Franchising in Belgium: make your supply chain scalable

A successful independent business often relies on suppliers who know you personally. They fit in extra deliveries, set stock aside or sort out problems over the phone. Once independent franchisees need to offer the same products or services, these informal arrangements are no longer enough. A reliable supply chain is a shared foundation for your franchise network. This approach will help you assess whether your purchasing model is ready for multiple outlets, without every order having to go through you.

1. Map the dependencies behind your offering

Do not start by negotiating discounts. Start by listing what each outlet needs. Think about goods for resale, ingredients, packaging, consumables and equipment parts. Even a service-based franchise may depend on specific equipment or products.

For each item, record the supplier, lead time, minimum order, shelf life and possible alternatives. Add the likely impact of a shortage: can the outlet keep operating, will it need to offer a temporarily reduced range, or will services have to stop?

Then divide purchases into three categories:

• Concept-defining purchases: products whose characteristics are essential to the distinctive identity and quality of your concept.
• Purchases with fixed specifications: products that different suppliers can provide, as long as they meet the same measurable requirements.
• Discretionary local purchases: supplies for which central control adds little value.

This classification prevents you from centralising every purchase unnecessarily. A signature ingredient may require a controlled source; standard cleaning supplies may simply need clear requirements for quality and use.

Above all, identify where your existing business depends on personal favours. An urgent delivery that works today because you know the owner does not yet amount to a reliable service for the whole network.

2. Test deliveries to several independent businesses

Do not just ask your suppliers whether they can handle greater volumes. Find out whether they can also supply separate businesses at different addresses, with varying order sizes. That is a different task from making one larger delivery to your existing business.

Discuss at least the following:

• ordering channels, ordering schedules and minimum quantities per outlet;
• transport costs and surcharges for small or urgent deliveries;
• invoicing, payment terms and credit checks for each franchisee;
• procedures for missing, damaged or rejected goods;
• communication about stock shortages and product changes.

Where possible, test these arrangements using a separate delivery point or a clearly defined trial order. Check whether the order arrives in full, on time and to specification. Also check whether the invoice is correct and whether a complaint can be resolved without your involvement.

Make a deliberate decision about who buys and resells the goods. If you buy centrally and resell to franchisees, you take on different stock, payment and liability risks from those involved when each franchisee orders directly. Ask your accountant and legal adviser to review this choice before adopting it as standard practice.

3. Make purchasing obligations transparent and legally sound

Requiring franchisees to use a particular supplier can protect quality, but it also limits their commercial freedom. Explain why each obligation is necessary. Consider whether objective product specifications could achieve the same result without prescribing a single supplier.

Belgium has specific pre-contractual rules for commercial cooperation agreements, including franchising. These are set out in Book X, Title 2 of the Belgian Code of Economic Law. Under Article X.27, the prospective franchisee must receive the draft agreement and the pre-contractual information document at least one month before entering into the agreement, in a durable and accessible medium.

Set out purchasing obligations, relevant costs and supply arrangements consistently in your contractual documents, and include the legally required information in the pre-contractual information document, known in Belgium as the PID. Do not hide a material purchasing obligation solely in a supplier list that may later change. Prospective franchisees must be able to assess the financial implications of your purchasing model.

Alongside these disclosure requirements, Belgian and EU competition law and Belgian rules on unfair terms between businesses also apply. Exclusive purchasing arrangements require a case-specific legal assessment. Nor should you confuse mandatory purchasing requirements with a right to impose fixed or minimum resale prices.

Also explain how centrally negotiated supplier discounts, rebates and any margins on goods resold to franchisees are handled. Transparency helps prevent mistrust within the franchise network.

4. Plan for shortages before the first emergency order

A scalable system must also work when a supplier cannot deliver. Identify alternatives for critical products in advance. Specify who assesses a replacement product, which quality tests are required and how outlets obtain permission to buy elsewhere temporarily.

Define who contacts the supplier during a shortage and who keeps franchisees informed. Agree when a stock alert should be issued and what it should contain: affected products, the expected duration and approved alternatives. For food products, for example, changes to ingredients may also affect allergen information.

Put a procedure in place for unsafe or defective products too. Can you trace which outlet received which batch? Does everyone know who must stop sales or use of the product, and how a recall is carried out?

Review delivery performance regularly with both suppliers and franchisees. Look beyond purchase prices to waste, transport costs, complaints and lost sales.

Practical takeaway: before launching your franchise, create a single supply matrix covering critical products, supply arrangements, responsibilities and approved alternatives. Then test whether another business owner can use it to place orders and resolve problems without relying on your personal contacts.