Changing regulations and cooperation conditions of the Franchise Council

Most franchise organizations have a franchise council. Numerous subjects are discussed in this franchise council, such as product innovation, marketing, automation, training, etc. The practice has franchise councils in many shapes and sizes.

A franchise council is usually of an advisory nature and its working method is further regulated in regulations drawn up for this purpose. It also happens that franchise councils function without regulations, often with success in practice.

What to do if the franchisees and the franchisor want to change their common working method? In itself, this can only be done by mutual consent. For example, if franchisees and franchisor are of the joint opinion that decisions of the Franchise Board can also be made outside the meeting, then this is only possible on the basis of consensus and unanimity. This all seems logical and relatively simple. However, things get more complicated when the interests of the individual franchisees who are not on the board are brought into the equation. This is quickly the case with regional representation. If it is decided within the Franchise Council to deal with advice relating to marketing and promotion in a certain way, other than previously regulated in, for example, the Franchise Council regulations, and this affects the individual interests of an individual franchisee who is not represented in the Franchise Council , then the rules can only be changed with the consent of all individual franchisees. This shows that in all cases it is necessary for the franchise council to be of an advisory nature and that individual agreement based on the franchise agreement is important if this actually results in far-reaching changes for an individual franchisee. The individual relationship between the franchisee and the franchisor is therefore binding. The Franchise Council therefore cannot and may not make decisions for fellow franchisees, unless this covers a limited number of subjects that are permitted under competition law.

The same applies to the phenomenon that sometimes occurs over time that the board of the franchise association is (suddenly) presented as the representative representation of the franchisees as being the franchisees sitting in the franchise council. The regulations usually do not provide for this without further ado. Changes to the regulations are then necessary, whereby the individual franchisees must then agree, with explicit observance of the above.

Demarcation of the competence of the franchise council, in particular in relation to the individual franchise agreement, is therefore of eminent importance both in advance and in the interim.

Ludwig & Van Dam franchise attorneys, franchise legal advice

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