Starting a franchise in Belgium: plan ahead for disputes

In your own business, you can often resolve disagreements directly. Once your existing business becomes a franchise network, a phone call may no longer be enough. A disputed invoice, a missed commitment or differing interpretations of the contract can bring cooperation to a standstill. A clear dispute resolution procedure gives both parties a predictable route towards a solution, without immediately turning every problem into a legal matter.

1. Distinguish between discussion and a formal dispute

Not every complaint amounts to a breach of contract. A franchisee who does not understand a statement of account is initially asking for an explanation. Someone who claims that an agreed service has not been provided may be reporting a failure to fulfil a contractual obligation. If you treat both situations in the same way, routine discussions can become unnecessarily formal, while serious problems may be left unresolved for too long.

Before entering into your first franchise agreement, establish a simple set of categories:

• Request for information: one party asks for clarification about an agreement, calculation or how something has been carried out.
• Complaint: one party is dissatisfied and asks for a specific solution.
• Formal dispute: the parties disagree about their rights, obligations or proposed remedial action.

For each category, decide who the point of contact is and how the matter will be recorded. Provide an alternative contact if the complaint concerns the usual contact person. In a small franchise organisation, the founder can take on this second role, provided they are not directly involved in the conflict.

Choose realistic response times. Do not promise an immediate substantive answer if you first need to examine invoices, delivery records or correspondence. Distinguish between acknowledging receipt and providing a full response.

2. Build a balanced contractual procedure

Belgium has no dedicated law governing franchise agreements in their entirety. However, the general law of obligations and contracts under the Belgian Civil Code applies, alongside relevant provisions of the Belgian Code of Economic Law, including rules on unfair terms between businesses. A dispute resolution clause must therefore do more than simply protect the franchisor.

Use a step-by-step procedure. First, the operational contacts discuss the problem. If that does not work, discussions move to people authorised to approve a solution. The parties can then consider mediation or pursue the legal options available to them.

At a minimum, specify:

• how to submit a formal complaint and what information is required;
• who will take part in discussions on behalf of each party;
• how any agreed remedial action will be confirmed in writing;
• when the parties will conclude that discussions have not produced a solution;
• how urgent action can still be taken.

A discussion procedure must not become a trap that deprives either party of necessary legal protection. Ask a Belgian lawyer to check how it interacts with formal notices of default, contractual deadlines, limitation periods and interim measures. An ordinary complaint email does not automatically satisfy all legal formalities.

Mediation is not the same as a court ruling either. A mediator helps the parties seek an agreement but does not impose a solution. Decide whether mediation should be proposed jointly once internal discussions reach an impasse, without suggesting that it is legally compulsory for every franchise.

3. Agree remedial action before resorting to sanctions

A useful procedure focuses first on what specifically needs to change. Describe any failure to meet an obligation in factual terms: what was agreed, what happened and which documents support that account? Avoid general accusations such as ‘insufficient commitment’ when the actual issue is a missing report or a disputed payment.

Make agreed remedial action measurable. Record the action required, the person responsible, the agreed deadline and how the parties will check whether the problem has been resolved. Also note anything that remains disputed. This prevents a temporary practical solution from inadvertently being presented as full agreement.

For example, suppose a franchisee disputes a statement of account because the basis of calculation is unclear. Start by comparing the underlying figures with the calculation method set out in the contract. Record which items both parties accept and which require further investigation. Do not assume that a complaint automatically suspends all payment obligations.

Have a lawyer review sanctions and opportunities to remedy breaches for balance and applicability. A standard clause imposing the maximum penalty immediately for every error is no substitute for careful contract management.

4. Make the procedure available in advance and test it

The dispute resolution procedure should not emerge only when the relationship is under strain. For Belgian franchise agreements, the pre-contractual disclosure obligations in Title 2 of Book X of the Code of Economic Law are relevant. As a general rule, the prospective franchisee must receive the draft agreement and a separate pre-contractual information document at least one month before the contract is concluded. Make sure your dispute resolution procedure is included in the draft agreement and properly explained wherever legally required.

Test the procedure with a fictional dispute before asking prospective franchisees to sign. Can someone find out where to send a complaint without you explaining it verbally? Is it clear who makes the decisions? Can both parties substantiate their position?

Practical takeaway: work through one realistic dispute from start to finish, from the initial notification to a written resolution. Use the exercise to clarify any ambiguous provisions, then have the contractual procedure reviewed by a lawyer.