Buying a franchise: check permits before you sign

A franchise concept may be successful elsewhere, yet your proposed outlet may not be allowed to open. In the Netherlands, municipal rules, permits and requirements governing the use of premises can delay your launch or make it impossible. Although the franchise community shares a wealth of knowledge, you must investigate local approvals separately. A targeted review of permit requirements helps you avoid committing to a business that cannot operate as planned.

1. Check the activities, not just the address

Start with a detailed description of what you intend to do at the premises. ‘A shop’ or ‘a food and drink business’ is too general. Consider food preparation, serving alcohol, outdoor seating, deliveries, external signage, opening hours and alterations. A combination of activities may also trigger requirements beyond those applying to the main activity alone.

The Environment and Planning Act (Omgevingswet) has been in force since 1 January 2024. The municipality’s environment plan is one of the key documents governing the permitted use of a location. The online Omgevingsloket portal allows you to view rules on a map and run a permit check. Depending on your plans, you may need an environment and planning permit, to submit a notification or to obtain another form of approval.

Municipal rules may also apply, for example to an operating licence for a hospitality business. Serving alcohol commercially generally requires a licence under the Alcohol Act (Alcoholwet). Do not assume that one general permit covers everything.

Draw up a list of activities and ask the municipality which procedures apply. Include any features that the franchisor makes compulsory. A concept requiring fixed evening opening hours or prominent external signage may not be readily accommodated at your chosen location.

2. Investigate existing approvals when taking over a business

An operating franchise outlet may seem a safer option than a new location. However, the fact that a business is open does not prove that all its activities are properly authorised. Nor does a permit always transfer automatically to a new operator. Whether a transfer, amendment or fresh application is required depends on the individual approval.

Ask the seller for a complete file containing:

• permits and licences granted, including supporting documents and conditions;
• notifications submitted and acknowledgements of receipt;
• correspondence concerning inspections, breaches and enforcement;
• pending applications, objections and appeals;
• drawings showing the approved layout and use.

Compare this file with the actual situation. Does the outdoor seating area match the approved size? Has a storage area since been converted into a kitchen? Does the existing signage comply with the approval granted? A discrepancy may require remedial work or an additional application.

Then check with the relevant authority what the takeover means for these approvals. A verbal assurance from the seller that ‘the licence comes with the business’ is not enough. Seek written clarification and have an expert assess any uncertainties. Also check whether a Bibob assessment may be required: under this Dutch integrity-screening procedure, the authorities may investigate matters including the applicant’s integrity and the source of funding.

3. Share the research responsibilities with the franchisor

The Franchise Act (Wet franchise), incorporated into Book 7 of the Dutch Civil Code, sets out pre-contractual disclosure obligations. Among other things, the franchisor must provide information that it knows, or can reasonably suspect, is relevant to entering into the franchise agreement. This may include a known permit problem at the proposed location.

As a prospective franchisee, you must also take reasonable steps to avoid proceeding on a mistaken understanding of the situation. Do not rely solely on the franchisor’s approval of the location. Commercial approval is not official authorisation.

Ask the franchisor which permits are needed in its experience, which technical requirements of the franchise concept are relevant and whether comparable outlets have encountered problems. Then agree in writing who will prepare applications, who will supply information and who will bear the costs.

For example, the franchisor might provide equipment specifications and standard drawings while you handle local applications. Check, however, that these standard documents genuinely reflect the premises and your activities.

4. Make approval a condition of your purchase

Have a legal adviser include appropriate conditions in the franchise agreement and, where you are taking over an existing business, the purchase agreement. Depending on the circumstances, these could make obligations conditional on obtaining approval or allow the agreement to be terminated if approval is not obtained. The wording determines when obligations arise and how you can withdraw if approval is not secured.

Specify exactly which approvals are required, the deadline for obtaining them and any restrictions you are willing to accept. For example, a licence allowing only shorter opening hours may not support the business model. Also set out what happens if there are delays, a refusal or costly additional conditions.

Address the consequences for sums already paid, preparatory costs and orders already placed. Distinguish between a permit that has been granted and one that can no longer be legally challenged; discuss which level of risk you can accept.

Practical conclusion: only sign once you know which approvals each activity requires, who will arrange them and how you can withdraw without unintended obligations if approval is not secured.