As soon as you choose to become a franchisee, you enter into a partnership with a large real estate brand. This model offers numerous advantages. You benefit, for example, from your franchisor’s brand recognition and from their proven methods, but there are also certain responsibilities you will have as a franchisee. There is, however, no specific legal framework for franchises in Belgium. In most cases, you will need to rely on the franchise agreement. Here is a summary of the various rights and responsibilities of both parties under the franchise agreement.
As stated earlier, there is no legal notice defining the rights and responsibilities of franchises in Belgium. There are, however, still some essential obligations between the two parties. On the franchisor’s side, their duties focus on assisting the franchisee. Here are three things to be aware of:
First, the franchisor must share their expertise with the franchisee. Expertise is defined by European regulations as “a secret, substantial and identified set of non-patented practical information, resulting from the supplier’s experience and tested by the supplier.” (European Regulation n° 330/2010 article 1er, §1, g). This definition implies that the expertise changes according to the type of business and therefore the type of franchise. It covers, for example, the layout of the store, its exterior design, and its management. In the case of a real estate franchise, the methods that contribute to the franchisor’s success as well as its business model are part of this expertise.
Second, in Belgium the franchisor has an obligation to assist the franchisee. It furnishes “important and useful methods for the sale of products and services upon entering into the contract”. As such, it allows the franchisee to launch their business under the most advantageous conditions. For example, initial and ongoing training may be offered.
Third, the Belgian franchisor agrees to respect the exclusive territory of the franchisee if the contract contains an exclusivity clause. In this case, the franchisor agrees to not employ a similar business in the defined territory, and also to not grant use to another franchisee. If no such clause exists in the contract, however, the obligation to carry out the contract in good faith may provide a minimal level of protection to the franchisee, as it may require the franchisor to refrain from any behaviour that could compromise the success or profitability of its franchisee.
If the franchisor’s obligations to the franchisee guarantee assistance to help ensure its success, the franchisee also has certain obligations. Here are the three most essential:
First, the franchisee agrees to respect franchise network standards. In exchange for the right to use the brand, norms must be respected, and the franchisor’s instructions must be followed.
Second, a number of financial obligations must be fulfilled. The franchisee must, for example, pay franchise fees upon signing the contract or shortly thereafter. These franchise fees are in exchange for using the brand and for officially becoming part of the franchise network, which can extend throughout Belgium. Additionally, the franchisee owes the franchisor periodic fees for initial or ongoing training. And a certain amount of revenue must be generated, as specified by the franchisor.
Finally, the franchisee agrees to respect the non-compete clause if one is present in the contract. This clause is, however, only valid under Belgian law if it contains limitations for time, geographic area and scope of activity.
So there you have the rights and responsibilities of franchisees to franchisors and vice versa. These responsibilities demonstrate that a franchise is based on an exchange between the two parties involved. If you are looking to invest in real estate, a franchise could be a great way to get into the profession with the help of your franchisor. Find your franchise, and establish yourself in the Belgian real estate market!