Starting as a franchise entrepreneur

Coming to the Netherlands

If you are coming to the Netherlands as an entrepreneur, you may need a residence permit. Our interactive tool Coming to the Netherlands as an entrepreneur can help you find out quickly if this is true for you, and tell you what other obligations you have to fulfil.

What is a franchise?

A franchise is a partnership between an independent entrepreneur (you) and the owner of a chain. You enter into a contract with a franchisor to start a business according to a certain franchise formula.

Besides catering and supermarkets, franchising is increasingly common in other industries. Such as gyms, home improvement shops, healthcare, employment agencies and childcare. Franchisors want to offer their formula as attractively as possible. Especially now that multiple formulas are operating in almost every industry.

What franchise forms are there?

There are many different franchise forms. The 2 best-known franchise forms are:

Soft franchise

If you opt for a soft franchise, you will have a lot of freedom. Of course, there are some rules you have to follow. Often, you get to decide on advertising, marketing, purchasing and inventory. In effect, the business name and concept are all you franchise.

Hard franchise

With this type of franchising, the rules are quite strict. Provisions on house style, stock, purchasing and advertising are fixed.

Check out the advantages and disadvantages of soft franchise (in Dutch) and of hard franchise (in Dutch).

Research franchise formulas

• Consider how well known is the franchise? For how long has it existed? How does the franchise deal with market changes? Talk to entrepreneurs who do business with the franchising organisation, and ask the franchiser about its results and financial situation.
• Find out if the franchiser is transparent about its business methods. What are the margins, and how much influence does he have on your margins?
• Does the franchising organisation have a franchisee association? En does the organisation abide by the European Code of Ethics?
• Ask other franchisees in the same franchise if they will show you their financial statements. You can also request financial statements from KVK for legal persons who are required to file their financial statements with KVK.
• Try to find out if there have been many franchisees in the past that have gone bankrupt or have ended their franchise contract.

How much does it cost to become a franchisee?

Fees vary per franchise. Some fees you will usually always have to pay. Such as an entry fee, a franchise charge and an advertising charge. The Nationale Franchisegids (in Dutch) lists the terms and conditions of nearly all franchisers.

Ask for advice about the franchising contract and the manual

When you enter into a franchise, you will sign a franchising contract. For example: the duration of the agreement, insurances, and the business premises. It also states the financial terms, like the percentage of sales you transfer

Before you sign a franchising contract, there are some points you should pay attention to:

• Get insight into the prognoses for turnover and location. you are interested in. Have an independent third party assess the information
• Get insight into your rights and obligations under the terms of the franchising contract. Ask for independent legal advice, if anything is unclear to you.

It may be that your franchise formula works with standard contracts and there is little room for negotiation. Read the contract carefully and do not sign the contract until everything is clear. In case of questions, call in a third party for advice. This is, for example, an accountant or lawyer who specialises in offering help with franchising.

Most franchise formulas use a handbook. This contains practical matters such as sales marketing, buying and selling and corporate identity when franchising. The handbook and the agreement together form 1 entity.

Rules for franchising

If you start a partnership with a franchiser, you must follow certain rules. For example, you must collect business information to determine how financially sound the franchise is and what the potential risks are. You will also discuss with the franchiser at least once a year how the cooperation is going. Read more about your rights and obligations in the franchise law.

Choosing a legal structure

You enter into a franchising agreement as an independent entrepreneur. This means that you will have to choose a legal structure for your business. This determines liability and tax matters. The most common legal structures are sole proprietor, general partnership (vof), and private limited company (bv).

Register with the KVK

You have to register your franchise with the Netherlands Chamber of Commerce KVK. The legal structure you have chosen determines the steps you have to take When you go in to finalise your registration, do not forget to bring your franchising contract, plus a copy of the rental or sale agreement for the business premises you will be located in.

If you were already registered at the KVK before you decided to enter into a franchising agreement, you should change your registration.