Franchise sector in Holland is booming in recent years. Franchising is especially popular in the retail industry where the fast-food franchise is the best example. In the Dutch market, there are no limitations for foreign investors while expanding franchises. That is the main advantage of starting a franchise in Holland.
Holland has no special legislation for franchising. Civil Code of Holland states the principles of governing franchises there. Also, there are multiple laws that dictate how those principles are applied to franchises. Another category of laws, that are applicable to franchise contracts, includes IP laws, laws on competition, laws on employment, and others. Traditionally, franchisees do not act on behalf of franchisors, and both of these groups are independent.
Holland’s most usual franchise models are:
- Franchisors have full control over the franchise
- Franchisees have a freer hand while using the franchise.
When it comes to foreign investors, the best choice in Holland for them would be registering a franchise as a PLC. By doing so, it is not necessary for the investors to fulfill the company’s obligations neither face a lot of formalities.
The franchise agreement in Holland must include the type of franchise, what know-how will be used, and other provisions of a general character. Technically, it is not a must to register a franchise agreement in Holland. Also, the agreement requires no formal obligations.
It is usually needed to pay certain fees for concluding a franchise agreement in Holland:
- Franchise fees
- Subscription fees
- Marketing fees
- Rent payments
- Cost of products bought from the franchisors.
According to the Dutch jurisdiction, the franchise agreement does not need to be necessarily prolonged. The franchise contract can be considered terminated when it expires.
Franchisors have a right to end the agreement and even require reimbursement if the franchisee misappropriated trade secrets or IP. In order to prevent franchisees from using objects of IP illegally, franchisors need to file a lawsuit sometimes.
Taxation in Holland
Corporate tax law is applicable to all domestic and foreign companies with a permanent office in Holland. Companies established permanently in Holland are supposed to pay taxes based on their income made in Holland. On the opposite side, if the franchisor does not own a representative office in the country, their earnings in Holland will not be taxed.
Usually, the contract would state which resolution procedure should be used in case of a dispute. Additionally, companies can resolve their financial disputes by using arbitration. For using this means, parties do not need to be related to any specific jurisdiction.
In case of violating the franchise agreement by one side, the other one can report this to the FDC and ask for advice on how to proceed with dispute resolution in Holland.
Decisions of foreign courts
Holland recognizes the decisions rendered by the courts of the European Union. Parties can prefer arbitration as for resolving international disputes in Holland. Awards rendered by foreign courts can be enforced in Holland because the country is a signatory to many international treaties.
If you are planning to purchase a franchise or register a company in Holland, contact COREDO and our specialists will answer all your questions.