Linking rental agreement and franchise agreement: new legislation

The new tenancy law is expected to come into force in a few months’ time. This has consequences for the link between the duration of the rental agreement and that of the franchise agreement.

In a contribution to this newsletter from a few months ago, attention has already been paid to the link between the duration of the (sub)lease agreement between franchisor and franchisee and that of the franchise agreement concluded between the parties. Such a link constitutes a deviation from the mandatory rental regime from the Civil Code. Approval from the subdistrict court is required for such a deviation.

Under the current regulations, the court will only approve a deviating clause based on the special circumstances of the case. This is a fairly general criterion that is broadly interpreted in practice. As a result, under the current regulations, the subdistrict court usually grants its approval for a clause in which the duration of the sublease agreement is linked to that of the franchise agreement.

The new tenancy law maintains the system of compulsory tenancy protection for the tenant for a period of five + five years. Approval from the subdistrict court remains necessary.

 However, a new criterion is used on the basis of the new regulations. Approval will only be given if the deviating clause does not substantially affect the rent protection that the tenant (franchisee) has, or if the social position of the tenant compared to that of the lessor is such that he does not reasonably need the rent protection. If one of these conditions is not met, the approval by the subdistrict court judge will not be granted. Compared to the current regulations, approval by the subdistrict court is expected to be refused more often. After the entry into force of the new regulations, practical experience will first have to be gained in order to ultimately be able to assess in which cases approval will be granted for linking the duration of the (sub)lease agreement to that of the franchise agreement.

In conclusion, it must be stated that the possibilities to link the duration of the (sub)lease agreement and that of the franchise agreement will probably be limited under the new regulations

Ludwig & Van Dam franchise attorneys, franchise legal advice