Buying a franchise in Belgium: check your territorial protection

An attractive location is worth little if the same franchise network can open a second outlet nearby or serve the same customers online without clear agreements. Anyone joining a franchise network in Belgium therefore needs to understand what territorial protection actually means. The word ‘exclusive’ is not enough: examine the protection you receive, the exceptions that apply and how the arrangements work in practice.

1. Define your franchise territory clearly in the agreement

Start with a simple question: what is the franchisor prohibited from doing within your territory? A ban on opening a second franchised outlet is not the same as a ban on all outlets operating under the same brand. Company-owned shops, temporary outlets and concessions within other businesses may fall outside a narrowly worded clause.

Ask for a map to be attached to the contract, together with a precise description. Municipal boundaries, postcodes and a radius around your premises are not interchangeable. If a radius is used, for example, the starting point and measurement method must be clear.

Then check:

• Who is bound by the agreement? Only the franchisor, or do the arrangements also cover other franchisees and associated companies?
• Which activities are covered? All products and services, or only part of the range?
• Which sales formats are protected? Only permanent shops, or also mobile sales, temporary outlets and collection points?
• How long does the protection last? Throughout the contract term, or only during an initial period?

An exclusive territory does not automatically give you exclusive rights to every customer who lives there. Ask for that distinction to be explained explicitly.

2. Find out who serves online customers

Within a franchise network, a central online shop and local outlets can support each other. Without clear arrangements, they can also compete for the same revenue. So do not simply ask whether online sales exist: follow a customer order through the entire process.

Who receives the payment when someone in your territory orders through the central website? Who delivers the order, handles returns and bears the cost of complaints? Do you receive a fee for orders collected from your shop, even if the sale is recorded elsewhere?

Draw up a joint overview covering at least these situations:

• A customer in your territory has an online order delivered to their home.
• A customer orders centrally and collects from your outlet.
• You process a return for an order from which you received no revenue.
• A central advertising campaign generates an enquiry for a local service.

For each situation, record who receives the revenue, does the work and bears the costs. Also ask how enquiries are allocated: by postcode, distance, availability or another rule. Check whether that rule can be changed unilaterally. Only include income from central orders in your business plan if there is a sufficiently clear basis for doing so.

3. Examine exceptions and performance conditions

Territorial protection may depend on sales targets, opening hours or investment commitments. That is not necessarily unreasonable, but the conditions must be clear from the outset and objectively assessable.

Check which sales count towards your targets. Are online sales within your territory included when your performance is assessed? What happens in the event of prolonged roadworks, a delayed opening or supply problems within the franchise network? Ask for a warning and a reasonable opportunity to put matters right before your protection can be reduced.

Pay attention to exceptions covering, for example, railway stations, shopping centres, large business customers or national agreements. A seemingly minor reservation can have a significant commercial impact if your revenue forecasts depend on those customers.

Test the clause against a specific scenario: the franchisor wants to open a collection point at a busy location close to your shop. Is that allowed? Must you be consulted? Could you operate it yourself? Ask for a written answer and have relevant commitments incorporated into the agreement. A sales conversation offers less certainty than a clear contractual provision.

4. Take Belgian and European rules into account

Belgium has no standalone law governing every aspect of how franchise agreements are performed. However, specific pre-contractual rules apply to commercial cooperation agreements: Title 2 of Book X of the Belgian Code of Economic Law, comprising Articles X.26 to X.33. Under Article X.27, you must receive the draft contract and the pre-contractual information document at least one month before entering into the agreement. Use that time to have your territorial arrangements reviewed as well.

This disclosure obligation does not, in itself, create a right to an exclusive territory. Your protection must be established by the agreed terms. General contract law, rules on unfair terms between businesses and competition law are also relevant.

The European Vertical Block Exemption Regulation, Regulation (EU) 2022/720, also plays a role in territorial restrictions. There is an important distinction between active sales, such as deliberately approaching customers in a particular territory, and passive sales, such as responding to unsolicited enquiries. Restrictions on these two types of sales are not necessarily permitted to the same extent. Nor can online sales be restricted without limits.

Have a lawyer assess both the commercial implications and the legal enforceability of the terms. Also agree on how potential breaches will be reported and handled.

Practical conclusion: invest only when you can show, on a single map and in a single overview, which territory is protected, which exceptions apply and who receives online sales revenue and bears the associated costs.