Buying a franchise: assessing an overseas brand in the Netherlands

A franchise brand that performs well abroad is not automatically a sound investment in the Netherlands. You may be joining an international franchise network, but you will be running a business with Dutch customers, local costs and Dutch legal protections. Before signing, investigate how the international franchise model has been adapted for the Netherlands. Your decision should rest on the evidence supporting that local adaptation, not the size of the overseas network.

1. Dutch protections also apply to overseas brands

The Netherlands has specific franchise legislation: the Franchise Act, incorporated into Book 7 of the Dutch Civil Code, Articles 7:911 to 7:922, since 1 January 2021. These rules cover matters including pre-contractual disclosure, support and certain arrangements during and after the franchise relationship.

For a franchisee established in the Netherlands, these rules cannot be departed from to the franchisee’s detriment. Article 7:922 of the Dutch Civil Code also provides that this protection applies regardless of the law governing the franchise agreement. Choosing foreign law therefore does not simply override Dutch franchise protections. This does not mean, however, that every aspect of your international agreement is automatically governed exclusively by Dutch law.

An overseas franchisor does not have to set up a Dutch company specifically to enter into an agreement with you. Nor is there a separate Dutch franchise register that approves franchise models in advance. Registration in a business register, or registration abroad, is therefore no guarantee of the quality of your investment.

Ask a specialist lawyer to establish how mandatory Dutch rules apply to the international contract. Request specific amendments where the standard agreement does not adequately account for them, rather than accepting the explanation that the same contract is used worldwide.

2. Ask for information that supports your decision in the Netherlands

Article 7:913 of the Dutch Civil Code requires the franchisor to provide relevant information in advance. This includes the draft agreement and its appendices, financial obligations, information about the franchisor’s financial position and financial data for the proposed location. If location-specific data is unavailable, data from comparable businesses may be used, provided there is evidence to support the comparison.

For an international franchise model, that supporting evidence is particularly important. An outlet in an overseas capital may perform exceptionally well yet tell you little about your future Dutch outlet. When reviewing overseas comparison data, ask about:

• the catchment area, location and size of the outlet;
• opening hours, staffing levels and the owner’s involvement;
• how local taxes are accounted for in turnover and costs;
• rent, wages, logistics costs and mandatory contributions;
• the currency, reporting period and definitions used for financial results.

Ask for more than a translated presentation: request an explanation of the original figures too. Have an accountant assess which items need adjusting to produce a useful comparison for the Netherlands.

The statutory disclosure obligation does not guarantee success, nor does it automatically require the franchisor to prepare a turnover forecast. If there is no Dutch trading history to draw on, treat this as a significant uncertainty. A large international network does not remove that uncertainty.

3. Check who is responsible for adapting the franchise locally

A franchise model may be fully developed abroad while important decisions for the Netherlands remain unresolved. Examples include Dutch-language customer information, a suitable product range, local payment options and deliveries that fit Dutch opening hours. Ask which elements are already operational and which still need to be developed.

Draw up a simple responsibility checklist with three columns: required adaptation, responsible party and completion deadline. Also record who will bear the costs. This helps prevent ‘local adaptation’ from turning out to mean that you must develop a substantial part of the Dutch concept yourself.

Check whether commercial promises can be delivered in practice. Who, for example, will answer an urgent operational query when the overseas head office is closed? Can a mandatory supplier actually deliver to your location? And are customer-facing materials ready to use without you having to arrange translation and legal checks yourself?

Discuss your findings with existing Dutch franchisees, if there are any. If you will be the first, ask explicitly what uncertainties remain and which preparatory tasks will be completed before you open.

4. Make local readiness a condition of your decision

Bring your findings together in a short decision document. Distinguish between proven Dutch performance, substantiated overseas comparisons and assumptions that remain untested. For each outstanding question, state what evidence you need and when you expect to receive it.

The statutory period of at least four weeks between receiving the required information and entering into the franchise agreement provides time for assessment. An international opening schedule is no reason to overlook missing information. Ask your adviser to assess how incomplete information, or information supplied later, affects when you can sign.

Practical takeaway: do not buy solely into an overseas success story. Sign only when your legal position in the Netherlands, the usefulness of the figures and responsibility for local adaptations are sufficiently clear.