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
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Other messages
Update Franchise Law
On 23 May 2018, the government indicated that it would prepare a legal regulation that creates a framework for four sub-areas of cooperation between franchisors and franchisees that are crucial
On the edge of a franchisee’s exclusive territory
The Court of Appeal of Arnhem-Leeuwarden ruled on 15 May 2018, ECLI:NL:GHARL:2018:4395, on the question whether a franchisor has a branch just over the edge of the exclusively granted protection area.
Can a franchisee cohabit with a competing entrepreneur?
Can a franchisee violate a non-compete clause by cohabiting with someone who runs a competing business? On January 12, 2018, the District Court of Central Netherlands ruled
Not an exclusive catchment area, but still exclusivity for the franchisee
The judgment of the District Court of Noord-Holland dated 18 April 2018, ECLI:NL:RBNHO:2018:3268, ruled on the exclusivity area of a franchisee.
Supermarket letter – 23
AH may not reduce wages when taking over personnel from AH franchisees;
Termination or dissolution of the franchise agreement by the franchisee
In principle, franchise agreements can be terminated prematurely, for example by cancellation or dissolution. On 21 March 2018, the District Court of Overijssel ruled on ECLI:NL:RBOVE:2018:1335 on