On Tuesday 16 June, the Dutch the House of Representatives approved of the legislative proposal to adopt the Franchise Act, including a motion and two amendments that were submitted by members of Parliament last week.
The objective of the first amendment is that the Franchise Act will be evaluated and a report will be published on its effectiveness and practical impact, within four years after its entry into force of the Franchise Act. The report is to address in particular the effects on the growth of the franchise sector and the scope for innovation and cooperation. The second amendment prevents deviations from the Franchise Act to the detriment of franchisees established in the Netherlands, even if the franchise agreement is governed by a foreign law (whereby the question arises if this entails the entire Act or just article 920 regarding goodwill and non-compete clauses). Deviation is permitted to the detriment of franchisees established outside the Netherlands, also if Dutch law is applicable to the franchise agreement. It is noteworthy that the commentary to this amendment states ‘franchisees active' or 'operating outside the Netherlands'. In our view this is not the same as ‘established’, but further clarification is not provided.
The motion calls for the creation of a consultative body of franchisors and franchisees to bring together representatives of franchisors and franchisees to encourage reaching agreement and come to model agreements for the implementation of the open norms as set out in the Franchise Act.
The next step in the legislative process is the debate and voting in the Dutch Senate. For more information on the content and background of the Dutch Franchise Act, please view our previous articles.
