Franchise in the food store industry? Expansion of list of prohibited contractual clauses as of January 1, 2025

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Are you a franchisor in the food store industry? Or are you running a food store as an independent entrepreneur in the context of a franchise? Then profoundly check your agreement! Because the list with forbidden contractual clauses has been expanded and could have a big impact on your agreement(s). The new forbidden clauses are for example about certain agreements revolving around third-party supply, costs of promotion campaigns, the valuation of the trade fund at the purchasing option, … What do you have to know about this?

For who is this important?

The goal of the new rules is to protect independent owners of food stores against unlawful clauses in their agreements with food distribution chains. More spefically, the new rules apply to commercial collaboration agreements, draftef between an enterprise and another enterprise which is active in the retail sector in non-specialized stores, where food and stimulants dominate. (NACE-code 47.11).

Be aware: these new rules only apply to “commercial collaboration agreements”, which is broader than franchise agreements. But because the rules are primarily important to franchise agreements, we will focus on these agreements in this article.

Take a closer look at your agreement to check if it is compliant with the new rules.

What is changing?

The law provides two lists with forbidden clauses: a black list with clauses which are forbidden under all circumstances, and a grey list with clauses which are presumed to be unlawful unless the opposite can be proven. Both lists are being updated.

When your agreement does contain a forbidden clause, this provision is invalid and can not be applied. 
 

New clauses on the black list

The black list will be expanded with 4 new forbidden clauses:

1.    The prohibition, imposed on the franchisee to claim a damage compensation, or to supply through a third party (or to inappropriately limit this right) if the franchisor doesn’t follow his obligation to supply (goods or services) or only partly follows it.

Sometimes franchisors can’t follow their obligation to supply their franchisees, for example because of frequent strikes, change of logistic partner, problems with distribution centers, … But it is forbidden to determine in an agreement that the franchisee can’t obtain supplies from a third-party supplier, or to make this very difficult.

Further, franchise agreements can contain clauses that determine that the supply agreement is only indicative (or contains a resource commitment), so that de franchisor cannot easily be addressed for this. This clause as well, is seen as unlawful.
 

2.    Restricting the right of the franchisee to negotiate with third parties to develop a new activity during the notice period or the term of a non competition clause.

Provided that the franchisee respects the trade secret linked to the franchise agreement, based on the new rules, it should be possible for franchisees to start up negotiations  with other companies or to make preparations to start a new activity during the notice period of the term of a non competition clause

Taking into account the broader formulation of this prohibition, it can be interpreted so that this applies to new activities as well as to identical or similar activities to the ones of the franchisor, regardless of how the franchise agreement was ended (for example through not renewing, ending by the franchisor -based on a big non-performance- or ending by the franchisee himself) (!).
 

3.    Letting the franchisee bear more than half of the costs, arising from promotion campaigns.

This includes the costs, arising from the “realization and the implementation” of promotion campaigns. The legislator however, gives very few explanation for this important restriction. It is not clear if this rule is about the costs of the promotion campaign itself or about the indirect costs as well, in the form of the price reduction on the product that is in promotion.

Further it is not clear how this prohibition has to be interpreted when it is determined in the franchise agreement that the franchisee periodically has to pay a percentage of his revenue for promotion campaigns.
 

4. Empowering only the judge from the franchisor’s seat and/or the judge whose seat is located in another language area than the one from the franchisee.

 

New clauses on the grey list

The gray list will be expanded with three new clauses:

1.    Option rights or pre-emptive rights relating to the trade fund or the stocks, that determine a “clearly unreasonable” price, relative to a “normal valuation” of the trade fund or the stocks.

The law prohibits clauses like this if the franchisee would have to accept a price for the transfer, which is clearly lower than the worth of the trade fund or the stocks on the market. This determination will undoubtedly lead to practical discussions.

2.    The (combination of) clauses which lead to the fact that the franchisee will be forced to run an enterprise that is structurally loss-making, without supplying a notice period up to 4 months, without additional remuneration.

3.  Explicit dissolving clauses

These are clauses which allow the franchisor to end the agreement immediately or within a short period of time himself, without having to take this to court. This is mostly the case when the franchisee commits a serious breach of contract which damages the reputation of the whole network. This new determination leads to the fact that the franchisor can only end the agreement by dissolvement by a judge.

As of January 1, 2025 different contractual clauses in franchise agreements for supermarkets will be forbidden.

As of when do these new rules apply?

The new determinations are applicable as of January 1, 2025 for franchise agreements, that are concluded, renewed or changed after that date. As of May 1, 2025, all other franchise agreements have to be compliant with the new rules.

Summary

  • As of January 1, 2025 different contractual clauses in franchise agreements for supermarkets will be forbidden.
  • The impact of the new rules is large, because they often apply to frequent clauses.
  • So check your agreement profoundly, or let it be checked by an expert of Baker Tilly.

Author

Lynn Jonckheere, Legal Counsel
l.jonckheere@bakertilly.be