Franchise council: necessity or wisdom?
When developing a franchise organization, the usefulness and necessity of a franchise council is invariably discussed. One of the first questions that comes to mind is whether a franchise council is mandatory. The answer is no. There is no legal rule that requires the franchisor and franchisee to establish a franchise council. However, the widely held view is that a franchise council is of course very useful. Such a council is usually set up when there are five and ten franchisees respectively. However, is it now necessary in that situation to actually move to a franchise council?
Not in itself. A franchise council is nothing more or less than a means of communication between the franchisor and franchisees. In a mature franchise council, ideas are exchanged on various topics such as purchasing, marketing, market development, etc. However, this consultation can also take place in another way. For example, (informal) consultation can take place on various topics with all franchisees together, or with a relevant part of them. This can take place in a form-free meeting. It is of course also possible to record this. It is primarily important that the franchisor and franchisee exchange ideas openly and that the parties express their concerns about their concerns. It is important that this opportunity is provided in all openness. If this happens, then strictly speaking it may not even be necessary to formally structure the consultation in the form of a franchise council. This also means that it is wise to set up a franchise council at some point. A good franchise council meets at least a few times a year. The sitting franchisees are ideally delegated by their own supporters, so that their contribution is made democratically. In practice, however, it is not always easy to find willing candidates and it is necessarily chosen that the franchisor itself recruits and appoints the candidates.
Spontaneous consultation can therefore fulfill the same function as a well-functioning franchise council. It is important that this is actually implemented regularly and that there is sufficient opportunity to do so.
Ludwig & Van Dam franchise attorneys, franchise legal advice
Other messages
Article in Entrance: “New owner”
“The catering company where I work has been taken over. The new owner now says that I no longer have to work for him, but can he refuse me as an employee?”
Directors’ liability in the settlement of a franchise agreement
Privately, can the director of a franchisee legal entity be liable to the franchisor if the franchisee legal entity wrongfully fails to provide business to the franchisor?
Column Franchise + – mr. Th.R. Ludwig: “Towards strict liability”
The Supreme Court recently ruled in a prognosis issue.
Article in Entrance: “Rentals”
“The landlord increased the prices of the property every year, but he hasn't done this for 2 years, maybe he forgets. Can he still claim an overdue amount later?”
No valid appeal to non-compete clause in franchising
On 28 February 2017, ECLI:NL:RBGEL:2017:1469, the provisional relief judge of the District Court of Gelderland ruled on whether a franchisee could be bound by a non-compete clause.
Structurally unsound revenue forecasts from the franchisor
On 15 March 2017, the District Court of Limburg ruled in eight similar judgments (including ECLI:NL:RBLIM:2017:2344) on the franchise agreements of various franchisees of the P3 franchise formula.