Enhanced Protection for Supermarket Franchisees

The recent Royal Decree of 20 June 2024, introduces significant amendments aimed at providing greater protection for supermarket franchises. This article delves into the key aspects of the decree and its implications for franchisors and franchisees in the supermarket sector.
Background and Purpose
The Royal Decree of June 20, 2024, supplements the lists of unfair terms in commercial cooperation agreements, specifically targeting the retail sector of non-specialized stores predominantly dealing in food and beverages. This decree is a response to concerns about the dominant position held by a few large players in the sector and the often weak negotiating position of smaller franchisees. It basically only concerns a handfull of supermarket chains active in Belgium.
Key Provisions
The decree introduces a “black list” of terms that are deemed unfair and therefore prohibited in franchise agreements. These include:
- Undermining Delivery Obligations: Prohibiting clauses that deny compensation or restrict the right to source from third parties in case of inadequate delivery by the franchisor.
- Restricting New Activities: Banning clauses that prevent franchisees from preparing or negotiating new business activities during the notice period or non-compete term.
- Shifting Promotion Costs: Prohibiting clauses that require franchisees to bear more than half of the costs associated with promotional activities imposed by the franchisor.
- Jurisdiction Clauses: Banning clauses that designate only the courts of the franchisor’s location or courts in a different language region as competent to resolve disputes.
Additionally, the decree includes a “grey list” of terms presumed to be unfair unless proven otherwise:
- Option or preemption clauses regarding the supermarket business (Handelszaak/Fonds de Commerce)
- Obligation to continue operating at a loss
- Unreasonable termination clauses
Implications for Supermarket Franchisors
From January 1, 2025, contracts with new franchisees comply with these new regulations. Existing contracts will need to be revised by May 1, 2025, to align with the decree’s requirements. This regulatory change aims to balance the contractual power between franchisors and franchisees, ensuring fairer terms and protecting the interests of smaller business operators.
Conclusion
The Royal Decree of June 20, 2024, marks a significant step towards enhancing the protection of supermarket franchises in Belgium. As a franchisor it is essential to assess and possibly update your contracts to ensure compliance.