Starting a Franchise in Belgium: Review Your Contract for Unfair Terms

If you want to turn an existing Belgian business into a franchise network, you will want to protect your business concept. But a contract that places almost all the risks on the franchisee is not necessarily a strong one. Belgian rules on unfair terms between businesses limit that freedom. Before issuing your first draft agreement, assess not only what each clause offers you, but also whether it is clear, justified and balanced.

1. Understand which Belgian rules apply

Belgium has no separate law governing franchise agreements as a whole. However, general contract law under the Belgian Civil Code and various provisions of the Belgian Code of Economic Law (known by its Dutch abbreviation, WER) apply.

For this contract review, the rules on unfair terms between businesses in Book VI of the WER are particularly important. Introduced by the Act of 4 April 2019, they are relevant to franchise agreements between businesses. The underlying principle is that a term must not create a manifest imbalance between the parties’ rights and obligations.

The rules also include a blacklist of prohibited terms and a grey list of terms presumed to be unfair. For the latter category, the specific context matters and it may be possible to rebut that presumption. An unfair term is prohibited and void; the agreement can remain in force if it can continue without that term.

In addition, Title 2 of Book X of the WER, on pre-contractual information for commercial cooperation agreements, applies. Among other requirements, prospective franchisees must receive the draft agreement and the pre-contractual information document (known locally as the PID) at least one month before entering into the agreement. Providing the required information does not, however, make an unfair term valid. Transparency and contractual balance are two separate checks.

2. Map risks alongside decision-making powers

Do not start by copying another franchise network’s contract. First, list situations in which something could go wrong: a central application fails, mandatory equipment proves unusable or an agreed service is not delivered.

For each situation, note:

• Who can actually influence the risk?
• Who decides on the supplier, working method or investment concerned?
• Who bears the costs under the draft agreement?
• What remedy is available to the other party?
• What legitimate interest does the clause protect?

One warning sign is a franchisee bearing all the consequences of a decision controlled exclusively by the franchisor. This does not automatically make a clause unfair, but it does call for a specific justification and legal assessment.

Suppose, for example, that your existing business uses a single mandatory point-of-sale system. The draft agreement places all losses caused by outages on the franchisee, while you select the supplier and are the only party able to request support. Consider whether a fault-reporting procedure, obligations to resolve problems and more clearly defined liability provisions would be more appropriate than a blanket exclusion of liability.

3. Pay particular attention to clauses that layer protections

An individual term may seem reasonable, yet produce a problematic result when combined with other clauses. Always read related provisions together.

Liability and remedies. Check that your obligations remain sufficiently specific where you exclude liability elsewhere. A promise of support loses its practical value if the contract simultaneously places almost every consequence of failing to provide it on the franchisee. Seek advice on which limitations are legally permissible and appropriate.

Penalties and damages. Map out the consequences that a single breach could trigger. Does the contract combine a fixed compensation payment, additional damages and other penalties? Have it checked to ensure that the result cannot become manifestly excessive. Distinguish between an administrative error that can be put right and a serious breach that undermines the franchise concept.

Evidence and disputes. Be cautious about provisions that automatically make your own records conclusive or severely restrict the scope for challenging them. Instead, specify which records the parties must keep, how they will investigate discrepancies and how errors will be corrected.

Acknowledgement of documents. Do not ask prospective franchisees to declare that they are familiar with documents they have not actually received. Identify appendices precisely and make them available. A standard declaration is no substitute for properly providing information.

4. Make the review part of your contract preparation

Give your legal adviser not only the draft agreement, but also the practical background. Why is an obligation necessary? How does it work in your own outlet? What costs or risks arise if it is not met? Without that information, it is difficult to assess proportionality and how the provisions fit together.

For questionable clauses, ask for one of three outcomes: retain with justification, rewrite or remove. Keep a brief internal record of why each approach was chosen. This helps prevent a standard clause added later from upsetting the balance again.

Carry out this review before giving prospective franchisees the draft agreement and PID. Then have both documents checked to ensure that they reflect the same arrangements. A change during the recruitment process may also affect the pre-contractual formalities.

Practical takeaway: choose the three clauses that give you the strongest protection. For each one, can you explain which risk it covers, why the allocation is reasonable and what recourse remains available to the franchisee? If not, have them revised before using the agreement to recruit franchisees.