Buying a franchise in Belgium: agree a period to remedy breaches

A missed report, a display that fails to meet brand standards or a late payment: even a carefully managed franchise business can breach its contract. What matters is what happens next. Will you receive a clear warning and a realistic opportunity to put things right? Within a franchise network, a well-designed procedure for remedying breaches protects both the franchise concept and your business. Examine that procedure before buying a franchise in Belgium.

1. Identify the grounds for termination

Do not just read the clause headed ‘termination’. Search the entire agreement for terms such as ‘breach’, ‘immediate’, ‘formal notice of default’, ‘termination for breach’ and ‘repeated breach’. Operational obligations may also be linked to a right to end the relationship.

Then draw up a table with three columns: the obligation, the franchisor’s possible response and the opportunity you have to remedy the breach. This will show you whether an administrative error is treated in the same way as something that seriously undermines the franchise concept.

Pay particular attention to broad wording such as ‘any breach of the operations manual’. Ask which specific situations this covers. An agreement that makes little distinction between a minor mistake and a serious breach warrants closer legal scrutiny.

Ask the same question for every ground for termination: can you work out for yourself what you need to do to avoid termination? If the answer depends entirely on whether the franchisor is satisfied, there may not be a sufficiently objective standard.

2. Understand the Belgian legal framework

Belgium has no standalone law comprehensively governing every aspect of franchise agreements. However, specific pre-contractual disclosure requirements apply to commercial cooperation agreements, including franchising. These appear in Title 2 of Book X of the Belgian Code of Economic Law, with the scope defined in Articles I.11, 2° and X.26 of that Code.

As a rule, the franchisor must provide you with the draft agreement and the pre-contractual information document, known locally as the PID, at least one month before the agreement is concluded. The PID contains key contractual provisions and socio-economic information. Use these documents to assess the termination provisions and have any uncertainties resolved before signing.

However, that statutory month is not a period for remedying breaches during the franchise relationship. Do not confuse the two. Whether a breach justifies termination, and which formalities apply, must be assessed separately.

Relevant rules include the general law of obligations in Book 5 of the Belgian Civil Code and the rules on unfair terms in business-to-business contracts. A contractual right to terminate does not therefore operate independently of the law. Equally, you should not assume that every franchisee automatically has the same fixed period in which to remedy a breach. Ask a Belgian lawyer to assess the clause in the context of your particular agreement.

3. Make the remedy procedure clear and workable

A useful remedy clause sets out not only how much time you have, but also how the procedure works. Discuss at least the following points:

• Notification: how will you be notified of a breach, and when does the period begin?
• Details of the breach: which facts, contractual provisions and supporting evidence must the franchisor specify?
• The required remedy: what action or outcome is expected of you?
• The time available: is the period appropriate for the type of problem and the practical work involved?
• Completion: how will it be confirmed that the breach has been remedied?

A single standard period is not always workable. Providing a missing document is quite different from arranging repairs to technical equipment. Where putting things right requires an external supplier, you could negotiate a requirement to submit a timely action plan with interim milestones.

Also ask what happens when mistakes recur. Do several different minor errors count together as a repeated breach? Can an old breach that has been fully remedied continue to count against you indefinitely? Clarify when an earlier warning can still have consequences.

There may be circumstances in which immediate intervention is justified, such as an urgent safety risk. Rather than negotiating an unlimited right to remedy breaches, focus on clear exceptions and a proportionate response.

4. Test the procedure before you sign

Put a few hypothetical situations to the franchisor: you forget to submit a report, a technical fault prevents you from delivering the required service, or an inspection identifies a failure to meet standards. In each case, ask what written notice you would receive, what action would be expected and when the relationship would be at risk.

Also check whether essential services can be suspended during the remedy period. If, for example, you lose access to essential systems, putting things right may become practically impossible. Discuss which services and facilities will remain available, where it is reasonable and safe to keep them in place.

Make sure any agreed clarifications are incorporated into the contractual provisions. Reassuring verbal explanations do not, by themselves, change a broadly worded termination clause.

Practical takeaway: only sign once you understand which breaches can be remedied, how you will be warned and when the remedy will be considered complete. A clear procedure helps prevent a solvable problem from unnecessarily bringing your franchise business to an end.