GF Issue 54

from the Dutch Franchise Association, the franchise industry in the Netherlands is thriving, with more than 1,300 franchise systems currently operating in the country – a remarkable growth of 10% over last year. This provides over 34,000 franchise locations, more than 375,000 employees, and a total annual revenue exceeding €55 billion. “The Netherlands has an attractive business climate for international organizations,” says Charlotte Oude Reimer, director of the Dutch Franchise Association. “We have a very diverse population, and the location between Germany, Belgium, and the North Sea is ideal for reaching every part of Europe.” Dutch consumers are also very familiar with international brands thanks to the country’s reliance on foreign trade, and 90% of the population speaks English, with many being multilingual. The Dutch Franchise Act 2021 But before you pack your bags and head to the Netherlands, be mindful of regulations in the country which affect all franchisors, both domestic and international. “The franchise law became effective for new franchise contracts in January 2021,” explains Reimer. “The law is mandatory and affects pre- contractual information provision, information exchange on changes during the contract period and postcontractual agreements.” One of the key things that the Dutch Franchise Law introduced was the legal definition of a franchise: “an agreement whereby, in exchange for a fee, the franchisor provides the franchisee the right and obligation to exploit a franchise formula in a designated manner for the production or sales of goods or the performance of services.” This shouldn’t contain any surprises for established franchising professionals, but the legal definition’s sheer existence is an important factor that differentiates the Netherlands from other European markets that remain largely unregulated. As well as providing this definition, the Dutch Franchise Act stipulates that franchisors must provide franchisees with a disclosure document at least four weeks prior to the date that the agreement will be concluded. It also requires that the franchisor must inform franchisees of any intended amendments to the franchise agreement, as well as any information that is important to the franchisee when carrying out the agreement. A lot of these requirements are commonly seen as good faith requirements elsewhere in Europe. Part of the reasoning behind the Dutch parliament introducing the Dutch Franchise Act was because franchising as a model was seen as highly valuable to the Dutch economy, but franchisors were previously viewed as much more dominant in the agreement than franchisees. The act rebalanced that dynamic. ITALY: an up-and-coming franchise destination Franchising has been constantly developing in Italy over the last 30 years and is increasingly becoming a profitable investment for foreign franchisors. Italy represents an important world market with a population of nearly 60 million, most of whom enjoy a higher standard of living compared to many other countries. According to Assofranchising – the main franchising association in Italy – franchising is one of the main sectors in the Italian economy, with an average yearly increase of 5%. The 2021 turnover of the Italian franchising industry stood at €28,867 million, a growth of 6.7%, reflecting the trend of the Italian GDP. The Italian market is increasingly attractive to foreign franchisors with its huge, untapped potential. In fact, franchising has grown relatively later in Italy than other EU nations, resulting in wide market possibilities and investment opportunities. The main indexes considered by international decision makers confirm that Italy “In 2022, there were 1972 franchise networks in France and 84,497 franchised outlets, representing a turnover of €76.6 billion” INS IGHT 72 GLOBAL FRANCHISE | ISSUE 8.2