Buying a franchise: check your say in changes to the franchise system

A franchise system does not stand still. A new shop layout, different software or an additional sales channel can strengthen the network’s collective position, but may also cost your business money. When you buy a franchise, you join a franchise community in which innovation and a say in decisions should go hand in hand. Before signing, investigate not only the obligations that apply now, but also who will decide on future changes.

1. Identify who has the power to make changes

The rules on changes are often spread across the franchise agreement, the operating manual and appendices. For example, a contract may allow the franchisor to amend the manual, even though that manual sets out requirements for shop fittings, product ranges or IT systems.

Ask for all documents referred to in the agreement. Then highlight provisions that allow the franchisor to change obligations unilaterally. These might cover:

• replacing equipment, furniture or till systems;
• introducing new compulsory subscriptions or services;
• changing opening hours or delivery operations;
• introducing a different store concept;
• expanding through a derivative franchise concept that could affect your business.

For each provision, note who decides, how much notice must be given and who pays. Also ask what changes are already planned. A verbal assurance that a refit is “not on the cards for now” offers less certainty than a specific written explanation of existing plans.

A broad variation clause does not mean the franchisor can simply introduce any change it wishes. Statutory protections still matter. Equally, the law does not give you an individual veto over every operational adjustment.

2. Understand the statutory right of consent

The Netherlands has a Franchise Act (Wet franchise), incorporated into Title 16 of Book 7 of the Dutch Civil Code since 1 January 2021. Article 7:921 of the Civil Code is particularly important for changes to the franchise system. The statutory franchise rules cannot be contracted out of to the detriment of franchisees established in the Netherlands.

The right of consent applies in specific situations: the franchisor intends to change the franchise system using a provision in the agreement, or to operate a derivative franchise concept without amending the franchise agreement for that purpose. The proposal must also have certain financial consequences for franchisees.

These may include a required investment, a new or amended fee or other financial contribution, other costs to be borne, or a reasonably anticipated loss of turnover. If those consequences exceed the relevant threshold set out in the agreement, prior consent is required.

The law provides two routes: consent from a majority of the franchisees established in the Netherlands with whom the franchisor has an agreement, or consent from every franchisee established in the Netherlands who is affected by the proposal. A loss of turnover therefore does not automatically require individual consent in every case.

What if no thresholds have been agreed? The consent requirement then applies to the proposals covered by the law regardless of the scale of their financial consequences. Ask a lawyer specialising in franchise law to assess how this mechanism is reflected in your draft contract and which changes it actually covers.

3. Examine thresholds, cumulative effects and exceptions

A threshold may look like a technical detail, but it helps determine how much influence you have. A high threshold could mean you must bear substantial new costs before consent is legally required.

Check not just the amount or percentage, but also how it is calculated:

• Does the threshold apply per decision, per outlet or per calendar year?
• Are several related changes added together?
• How is anticipated loss of turnover assessed?
• Are both one-off and recurring costs included?
• Who reviews the supporting calculations if there is a disagreement?

Suppose new software, payment terminals and a redesigned counter are made compulsory in succession. Each cost may fall below a contractual threshold, while the combined burden is substantial. Ask for clear provisions on related changes and cumulative costs.

Also watch for exceptions, such as urgent situations or legal requirements. These circumstances may make rapid changes necessary, but a contractual label does not automatically override mandatory legal protections.

4. Check whether consultation gives you real influence

The Dutch Franchise Act requires consultation between franchisor and franchisee at least once a year. Consultation, however, is not the same as consent. A presentation at a meeting does not prove that the required consent has been given.

Ask how proposals, financial consequences, votes and decisions are recorded. Is there a franchisees’ association or franchise council? If so, check its powers: an advisory role does not automatically authorise it to give binding consent on everyone’s behalf.

Speak to existing franchisees about a recent change. When were they given information? Could they suggest alternatives? Were budgets and implementation dates adjusted? Their experiences will show how the franchise community handles differences of opinion.

Before signing, have any uncertainties about thresholds, decision-making and cost allocation resolved in writing. The practical takeaway: do not buy into a franchise system solely as it stands today. Make sure you also understand the conditions under which it can change tomorrow, what those changes could cost you and when your consent matters.