franchise organizations, agreements are made about the recruitment of (potential) customers in a certain area.
District protection no protection against termination due to urgent own use – dated September 17, 2019 – mr. AW Dolphin
As a landlord, can the franchisor terminate the lease for urgent own use, in the sense of district protection, while this would be excluded on the basis of the franchise agreement.
Unreasonable compensation at the end of the franchise agreement – dated September 17, 2019 – mr. AW Dolphin
Some franchise agreements stipulate that the franchisee always owes the franchisor a minimum of a certain amount of costs upon termination of the franchise agreement.