Proposition 51K1687

Projet de loi relatif à l'information précontractuelle dans le cadre d'accords de partenariat commercial.

General information ¶

Submitted by

PS | SP MR Open Vld Vooruit Purple Ⅰ

Submission date

March 22, 2005

Official page

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Status

Adopted

Requirement

Simple

Subjects

franchising commercial contract commercial law

Voting ¶

Voted to adopt

CD&V Vooruit Ecolo LE PS | SP Open Vld N-VA MR FN VB

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Discussion ¶

July 7, 2005 | Plenary session (Chamber of representatives)

Full source

Mr. Speaker, I would like to thank you for your willingness to adjust your schedule for the proper development of our work, taking into account many parameters.

The [...]

No, Mr. Tint, I will not be too long.

I asked for the closure of the restaurant for 21:00.

I later told the services that there is no problem. I will suspend following the three bills that we will now deal with separately.

At 9 p.m. the restaurant will be open. If necessary, it will be later. We must allow our colleagues to sustain themselves!

Today was a somewhat special day. It was difficult to coordinate everything.

Ladies and gentlemen, at last, we have to be honest! Finally, a plenary debate, even if we are not many at this hollow hour, between the afternoon, the evening session, the buffet and the committees for, I hope, soon to legislate on the franchise agreement, tenminste deeltelijk, since your bill bears the name "the bill on pre-contractual information within the framework of commercial partnership agreements".

You have chosen a broader formula than the franchise itself but you know that a number of members of this assembly have been motivated for many years, at least five years for the survivors of the previous legislature, to say that it is important in our country to have a law on the commercial partnership agreement, in any case, on the franchise agreements. Indeed, this sector has grown considerably in our country and is facing a legal void that is, in my opinion, detrimental. The newspaper "L'Echo" recently cited a few figures to position the franchise: about a hundred franchisors in Belgium; 3,500 franchisees; 30,000 jobs; 2.4 billion euros in turnover and 6% of the turnover of retail trade. It is important.

This sector, if it has undergone some development, may also be hampered by this legal uncertainty. His predecessor, Mr. He also did not put a point on the agenda of this assembly during the previous legislature. I regret the government’s lack of confidence in parliament. We could have worked faster and for longer. by Mr. Picqué said at a franchise show a few years ago: "It can be argued that the idea of franchise remains inhibited by some legal uncertainty. I am convinced that a law guaranteeing greater legal certainty in this area would contribute to the harmonious development of franchise in our country.” I think you can share, Mrs. Minister, the analysis of your predecessor. I am very pleased that we are finally reunited in this place.

The discussions in the committee were interesting. We are unanimous in saying that it is important to legislate today in this area. We knew the divergence of views on how to proceed. How far should we go? Where should we stop? This is where the debate arose between one and the other. We have reached a compromise on this. I will come back.

On whether the law should be limited to the pre-contractual information phase only, opinions differed. We were unable to convince each other. You did not convince me, and I did not convince you either. We took a wise position by taking a first step today, by adopting a law. This will be evaluated in a year and we will see if there is a need to return to it.

I must recognize that the pre-contractual phase is crucial in establishing a fruitful partnership between two parties. How can you imagine concluding an agreement without the parties having honest and complete information? The question is what to do after this unanimous statement.

During the previous legislature, I was the co-author of a bill with our colleague Jan Peeters present here. We wanted to legislate about this at the time. With regard to the government agreement, we believe that this bill you submit to us today is in retreat. I recall that the agreement said the following: "The franchise legislation will be adapted. In this context, the responsibilities of the parties concerned will be better clarified, both for the conclusion or execution and for the termination or in case of bankruptcy." Of course, it can be considered that this bill is a first step. The legislature is not over, we will evaluate and see if there is a need to go further.

One might wonder whether a law specifically on the franchise agreement (the "franchising") is needed or if a broader law is needed. In our view, the system is sufficiently widespread in Belgium to justify a specific legislation. It can also be said that if the legislation is too binding, it risks being bypassed under another designation. Obviously, everything is based on the definition and a definition can also be adapted according to the evolution of the situation. In the literature on the project, we can read what you wrote in the motivations, Madame the Minister: "He who obtains the right to exploit, for example, a common trade name or a common sign is in a weaker economic situation and does not have resources equivalent to those of the granting the right."

Once this difficulty has been highlighted, I would like to go back to real field situations and see if this bill meets these situations or not. The future will tell.

In this imbalance, we can observe several different situations.

First situation: we are faced with standard contracts proposed by large franchisors and drawn up in favor of franchisors and non-negotiable. Such a situation exists.

The second situation: the payment of an entrance fee. A franchisee pays the franchisee an entrance fee, sometimes without a proportionate compensation. The practice is equal to that of door-to-door in terms of commercial leases, with the difference that the franchisee cannot assign his trade fund and can not recover his door-to-door at the exit.

Third situation: many obligations, sometimes purely verbal, which place the franchisees in a real bond of subordination to the franchisees.

Fourth situation: Excessive management and control of the franchisee often deprives the franchisee of any freedom of action.

Fifth situation: resolute clauses that can be called abusive. The franchisee terminates the contract because the franchisee has not achieved the agreed turnover, while one may find himself facing economic circumstances that were not suitable for it. As a commission, we took the example of the health crises that our country has experienced: when one is in a situation of franchise with a contract, a turnover to be achieved, and when one is faced with this type of situation, one obviously does not ⁇ the goal. There is a period of disease of the franchisee, there is the fact that sometimes points of sale develop in a neighborhood, in a municipality, in a city. Therefore, the competition is no longer that of the beginning. Sometimes we find ourselves in a situation where the same brand develops itself too many points of sale, which creates damages to the franchisee who then no longer succeeds in fulfilling his financial obligations.

Sixth situation: minimum obligations applied too strictly. The franchisee must pay a remuneration to the franchisee that is calculated on theoretical profitability and without consideration of actual profitability, which may vary depending on the circumstances. For example, a franchisee undertakes to pay the franchisee a remuneration equal to 15% of the sales point turnover with an agreed annual minimum, which is calculated on a turnover estimated too optimistically. For reasons sometimes independent of the franchisee, this turnover is not realised and the royalties paid to the franchisee actually amount to about 25% of the actual turnover. After payment of banks, supplies and staff, the franchisee no longer has enough money and is in bankruptcy.

Seventh situation: the procurement policy that generally stipulates that the franchisee must procure from suppliers approved by the franchisee. However, the end-of-year returns are paid by the supplier to the franchisee without control and without participation in this benefit, at this return, by the franchisees.

Eighth situation: the obligation to make significant unforeseen investments. These may take the form of investments imposed on the franchisee by contract. He is forced to make the necessary investments for the exploitation of the franchise, as they will be determined by the franchisee. Sometimes a franchisee is used as a cobaye to test a new tool or new product, and sometimes the franchisee imposes a purchase on a franchisee who is unable to finance it.

Ninth situation: the cost of upgrading the franchise which includes new products and new tools. Some franchisors take advantage of the fact that the franchisee is in captivity to apply unreasonable financial conditions to the sale of tools, products or services necessary to the franchisee.

Tenth situation: the construction or arrangement by the franchisee of a point of sale fully adapted to the franchisee’s brand image.

What happens at the end of the franchise contract? The fees are not yet amortised and the franchisee can do nothing from the premises that are not good, except very heavy conversion costs, only to the exploitation of the sign of the franchisee.

There are also situations of non-fulfilled verbal commitments, unforeseen conditions conditioning the renewal of the contract as the recovery of other deficit signs. There is still—there are cases that have existed, it’s not theory—an unconscious development of franchise networks that leads to what can be called a form of economic cannibalism with too many shops of the same type killing franchisees’ stores.

Next point: sometimes the contract contains an option clause, to the benefit of the franchisee, at the point of sale often at a price below its market value

Then, too short warnings that are sometimes imposed by the franchisee and that force the franchisee to terminate the employment contract of its employees and workers. If the notice given by the franchisee when terminating the contract is too short, the franchisee will find himself with significant compensations to pay to his employees.

Finally, too often, after ten or fifteen years of franchise and good and loyal services and work, a small self-employed, who has embarked on the franchise, sees his contract terminated because the franchisee wants to regain the point of sale in direct management. Since the franchisee has done nothing else and since the contract prohibits him from competing activities, he will therefore find no more employment.

Here, Mr. Minister, are a few examples. As Victor Hugo said, “I go through and the best.” All this demonstrates that in the absence of a legal framework for the franchise, many franchisees are in a situation of real economic dependence on franchisors and live under the threat of a quick and easy breach of contract by the franchisee. These are abuses that must be prevented. by

Often these situations are settled in the courts. It is true to say that this makes lawyers live. We will see if this bill will be able to avoid these trials. In fact, a legislative framework must allow to avoid conflicts but also to resolve a situation without having to appeal to justice. by

These small self-employed people have often invested all of their assets in this trade and find themselves, if they have been robbed, in a completely unacceptable social situation.

In the committee, we heard a few experts a priori representative of both parties concerned. by

We found in these hearings interesting elements, relevant arguments, but, just as I think that the franchise system is, by nature, unbalanced, I also believe that the representation of the actors is. Of course, franchisees are not as well organized and represented as the large groups for which they work. Moreover, it can be understood that an unhappy franchisee sometimes hesitates to denounce the reproachable behavior of the one on whom his economic activity depends.

In particular, we heard representatives of Unizo, whom we had already contacted a few years ago to get their opinion on the old bill proposals; they in any case welcomed the government's willingness to legislate in this area, while specifying that they consider this text as a first step. Certainly, a first step that goes in the right direction, but a first step only. They prefer this to nothing at all. Still, according to them, the problems are not limited to the pre-contractual phase; they would have desired a little more boldness in the project that is submitted to us and as it has been discussed and adopted in the committee of the Economy.

Among the arguments, there is also the fact that there is no need to legislate more before the pre-contractual phase because this is the path chosen by some of our European partners who have laws in this area, notably France and Spain. by

I am well aware that we live in a globalized economic environment, that the Belgian economy is ⁇ open and that foreign investors should not be frightened by adopting tactile legislation. by

Is the comparison valid?

On the legal level, I pointed out, the situations in France and Spain are very different from ours because the French courts, the French and Spanish judges have a legal arsenal that allows them to intervene, to defend the weak side in the relations between the two parties, which is not the case in our country until now since the judicial authorities are compelled to apply stricto sensu the existing law. It has also been argued, in the course of our work, that the diversity of realities existing under the name of franchises made it impossible for legislation to understand this form of organization as a whole. I said it: one can define a franchise agreement and one can always adapt this definition.

Parliamentary work is compromised. All of our discussions have therefore resulted in the project we are about to vote on. We believe that this project brings significant advances, which should in any case strengthen the position of the franchisee – at least for the part on which we legislate – and enable him to commit with at least the necessary information. The obligations of each other will now be better defined, mainly through the content of the pre-contractual document. by

This must be precise and comprehensive. Franchise applicants will be better informed, and franchisees will need to be more transparent. Beyond these general principles which seem obvious, several key aspects of the pre-contractual phase have been listed and will need to be included in the documents exchanged in this context. The list of information that the franchisor will now have to provide the franchise candidate has been significantly clarified during our discussions as well as by the amendments that were adopted by consensus.

Indeed, this particular document will have to mention the data that we consider indispensable for franchise applicants to be able to engage in knowledge of the cause. Through this, we have tried as much as possible to minimize the risks of seeing deviations such as those I described a few moments ago. In any case, the franchisee will now have to provide a written document containing details regarding the obligations, charges and investments, the duration of the agreement and its mode of renewal, as well as exclusivities. In addition, it will also be obliged to provide information about the franchise network itself, its history and its projects, both for Belgium and for the international. This particular document will therefore be an essential tool of transparency and mutual respect and I cannot too encourage franchisees, not only to read it very carefully but also to be advised by professionals who can really give them all the answers to any questions they might ask.

An arbitration committee will be established. This is a good point and I have no doubt that my colleague Jan Peeters will return to it because it is one of his favorite subjects. It must be composed in a paritary and balanced manner. This balance must be ⁇ ined so that both sides are represented. It is planned that an evaluation will be carried out one year after the entry into force of the law, i.e. in September 2006, in order to verify whether or not this text allows to put order and sanitize the franchise sector.

Can you confirm this timetable and the commitments that have been made in this matter in the committee? I would ⁇ also add a request for information in the Economy Committee, and, in relation to the co-authors, information on the composition and establishment of this arbitration committee or even information on a royal decree that you would take in the matter. In short, it is necessary to take care of the balanced nature of the situation, knowing that the franchisees - I said it recently - are not structured in a very precise organization.

Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker, Mr. Speaker. The future will tell us if it is enough, but for our part, our bills wanted to go further.

What we want, of course, is a healthy franchise sector that contributes in a fair and balanced way to the creation of wealth and jobs and that allows those who desire to create their own economic activity in good conditions.

Mrs. Minister, you can be sure that we will be very attentive to the evaluation that will be carried out to see whether or not, still during this legislature and in accordance with the government agreement, to eventually complete this legislation that we will adopt in the course of the evening.

Mr. Speaker, Mrs. Minister, the sp.a-spirit faction believes in the formula of franchising.

We also believe that it is a commercial cooperation that should be encouraged and encouraged. Indeed, we believe that in the future, in our country’s shopping streets, we will be more and more confronted with larger commercial chains entering our market through franchise establishments. That’s an interesting formula for them, but we also think that it offers many advantages for the start-up entrepreneur — for the small self-employed who wants to start a business — to work with a franchise system. In doing so, he or she can indeed benefit from the commercial and logistical framing of a larger chain, which can benefit.

We believe that franchising, which is already widespread in our shopping streets, is the right formula and should be encouraged. We also believe that that encouragement should include that we come to balanced franchise contracts in order to make that we are there in the long run with durable and viable contracts for the franchisee. This has often been suspended in the past and so far.

Theoretically and legally, the franchisees are indeed independent identities, but economically and often contractually, the franchisee as the weakest party is often completely dependent on the larger chain, with conditions to take or let be and are not always known in advance. The commercial freedom he has is a freedom of hypocrisy. Social protection is understated. At the moment, the franchisee is actually the one that combines the worst of two worlds. He lacks the right social protection of the worker through labour law, but at the same time he lacks the commercial and true entrepreneurial freedom of the true self-employed. Therefore, we believe that a legislative initiative is necessary. Already in 2001 we, together with the self-employed organisations – and I would like to thank them heartily for that – initially Unizo – and together with the colleagues of the PS group, submitted a bill, which later also was largely taken up by the colleagues of CD&V in their own bill and that regulated that legal certainty and that more balanced relations in the contracts.

Therefore, you basically know our vision. In the discussions over the past few months, unfortunately, we have not been able to fully persuade our liberal colleagues to fully draw the map of the small self-employed or the start-up entrepreneur and to take a little more distance from the commercial interests of the larger chains of the franchisees. We regret that, but we also think, Mrs. Minister, that the step we now take with this draft is a good first step.

Defining clear conditions in advance, discussing all eventualities together and providing complete information before the contract is, of course, a first necessary prerequisite to reach a balanced contract that is concluded in full freedom and with knowledge of the facts by both parties. There is no discussion about this, so this is a good step forward. Their

Indeed, we would have preferred to have arranged even more matters in the present draft. We have also made efforts to convince you and the coalition partners. If it depends on us, we would indeed like, in addition to the pre-contractual phase, some things in the contracts themselves to be more specified, which now often lead to very unbalanced relationships. Their

We believe that a contract should not require the franchisee to reach a certain turnover with a minimum reduction on penalty of sanctions. These penalties are often breaking the agreement, fines, rental increase and the like. We also consider that the contract should not prevent the franchisee from continuing its commercial activity in the same industry after the end of the agreement. A professional ban that is often already inscribed in the contracts, often binds a franchisee against his will forever to the chain. Their

We also consider that there should no longer be an obligation, at the end of the contract, to have the sometimes very flourishing commercial business overbought in a pre-purchase right system by the chain itself, after which the chain then sells the thing again to another franchisee, of course not for that same prick. We also believe that the franchisee should be entitled to compensation when he is driven into the loss because the chain near his own business starts a new franchisee and thus his own franchisee in fact creates competition. Their

Furthermore, we consider that the franchisee should receive guarantees when the chain transfers the franchise, for example when a chain is acquired. Now such a restyling, such a merger, such an acquisition, is often twisted on the franchisee. We also believe that the breach clauses should be more strictly defined, with fair cancellation periods and fair cancellation fees. Their

Finally, we think that a kind of deontological committee, an arbitration committee that itself regulates the sector and can also do the review of the balance in the contracts in the sector, would be a good thing. We are therefore pleased that you have agreed to include this latter, that arbitration committee, in the law through the amendment we have submitted. There will be such an arbitration committee that will indeed do quality monitoring in the sector, which will act as a deontological reference point in the sector. That committee will also help us to make a thorough review of this law within a year, to see on which points there are still improvements and where there are still gaps. Their

At that time, we will reopen the discussion. The sp.a-spirit faction believes in franchising, believes that this can be a very good tool for small self-employed and start-up entrepreneurs, sees that this law is an improvement of their position and will therefore fully support it. Their

For us, however, the debate is not over, for us, the dossier is not closed. We will return to those points in a year. After all, we think that the small self-employed here should indeed have all the chances for a good contractual protection against the large chains, against which he is indeed often Little Duimpje. We want to pull that car. We would like to stand on that side.

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The MR was very early interested in the problem that we are discussing tonight since, under the previous legislature, in 2002 to be precise, we filed a bill on pre-contractual information concerning contracts by which one person grants another the right to carry out a commercial activity. This bill, drafted in close collaboration with the sector, is practically identical to this bill and also covers all forms of commercial partnership. We look forward to the next adoption of the proposed text. We are, indeed, convinced that this law will undoubtedly come to fill a void in matters of commercial relations and will help to avoid the ambiguity that is currently found in certain contracts.

Today, there is no specific legislation in Belgium but, at the European level, a legal framework exists. Since 1 January 2002, franchisors and other persons granting a partnership right must comply with a European Regulation of 22 December 1999 on vertical agreements. It specifies what is permitted from the point of view of competition law.

The legal means currently available in Belgium to resolve potential problems in this area are limited. These include contract law, lease law, sales concession law and ethical codes. A law strictly regulating every form of business partnership agreement is, in our opinion, not useful and advisable. Like those of our European neighbors, our legislation will therefore be limited to regulating the relationship between the person who grants the right to use a sign and the person who receives it in a so-called “pre-contractual” phase.

During the period preceding the signing of a contract, the person granting the right will be obliged to communicate to the applicant the essential clauses of the contract such as remuneration, non-competition conditions as well as elements relating to the economic health of the sign. Therefore, the aim is not to impose a franchise contract, which is a very good thing for us. Thus, a dishonest franchisee will not be able to lock themselves behind a restrictive definition of the franchise to estimate that they are not affected by these rules.

Although I fully understand the desire of some colleagues, such as Jean-Marc Delizée, to go further in view of the many complaints filed against certain unscrupulous franchisors and the weak position of franchisees, I nevertheless think that the measures proposed in the law text are able to incline the balance in favor of the franchisees. The latter may, in fact, claim the nullity of the contract if it comes to find that information has not been communicated to him before the signing of the contract. Furthermore, in case of divergence in the interpretation of the law, the most favourable interpretation will be granted to the franchisee.

In any case, an arbitration committee will be set up and will have the task of establishing an assessment of the progress of the sector, one year after the entry into force of the law. Following this assessment, it will always be possible to introduce, if necessary, more specific legislation in the field if abuses and malicious practices are still detected.

I repeat, I understand and I share the will of some colleagues who want to put an end to the abuses that may take place in this sector but I would like to emphasize the importance of the fact that the Belgian law must not scare the signs, and in particular the foreign signs that may launch on our market. It is fundamental that Belgium does not isolate itself from its European neighbors by adopting too binding legislation on the matter. In particular, we should not let foreign investors flee who would not accept to endure the constraints that other neighboring countries do not impose on them.

The MR group will therefore support this bill because it incorporates the main elements of the bill I had submitted with some colleagues in 2002 and because we are convinced that the measures envisaged will guarantee the freedom to undertake while ensuring the candidate partner better protection in matters of commercial partnership.

A lot has been said about this project. I think that it is an important project is for a franchisenemer but also for a franchisegiver. I also think that this bill will bring a new balance between two parties. I know, Mr. Delizée, that a number of my predecessors have thought a lot about this. What I tried to do with my colleague Marc Verwilghen was not only to think about it, but also to ⁇ it. I confirm that an evaluation will take place within a year and that according to this evaluation, we will have the opportunity in a committee to talk about this project, which will no longer be a project since it should be voted today, and to see the possible added values for franchisees. I believe that this project will be sufficient. It is true that in France, the same type of debate took place and that after the implementation of the Doubin Act it was realized that it was largely sufficient. But there will be an assessment and an arbitration committee will be set up. I will make sure it is as balanced as possible and I am fully willing to discuss it with the committee.