Franchising is an established way of cooperation between independent companies – the franchisor and the franchisee – that offer products and services under a common name and similar outward appearance. For an agreed amount (the franchise fee) the franchisor allows the franchisee to use their business formula.
Franchising is actually a form of distribution. The franchisor has developed a product or service and wants to sell these. Moreover a formula has been developed to sell the products or offer these services. This formula will include such things as a brand name, a logo, a certain range of products, the way advertising is executed and (after-sales) service. The franchisor, often operating several branches according to this formula (such as Douwe Egberts and HEMA), provides third parties with the formula for a fee. The franchisees then run their own businesses according to the formula, with (a.o. commercial) support by the franchisor.
In drafting and the subsequent compliance with franchise agreements, several general issues may arise. It is not always clear for a franchisee what obligations the franchisor may impose, if the franchise agreement can simply be terminated and whether a party that terminates the franchise agreement is liable for damages. Another common question is whether the franchisee can transfer the franchise agreement to a third party.
GMW advocaten can assist both franchisors and franchisees with our know-how of franchise and has various in-house specializations (such as rent law, contract law, insolvency law and intellectual property) resulting in the best possible advice on franchise law issues. We have extensive experience in drafting franchise agreements and can assist you with negotiations / litigation.
Do you have questions about franchise agreements or would you like to discuss a case? Please contact the Company and Insolvency section.