Franchising is “a bottleneck in tackling healthcare fraud” – dated 10 June 2020 – mr. AW Dolphin

According to the various supervisory authorities in the healthcare sector, franchise constructions can be seen as non-transparent
business construction in which the supervision of professional and ethical business operations of healthcare providers is limited. That’s franchising
according to them a bottleneck in the approach to healthcare fraud.

According to established case law, a franchisor cannot be regarded as a healthcare provider within the meaning of the Healthcare Quality, Complaints and Disputes Act (Wkkgz). In concrete terms, this means that the franchisor cannot be regarded as ultimately responsible for providing good care, including the administrative and financial preconditions for this. Final responsibility lies with the franchisees, while the franchisor uses the franchise formula to determine the framework within which the franchisees provide care.

Health care fraud

It has been pointed out that it would be impossible to gain insight into the financial flows of a franchisor. It is further stated that experience shows that franchisors can receive considerable remuneration by operating one or more healthcare formulas. Franchisees can only finance these fees from their healthcare activities and therefore from healthcare funds, according to the supervisory authorities. This lack of transparency is all the more a problem now that there are no powers to take enforcement action against franchisors as healthcare entrepreneurs if the standards of the regulators are not met. An example is given of situations involving improper or inefficient spending of healthcare funds. 

Legislation to tighten supervision of franchising

The Social Affairs and Employment Inspectorate (SZW Inspectorate), the Health and Youth Care Inspectorate (IGJ), Health Insurers Netherlands (ZN), the Care Needs Assessment Center (CIZ), the Association of Dutch Municipalities (VNG), the Social Insurance Bank (SVB), In a letter from the end of 2019 to the Minister of Health, Welfare and Sport, the Public Prosecution Service (OM) and the Dutch Healthcare Authority (NZa) argued for more opportunities for closer supervision of franchisors in the healthcare sector. According to them, legislation to strengthen public law supervision is necessary. The bill of the Care Providers Accession Act (Wtza) and the bill for Ethical Business Operations of Care Providers (Wibz) tighten the legal requirements for the business operations of care providers. The Whhgz is also evaluated.

Preventive screening of franchise construction

Ludwig & Van Dam Advocaten is an experienced legal specialist in the field of franchising and advises franchise organizations in the healthcare sector to have their franchise construction examined for possible bottlenecks. In this way, any necessary transitions can be implemented in a timely manner. This is not only necessary for the preservation of the franchise organization of the franchisor, but also because of the duty of care that franchisors have towards their franchisees.

mr. AW Dolphijn – franchise lawyer

Ludwig & Van Dam Franchise attorneys, franchise legal advice. Want
you respond? Go to

dolphijn@ludwigvandam.nl