Five years of the Dutch Franchise Act: consultation and information take centre stage

More than five years after the Dutch Franchise Act came into force, information disclosure, consultation and termination remain key concerns for the Netherlands’ franchise sector. Law firm Damsté published a review of the Act on 5 November 2026. Its central message is that care is needed not only in drafting the contract, but also in how franchisors and franchisees work together day to day.

Ground rules for the entire relationship

The Dutch Franchise Act came into force on 1 January 2021 for new franchise agreements. From 1 January 2023, it also applied in full to existing agreements. The Act aims to create a more balanced relationship between franchisors and franchisees, with greater transparency, better information disclosure and clearer arrangements for working together and ending the relationship.

Damsté’s review does not announce new regulations. Instead, it brings together the obligations that apply at different stages of the franchise relationship: before signing, during the relationship and when parting ways. The overview makes clear that compliance does not end once the signatures are on the page.

The rules apply both to franchise systems that allow considerable business autonomy and to those that prescribe operating procedures in detail. In either case, the franchisee remains an independent business owner operating for their own account and at their own risk. That independence comes with both statutory protection and responsibilities of their own.

Four weeks to make an informed decision

Before entering into an agreement, both parties have disclosure obligations. The prospective franchisee must provide timely information about their financial position. The franchisor must supply, among other things, a draft agreement, an overview of the fees payable and information about its own financial position.

This is followed by a statutory period of at least four weeks. This standstill period gives the prospective franchisee time to assess the documents. According to the review, the franchisor may not enter into the agreement during this period or induce the prospective franchisee to make payments or investments. The period cannot be shortened, even if both parties wish to do so.

For prospective business owners, this is therefore more than a waiting period. Alongside the franchisor’s disclosure obligations, the franchisee has a duty to carry out their own due diligence. They must investigate the viability of the business. Damsté cites a location feasibility study as one example.

In practice, this means that the information received must actually be assessed. Prospective franchisees need not only to understand the fees being charged, but also to investigate whether the proposed business is viable. The firm notes that carefully documenting this preparatory stage is also an important consideration for franchisors.

Annual consultation and clarity on contributions

Throughout the agreement, the parties must act as a good franchisor and a good franchisee. Damsté refers here to Article 7:912 of the Dutch Civil Code. As well as its own interests, the franchisor must take account of the interests of the franchise system and the individual franchisee.

Consultation must take place at least once a year. The franchisor must also provide an annual financial account of how surcharges and contributions have been spent. This creates a regular opportunity to discuss not only plans, but also the flow of money within the relationship.

Another key issue is the right to consent to changes with financial consequences. The review stresses the importance of carefully drafted financial thresholds in the agreement. For changes covered by this statutory consent requirement, those thresholds help determine when consent is needed. If no threshold has been set, even a limited financial impact may be relevant.

According to Damsté, new investments, online sales and changes to the franchise system can raise fresh questions about information, consultation and consent. The firm also describes the emergence of more organised consultation structures, such as franchise councils and franchisee associations. These give consultation an established place within the franchise sector.

Lawful termination can still carry a cost

When ending a relationship, it is not always enough to look solely at the notice period. Damsté discusses 2024 judgments by the Dutch Supreme Court concerning Leen Bakker and four franchisees. The termination was legally valid because the contractual provisions and notice period had been observed. However, that did not mean the relationship could be ended without cost.

According to the review, the long-standing relationship, expectations created and ongoing investments played a role in the obligation to pay compensation. Whether compensation must be offered at the same time as notice is given depends on the circumstances. Where the reason for termination lies entirely with the franchisor, Damsté says compensation is likely to be required.

Practical lesson: treat the franchise agreement as an ongoing framework for working together. Before signing, assess the information provided and the business’s viability; during the relationship, document consultation and financial reporting; and when ending it, consider any potential compensation as well.