Recent years have seen a genuine boom in Holland’s franchise sector. One of the most popular franchising areas is retail where fast food franchises have been mushrooming at a staggering rate. One of the advantages of opening a franchise in Holland is that foreign investors face no problems with expanding franchises in the Dutch market.
There’s no franchise-specific legislation in Holland. Therefore, franchises are governed in accordance with the principles laid forth in the country’s Civil Code. There are also quite a few laws in which those principles are adapted to franchise contracts. Other laws may also apply to franchising, and those may include, for instance, laws on IP, laws on employment, laws on competition, etc.
As a rule, franchisors & franchisees are totally independent, with franchisees not acting on behalf of franchisors.
Two franchise models are common in Holland:
- one in which franchises are fully controlled by franchisors
- one in which which franchisees have more freedom with regard to using their franchises
For foreign investors, the best option would be to register a franchise in Holland as a PLC. By registering a PLC in Holland, investors do not have to honor the company’s obligations & face relatively few of formalities.
Concluding a Franchise Agreement in Holland
Concluding franchise agreements in Holland requires including in them information about types of franchises, know-how used & other general provisions. Registering a franchise agreement in Holland isn’t a prerequisite; the agreement requires meeting no formal requirements, either.
Normally, concluding a franchise agreement in Holland requires franchisors to look into potential franchisees’ liquidity & solvency. They can also examine the franchisee’s location in order to make sure of its competitiveness.
Concluding franchise agreements in Holland usually entails these fees:
- subscription fee
- franchise fees
- marketing fees
- prices of products purchased from franchisors
- rent payments
Dutch law contains no provision regarding extension of franchise agreements. Thus, a contract is considered terminated upon its expiration.
Breach of Obligations
Should franchisees misappropriate IP or trade secrets, franchisors can terminate the agreement & demand compensation. They can also file a lawsuit to prevent franchisees from illegally using objects of IP.
Taxation of Franchises in Holland
Domestic & foreign companies with permanent establishments in Holland must abide by corporate tax law. If franchisors have a permanent office in Holland, they will be taxed based on the profit they earn in Holland. If franchisors have no representative office in Holland, their profit won’t get taxed.
It is usually stipulated in the contract which dispute resolution procedure will be applicable. Also, parties can often resort to arbitration to resolve commercial disputes in Holland. For this, they do not have to be connected with any particular jurisdiction.
If one party accuses the other of breaching a franchise agreement, it may report to the FDC & seek advice on ways of settling a dispute in Holland.
Decisions Rendered by Foreign Courts
Decisions rendered by EU courts are recognized in Holland. When it comes to resolving international disputes in Holland, parties may choose arbitration. Since Holland is a signatory to a number of international treaties, awards rendered by foreign courts are enforceable in Holland.
Interested in registering a company in Holland? Thinking of buying a franchise in Holland? Consider contacting IQ Decision UK. Our lawyers will be happy to answer all your questions.