Real Estate and Franchise
Real Estate and Franchise
Real Estate and Franchise are like pepper and salt, an (almost) inseparable pair. But beware: different legal regimes apply to Franchising and Real Estate, which you must take into account when drawing up a franchise and/or rental agreement.
Rental versus franchise agreement
In franchise relationships, business space is usually provided by the franchisor, so that the franchisor retains control of the locations. This is often done via a separate (sub)lease agreement.
The starting point here is that the rent protection provisions of the Dutch Civil Code apply to the sublease agreement. Those provisions are mandatory and you often cannot work around, which can (for example) create a situation where you can dissolve the franchise agreement, but not the (sub)lease agreement. In addition, commercial property tenancy law stipulates a statutory term of 5 + 5 years, which cannot be deviated from to the detriment of the tenant.
Link between rental and franchise agreement
To reduce this uncertainty, the franchisor and franchisee have the option of including a “link clause” in the rental agreement (and the franchise agreement). In this you include that the rental agreement ends when the franchise agreement ends and (if applicable) that the term of the rental agreement is equal to that of the franchise agreement. To get even more certainty about the validity of the linking clause, you can submit it to the subdistrict court judge for approval.
The subdistrict court will not automatically grant that request. The subdistrict court judge will consider whether the position of the tenant is not materially affected and whether the social position of the tenant compared to that of the landlord is such that he does not reasonably need the protection of semi-mandatory tenancy law.
Ludwig & Van Dam franchise attorneys have great expertise in this area. If you are negotiating or drawing up a rental agreement as a franchisor and/or franchisee, please let us know. We are happy to advise you on this matter.