The established Dutch logistics network provides tried-and-tested systems for incoming franchisors.
Words by Kieran McLoone, deputy editor for Global Franchise
THE NETHERLANDS IN NUMBERS
• Population: 17.28 million
• Size: 41,526 sq. kilometers
• GDP: $913.7bn
• Franchise market value: $43.19bn
The Dutch economy has always been heavily dependent on foreign trade, with Rotterdam being Europe’s largest port by volume. This means that the Netherlands has arguably Europe’s best logistics and distribution network, which is why the country is often known as Europe’s primary transport hub.
Not only does the Dutch logistical framework ease the burden of transporting goods and materials around the Netherlands and across the world, but it means the country has a natural predisposition for global-spanning franchise concepts. In fact, 80 per cent of the country’s GDP is generated by foreign goods and services, and the U.S.’s trade relationship with the Netherlands is the country’s oldest bilateral continuous relationship, dating back to the American Revolution.
As a result, the Netherlands has high regard for U.S. products and the highest level of English-fluency on the continent.
The big picture
Taken at a glance, there were 921 franchises in the Netherlands in 2019, which is more than 10 per cent higher than the previous year. Dutch franchising brings in a turnover of $43.19bn, with a high GDP per capita of $53,024.
The focal point for franchisors is the Dutch capital of Amsterdam, with 742,000 inhabitants, but The Hague and Rotterdam are also viable locations for a franchise to open shop.
The primary language spoken throughout the Netherlands is Dutch, but as mentioned, there is a strong grasp of English nationwide, and German and French are also spoken widely.
The Dutch Franchise Act has been on the table for quite some time and is now likely to come into effect on January 1, 2021. For franchisors both domestic and international, an understanding of this new legislation is crucial for success.
“The impact of the Dutch Franchise Act is considered to be substantial, in particular for franchisors,” says Roelien van Neck, a lawyer at Bird & Bird, an international law firm. “The Dutch Franchise Act governs aspects of all stages of the relationship between the franchisor and franchisee. This covers the pre-contractual stage, what happens during the term of the franchise agreement, and the post-termination stage. In all these stages, parties must be compliant with the new legislation.”
“For both existing brands and international brands looking to penetrate the Dutch market,” explains Lisette den Butter, a lawyer at Bird & Bird, “it is important to note that franchisees established in the Netherlands can invoke the protection of the Dutch Franchise Act, regardless of the choice of law in the franchise agreement. Contract clauses contrary to the Dutch Franchise Act will not be enforceable or may even be void.”
The intricacies of the Dutch Franchise Act mean that seeking local and knowledgeable counsel is a must, but as an overview, new guidelines mean that the franchisor/franchisee relationship becomes more of an equal one. This involves a cooling-off period of four weeks and, in certain cases, the need for written consent to make changes on the franchisor’s behalf protecting the best interests of all parties involved.