IS YOUR AGREEMENT REALLY A FRANCHISE AGREEMENT?

Franchise Act: the classification issue

Your agreement may not be titled a ‘franchise agreement’, but the court may nevertheless classify it as such, and vice versa. Since 1 January 2021, franchise agreements have been specifically regulated under the Civil Code (BW). The Franchise Act introduced a protective framework for franchisees: from the pre-contractual information document and the standstill period to rights of consent, goodwill agreements and non-competition clauses. All this protection applies to those who are actually covered by the Act. The first, fundamental question is therefore whether your agreement qualifies as a franchise agreement within the meaning of Article 7:911 of the Civil Code.

What does the law say?

Section 7:911(1) of the Dutch Civil Code defines a franchise agreement as an agreement whereby the franchisor, in return for consideration, grants the franchisee the right and imposes the obligation to operate a franchise formula in the manner designated by the franchisor for the production or sale of goods or the provision of services.

The classification process

The following applies first and foremost to any question of classification: the title given to an agreement by the parties is not decisive. A party that refers to an agreement as a ‘distribution agreement’ may still be subject to the Franchise Act, and vice versa. What matters most are the rights and obligations agreed upon by the parties.

The classification process comprises two phases: the interpretation phase and the classification phase. In the interpretation phase, the rights and obligations agreed by the parties are determined on the basis of the Haviltex test. This involves not only a linguistic interpretation, but also what the parties could reasonably have inferred from each other’s statements and conduct.

Once the content of the agreement has been established, the classification phase involves assessing whether these rights and obligations meet the legal definition of a franchise agreement. If they do, it constitutes a franchise agreement; even if the parties never intended it to be so. Their intention is irrelevant to the classification; what matters are the objective characteristics of the agreement.

Qualification issues in case law

The question of classification is frequently the subject of debate in practice. This was also the case earlier this year in summary proceedings before the Midden-Nederland District Court. The defendant had terminated the cooperation agreement with the claimant before the agreed expiry date. According to the claimant, that termination was not legally valid, as it concerned a franchise agreement that could not be terminated without good cause. The claimant’s claim for specific performance was dismissed, as it was unclear exactly how the cooperation agreement should be classified. Summary proceedings were not suitable for this matter.

The question of classification is also on the agenda at the highest level. On 28 May 2026, Advocate General Van Peursem’s opinion was published in the cassation proceedings concerning Stellantis’s dealer and repairer agreements. A detailed discussion of these submissions is beyond the scope of this article, but in essence it boils down to the fact that, although Stellantis’s agreements have ‘franchise-like characteristics’, they do not meet the legal definition of a franchise agreement. These submissions are well worth reading.

Characteristic of a franchise

The decisive factor in classifying an arrangement as a franchise is whether the business owner is actually operating a franchise system or is primarily part of a distribution network. According to the Advocate General, the essence of a franchise is that the franchisee is granted the right and the obligation to operate the franchisor’s business concept. The system must be instrumental in establishing a uniform identity and image for the businesses. The imposition of (many) regulations does not in itself make an agreement a franchise agreement.

Conclusion

Remember: the name of an agreement is not (the only) thing that matters; what matters are the objective rights and obligations of the parties. Does your agreement qualify as a franchise agreement? If so, the Franchise Act applies. If not, the protective provisions of that Act do not apply, even if the collaboration bears a striking resemblance to a franchise.