Changing your franchise model: agree the consent process in advance

In your own business, you can usually introduce a new till system or shop layout yourself. Once you work with independent franchisees, that changes. A change to the franchise model can affect their costs, investment requirements and turnover. Establish a clear decision-making procedure before signing your first franchise agreement. This gives your franchise network room to innovate without presenting business owners with unexpected decisions they have had no say in.

1. Distinguish day-to-day operations from changes to the franchise model

Start by listing changes you may want to introduce over the coming years. These could include centralised ordering software, a new visual identity, revised opening hours or a different product range. For each change, describe what you want to decide centrally and where franchisees will retain discretion.

Then distinguish between implementing existing arrangements and introducing new obligations. Replacing faulty equipment under an existing maintenance agreement is not necessarily the same as requiring every outlet to buy a new production system. What matters is the substance and impact of the decision, not the label you give it.

For each proposed change, record:

• What problem will the change solve?
• Which outlets will be affected?
• What investment, costs or effects on turnover do you expect?
• What alternatives have been explored?
• Who has the authority to make the decision, and on what basis?

This helps prevent a general clause on ‘uniformity’ from being wrongly treated as a licence to introduce any change.

2. Understand when the Dutch Franchise Act requires consent

The Netherlands has specific franchise legislation: the Dutch Franchise Act (Wet franchise), incorporated into Book 7 of the Dutch Civil Code, Articles 7:911 to 7:922. Its provisions cannot be varied to the detriment of franchisees established in the Netherlands.

Article 7:921 of the Dutch Civil Code provides a specific right of consent. It applies where you intend to use a contractual power to change the franchise model, or to operate a derivative model without amending the franchise agreement, and the proposal has certain financial consequences.

These include required investments, fees or other financial contributions payable, other costs and reasonably anticipated loss of turnover. If these exceed the applicable thresholds set out in the agreement, prior consent is required. If the relevant thresholds have not been specified, this consent requirement applies regardless of the scale of the financial consequences concerned.

The law offers two routes: consent from a majority of franchisees established in the Netherlands, or consent from every franchisee established in the Netherlands that will experience the relevant financial consequences of the proposal. A loss of turnover therefore does not automatically trigger a different voting rule from an investment requirement.

This statutory mechanism does not replace ordinary contract rules. If you have no authority to change an obligation unilaterally, you may need to amend the agreement. Have a lawyer specialising in franchise law assess this in advance.

3. Make financial thresholds practical and verifiable

Do not copy a standard threshold without checking what your outlet model can bear. An amount that is modest for your own large outlet could place a significant burden on a smaller franchisee.

Discuss how to frame the thresholds with your lawyer and financial adviser. Explain separately how investments, contributions, other costs and loss of turnover will be assessed. Specify the assessment period and how related measures will be treated. Avoid artificially splitting one large project into a series of smaller decisions.

For example, work through a switch to centralised ordering software in full. Include not just the purchase price, but also subscriptions, data migration, training and temporary disruption to operations. Substantiate any projected savings separately: future benefits are not guaranteed.

Test the arrangements against outlets of different sizes. Can a franchisee work out when consent is required? Can you substantiate the same conclusion? If not, the provisions are not yet clear enough.

4. Arrange consultation before there is a final proposal

The Dutch Franchise Act requires consultation between franchisor and franchisee at least once a year. You must also provide timely information about proposed contractual changes and other developments covered by statutory information requirements. A single annual meeting is therefore no substitute for timely communication about a specific change.

Follow a consistent sequence: discuss the problem first, explore alternatives, then present a substantiated proposal. Give franchisees the opportunity to ask questions and assess the impact on their own outlets.

When requesting consent, set out in writing what is being voted on, whose consent is required under the chosen statutory route and when responses are due. Do not simply treat silence as consent. Record the outcome and retain the calculations supporting the decision. A formal procedure is no less important when you have only one franchisee.

5. Make implementation conditional on a completed decision-making process

Do not order equipment that franchisees will be required to use or promise suppliers a firm implementation date before you know what decision-making process is needed. Allow time in your schedule for research, consultation, consent and any amendments to the agreement.

Once a valid decision has been made, draw up an implementation schedule, assign clear responsibilities and set a review date. Check whether actual costs and effects on turnover differ from the assumptions. This will provide better information for the next change.

Practical takeaway: work through one realistic change to your franchise model in full before signing your first franchise agreement. If the authority to act, financial consequences, thresholds and consent process are clear, you will have a practical foundation for the responsible growth of your franchise network.