Belgium

• Author: Pascal Hollander - Joe Sepulchre
• Pages: 38-63

38 International Franchise Sales Laws

Belgium

I. What Is a Franchise?

A. Scope of Law

Belgium still has no specific legislation on franchise agreements. Franchise agree-

ments are governed in Belgium by various pieces of legislation but none of them

defines franchise agreements or specifically deals with franchise agreements. Sev-

eral draft acts have been submitted to Parliament, but none has been adopted. There-

fore, there is no statutory definition under Belgian law of what a “franchise” is.

Most of the laws that deal with franchise agreement have been (or are in the

process of being) restated and codified in the Belgian Business Law Code (the

Business Law Code), sometimes with amendments.

The pre-contractual phase of franchise agreements is governed by the provi-

sions of the Act of December 19, 2005, “regarding pre-contractual information

within the framework of commercial cooperation agreements” (the Disclosure

Act). The Disclosure Act underwent an amendment process in 2014, upon the

conclusion of which it is now consolidated into the provisions of the Business

Law Code, more particularly in its Article I.11, 2° and Articles X.26 to X. 34. For

ease of reference, the restated and amended provisions will continue to be re-

ferred to as a whole in this chapter as the Disclosure Act, but references to specific

statutory provisions will be those of the Business Law Code.

The Disclosure Act applies to “commercial cooperation agreements,” defined

as follows: “agreements, concluded between several persons, by which one of

these persons grants to other the right to use, in the course of the sale of products

or of the provision of services, a business process, under one or several of the

following elements: (i) a common brand; (ii) a common commercial denomina-

tion; (iii) a transfer of know-how; or (iv) technical or commercial assistance” (Ar-

ticle I.11, 2° of the Business Law Code).

This definition amends and broadens the original scope of the Act of 2005. It

is vague and broad. One reading of the clause could seem to imply that the sole

presence of one of the four elements listed above is sufficient to trigger the appli-

cation of the Act. However, in the opinion of the authors of this chapter, the defi-

nition will probably be construed narrowly, emphasizing the requirement of an

actual cooperation regarding the operation of a “business process,” i.e. an orga-

nized business process or business format. The four elements identified by the

Disclosure Act will most likely be considered as additional requirements for the

Act to apply.

Belgium 39

In the absence of a specific legislative framework relating to the contractual

phase of franchise agreements, general principles of Belgian contract law govern

the conclusion, performance, and termination of franchise agreements.

In addition, other sections of the Business Law Code may also apply, such as

(the list below is not exhaustive):

• competition rules;

• rules regarding market practices;

• provisions concerning commercial agency agreements (originally set forth

in the Act of April 13, 1995, implementing the European Directive on

commercial agency); and

• provisions regarding the termination of distribution agreements (originally

set forth in the Act of July 27, 1961, regarding the termination of distribu-

tion agreements). It is disputed whether these provisions apply to genuine

business format franchising agreements. A consensus seems to be build-

ing up that, even when the franchise agreement entails the purchase of

products by the franchisee from the franchisor, the provisions of the Busi-

ness Law Code regarding the termination of distribution agreements do

not apply, provided the agreement is a genuine business format franchise;

i.e. if the purpose of the agreement is mainly to operate a business model,

designed by the franchisor, rather than to merely allow the franchisee to

distribute the franchisor’s products. The same debate has arisen regarding

the applicability of the provisions of the Business Law Code regarding

agency agreements. A few recent court decisions have endorsed this view;

but as of yet, the question is still disputed and has not been settled by a

decision of the court of cassation (the Belgian Supreme Court).

Finally, reference must also be made to the European Code of Ethics for Fran-

chising, to which the Belgian Franchise Federation is a party. It does not have the

status of binding law but is generally acknowledged as a usage of the sector, at

least for those franchisors that have adhered to the Belgian Franchise Federation

(or another European franchise association that proclaims adhesion to the Euro-

pean Code of Ethics).

As there is no statutory definition of “franchise,” Belgian case law and legal

authorities traditionally interpret the term “franchise” in the light of the defini-

tions developed at the European level, either by legislative authorities (for in-

stance, the now expired European Block Exemption Regulation on franchise

agreements) or by sector-specific self-regulations.

B. Applicability to Master Franchising

Master Franchising is not regulated by specific statutory or regulatory provisions

in Belgium.