Starting a franchise in Belgium: define territories clearly

When you turn an existing Belgian business into a franchise, your customer catchment area takes on a new significance. Where may a franchisee open an outlet? What scope do you retain for company-owned outlets and online sales? Clearly defined territories help your franchise network grow without creating expectations you cannot later meet. So start not with boundaries on a map, but with the rights you actually intend to grant.

1. First, establish what your territorial commitment means

An allocated territory is not automatically an exclusive sales territory. It may simply define where a franchisee may operate an outlet, or it may also specify where you will not open additional outlets. These arrangements have different implications for your growth plans.

Distinguish between three possible arrangements from the outset:

• Location territory: the area within which the franchisee may seek suitable premises or operate their business.
• Protection against additional outlets: your commitment not to add a company-owned outlet or another franchise outlet within a defined area.
• Customer solicitation arrangements: rules governing targeted sales activity outside the allocated territory, insofar as legally permitted.

Avoid a vague promise that someone will ‘get the region’. A prospective franchisee may interpret this as protection against all competition under your brand, while you mean only the right to open an outlet. Also explain what you cannot guarantee: a territorial arrangement does not guarantee turnover or prevent independent competitors from opening nearby.

Check, too, whether your existing business falls within the proposed territory. Without an explicit agreement, your original outlet could become the first source of disagreement.

2. Base boundaries on your existing customer patterns

Use your own business experience to investigate how customers actually reach you. Are they local, travelling along a main route, or making a special journey for what you offer? For a delivery-based business, journey times and delivery capacity may matter more than municipal boundaries. For a specialist service, the customer catchment area may be much wider.

Use sufficiently aggregated data on customer origins, order frequency, accessibility and existing deliveries. Do not simply draw a circle around your current location: a canal, ring road or difference in shopping habits can split an apparently logical territory into two distinct markets.

Then test different growth scenarios. What happens if a second outlet opens just outside the territory? Is there enough room for expansion without granting the first franchisee an unrealistically large area?

Next, produce a dated map and a written description. Specify which takes precedence if there is any uncertainty about a boundary. Use recognisable boundaries or a clear list of included areas. Also set out what happens if administrative boundaries change. This prevents a commercial arrangement from inadvertently depending on a subsequent reorganisation of municipalities.

3. Address online sales and exceptions in advance

A map does not determine who fulfils an order placed through the central website. Nor does it cover a business customer with locations across Belgium. Discuss these situations before offering territorial protection.

List your existing sales channels and consider at least the following cases:

• A customer orders online and chooses to collect from an outlet outside the area where they live.
• A national customer requests a single agreement covering several locations.
• A franchisee receives an unsolicited enquiry from outside their territory.
• You want to set up a temporary sales outlet, run an event or introduce another version of the franchise format.

For each case, determine who receives the enquiry, who supplies the goods or services, and who handles customer service or complaints. Any financial settlements must be consistent with the other arrangements within the franchise network.

Have restrictions on customer solicitation and online sales reviewed for compliance with Belgian and EU competition law. The distinction between active sales, such as targeted approaches to customers in another territory, and passive sales, such as responding to an unsolicited customer enquiry, is important here. An exclusive territory does not give you unrestricted freedom to prohibit all sales across its boundaries. Have exceptions precisely defined too: reserving unlimited rights for yourself leaves the promised protection with little substance.

4. Keep the contract and pre-contractual information consistent

Belgium has specific pre-contractual rules for commercial cooperation agreements, including franchising, in Book X, Title 2 of the Code of Economic Law. Under Article X.27, the prospective franchisee must receive the draft contract and the pre-contractual information document, known locally as the PID, at least one month before entering into the agreement. Article X.28 governs the content of that information document.

Have your legal adviser properly incorporate territorial rights, restrictions and reserved rights into the contract, and the relevant information into the PID. The map, sales presentation and verbal explanations must be consistent with those documents. Alongside these disclosure obligations, general contract law and competition law, among other rules, remain relevant.

Are you making protection conditional on requirements such as an opening deadline? If so, define objectively how compliance will be assessed and what the consequences will be. Do not conceal changes in a map or manual that can be amended later.

Practical conclusion: only start recruiting for a territory once you can explain, on a single map and in clear terms, what the franchisee receives, which exceptions apply and what scope you retain for your own activities.