As of 1 January 2021, the Dutch Franchise Act (DFA) is applicable. Pursuant to the DFA, parties are not allowed to deviate from the Dutch Franchise Act to the detriment of a franchisee based in the Netherlands, even if the franchisor is not based in the Netherlands itself and even if the formula is international.
Theoretically, it is legally possible to agree on the applicability of, for example, the laws of Germany to the franchise agreement with a Dutch franchisee. It is furthermore possible to agree that any disputes between parties will be settled before a German court. However, the DFA remains applicable at all times, no matter what the so called governing law and disputes clause in the agreement may stipulate.
By nevertheless opting for German law, in the event of a dispute you would be faced with the strange situation that a judge will have to apply German law and at the same time must take into account the Dutch Franchise Act. This is quite difficult for the judge, because the DFA forms a part of and is embedded in a larger system of laws (the Dutch Civil Code) and thus cannot easily be applied in isolation therefrom within the principles of German law. And because it is difficult for the judge, for the lawyers and the parties themselves it is hard to predict the outcome of the case and this will lead to more complicated, lengthy and costly proceedings for both parties (parties will furthermore each need to hire two lawyers: both Dutch and German).
In short: since there is no way around the DFA anyway, for both the foreign franchisor and the Dutch franchisee it is better, easier and cheaper to keep it simple and opt for Dutch law and the Dutch courts.
Would you like more information on Dutch franchise law? Please contact Daphne Jerphanion: email@example.com or the other franchise specialists of Valegis Advocaten.