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The Franchise Memorandum

New Laws in Belgium and Netherlands Impact Franchise Regulations

Laws that just became effective in Belgium and Netherlands may have a major impact on how franchisors conduct business there. On December 1, 2020, Belgium’s Unfair Contract Terms law, which regulates B2B and franchise contracts, among others, went into effect. Unfair contract terms are divided into those on a “black list,” which are per se void and unenforceable, and “gray list” terms, which carry a rebuttable presumption of unfairness. Black list terms include limitations on remedies available to a franchise in a dispute with its franchisor, as well as terms that give a franchisor discretion to perform its obligations to a franchisee while requiring a franchisee to perform regardless of the franchisor’s performance.

The Netherlands franchise law became effective January 1, 2021. It requires preparation of an FDD, which must include specified information, and all other information that a franchisee might consider important to making a franchise investment. Franchisors must disclose limitations on their right to increase fees or investments franchisees must make during the term of the franchise agreement. Additional fee and investment requirements are not enforceable unless a majority of franchisees agree to the changes. The regulation of additional fees and investments will apply to all new and existing agreements on January 1, 2023.

Lathrop GPM’s latest issue of Global Franchise Regulation Update, which can be accessed here, also contains information about recently enacted laws in Ecuador and Romania, and surveys all known franchise regulations proposed or adopted since January 2019.

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The information contained in this post is provided to alert you to legal developments and should not be considered legal advice. It is not intended to and does not create an attorney-client relationship. Specific questions about how this information affects your particular situation should be addressed to one of the individuals listed. No representations or warranties are made with respect to this information, including, without limitation, as to its completeness, timeliness, or accuracy, and Lathrop GPM shall not be liable for any decision made in connection with the information. The choice of a lawyer is an important decision and should not be based solely on advertisements.

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The Franchise Memorandum is a collection of postings on summaries of recent legal developments of interest to franchisors brought to you by Lathrop GPM LLP. 

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