Buying a franchise in Belgium: check your territorial protection

An attractive location does not mean you will be the only outlet for a franchise brand in the area. A second branch, online shop or delivery point could serve the same customers. Clear agreements on these matters are important for a workable relationship within a franchise network. Before buying, investigate not only where you can operate, but also what competition from within the network may still be permitted.

1. Understand the difference between a location and a protected territory

The right to open a franchise business at a particular address is not the same as territorial protection. A contract may specify your location without restricting the franchisor from opening other outlets. Even the term ‘exclusive territory’ means little unless it is clear which activities and parties it covers.

Ask for a map with clearly identifiable boundaries and a written description. Postcodes, municipal boundaries and a radius around your premises can produce different results. Where a radius is used, for example, it must be clear whether the distance is measured as the crow flies or by road.

Then get answers to these questions:

• Can the franchisor open its own outlet in the territory?
• Does the protection also apply to other franchisees and affiliated companies?
• Does it cover temporary shops, collection points and outlets within other shops?
• Does it protect all products and services offered by the franchise or only some of them?
• Does it apply throughout the full contract term?

Have any verbal promise, such as ‘we won’t put anyone nearby’, turned into a specific contractual commitment. A map without corresponding rights is merely a geographical reference.

2. Investigate sales channels that cross your territorial boundaries

Customers do not observe territorial boundaries. They may order online, visit another outlet or arrange delivery through a platform. Investigate how the franchise combines physical and digital sales. Territorial protection for shops does not necessarily mean protection against online sales.

Ask who receives orders from your postcode area. Are they allocated to your outlet, a central warehouse or the franchisee who previously served the customer? Also check who receives the revenue when you fulfil an online order or process a return. Providing additional services without appropriate payment can reduce your profitability.

Distinguish between individual customers and centrally negotiated customer contracts. The franchisor may, for example, want to enter into agreements with businesses operating across several locations. Ask whether these contracts are excluded from your protection and who carries out the local work.

Record the answers in a simple table: sales channel, permitted seller, order allocation and payment for your work. This will help you assess whether the promised territory has real economic value.

3. Check the agreements against Belgian rules

Belgium has no single, comprehensive franchise law, but franchise agreements are subject to specific pre-contractual disclosure requirements. Title 2 of Book X of the Belgian Code of Economic Law governs pre-contractual disclosure for commercial cooperation agreements.

Under Article X.27, you must receive the draft agreement and a separate pre-contractual disclosure document at least one month before entering into the contract. Article X.28 specifies the key contractual and socio-economic information these documents must contain. Use them to compare the explanations about your territory with the legal terms. Ask for clarification if the sales presentation promises protection that you cannot find in the draft agreement.

These disclosure requirements do not automatically give you an exclusive territory. That depends on the rights agreed in the contract. General contract law and Belgian rules on unfair terms in business-to-business contracts also apply, among other provisions. The latter may be relevant to clauses that create a manifest imbalance in the parties’ legal rights and obligations.

Belgian and EU competition law also require attention. Not every restriction on sales to customers outside a territory is permitted. The distinction between actively approaching customers and responding to unsolicited enquiries can be legally significant, including online. Have a specialist lawyer review both your protection and any sales restrictions. An outright ban on all sales across territorial boundaries is not a safe default solution.

4. Negotiate exceptions and practical consequences

Ask which existing outlets, committed openings and sales channels reserved by the franchisor could affect your proposed territory. Have the exceptions listed specifically. A broad reservation covering ‘future developments’ can make the value of your protection difficult to predict.

Discuss what happens if a permitted new outlet opens just outside your boundary. This does not automatically entitle you to compensation. However, you can agree in advance on notification, consultation and the assessment of any potential overlap in customer catchment areas.

Does your protection depend on performance? If so, check when it can lapse, how shortcomings are established and whether you have an opportunity to remedy them. Also ask your adviser what contractual remedies are available if the franchisor breaches the territorial agreement.

Practical takeaway: do not assess your territory solely by looking at a map. Record who may sell through which channels, what exceptions apply and what happens if the protection is breached. Only then can you assess its commercial value.