Dutch Franchise Act
Legal clarity and stronger franchise relationships in the Netherlands
Since January 1, 2021, the Dutch Franchise Act (Wet Franchise) has been in effect, following approval by both chambers of Parliament. Its purpose is to strengthen the legal position of franchisees and promote fair, balanced franchise relationships.
If you’re planning to enter the Dutch market, it is essential to understand this law — not only for compliance, but to build long-term trust with future partners.
Four key pillars of the Dutch Franchise Act
The law focuses on four areas that define healthy franchise relationships:
1. Pre-contractual disclosure
Franchisees must receive all relevant information at least four weeks prior to signing the agreement. This includes:
- The full franchise contract and annexes
- Financial obligations and investment levels
- Franchisee consultation structure
- Contact details of other franchisees
- Financial position of the franchisor
- Details about the intended location (if applicable)
2. Mid-term modifications
Franchisors must inform franchisees in advance of changes that may require substantial new investments or could affect revenue. Major changes require approval from a majority of franchisees or those directly impacted.
3. Ongoing consultation
Franchisors are required to meet regularly with franchisees – at least once a year – to ensure open dialogue and collaboration.
4. Termination and goodwill
Franchise agreements must clearly outline how the value of a unit is determined upon exit. It must also specify how goodwill will be allocated between the franchisor and the departing franchisee.
Key provisions to know:
- Stand-still period: A mandatory four-week waiting period before signing, during which no changes may be made or investments required.
- Consent for major investments: Franchisors need franchisee consent for significant financial obligations.
- Transparency on fees: Full disclosure is required on how marketing or IT fees are spent.
- Valuation on exit: The agreement must specify how to calculate business value and goodwill.
- Non-compete clauses: Must be limited to one year and restricted to the franchisee’s exclusive operating area.
- Cross-border application: The law applies to franchisees operating in the Netherlands, even if the franchisor is based abroad. It can be waived only if the franchisee is established outside the Netherlands.
Why it matters
The Dutch Franchise Act enhances transparency, supports collaboration, and promotes sustainable partnerships between franchisors and franchisees. Understanding and adhering to these legal standards is not only a requirement — it’s a competitive advantage when entering the Dutch market.
This summary was developed in collaboration with Koelewijn & Partners, franchise law experts in the Netherlands.