Extra protection for Belgian supermarket franchisees
The Belgian legislator has issued the Royal Decree of June 20, 2024 for franchise contracts in the food sector (supermarkets), where the franchisors are typically in a much stronger position than their franchisees. This new legislation complements the existing law of 2020 that prohibits “unfair contract terms” in a commercial cooperation agreement. For this type of agreements, a special protection of the weaker party is also granted by “precontractual information obligations”.
Key elements:
Blacklist (presumed unfair, unless proven otherwise):
–Prohibiting the franchisee to claim an indemnity or to source from other suppliers, if franchisor fails to fulfill its delivery obligations.
-Restricting the franchisee from preparing new business activities during notice or non-compete periods.
-Obliging the franchisee to cover more than half of the promotional costs imposed by the franchisor.
–Jurisdiction clause appointing the courts in the franchisor’s location or the courts of another language area than the franchisee’s location.
Gray List (presumed unfair, unless proven otherwise):
-Pre-emption right or option for the franchisor to take over the franchisee’s business at unbalanced terms.
-Prohibiting or restricting the franchisee to discontinue its business if it has been structurally loss-making for over 12 months.
-Allowing franchisors to terminate the franchise agreement based on an immediate cancellation clause.
The new rules will apply as from January 1, 2025 to all new franchise contract in the relevant sector. For existing contracts, there will be a transition period until May 1, 2025.
In case of a breach of this law, the relevant contract clause will be void. Moreover, the validity of the entire agreement could be at stake if the void clause(s)s was(were) essential elements of the agreement.
Barbara Terriere, IDI Country Expert for distribution in Belgium
