The fee
To begin with, franchisees pay a fee for the use of the franchise formula to the franchisor, whereas the commercial agent is entitled to commission under Section 7:431(1) of the Netherlands Civil Code for agreements concluded during the term of the agency agreement.
Supervision
Secondly, franchisors supervise the way in which franchisees carry out their business, whereas a principal generally does not supervise the business conducted by the agent, often a principal only looks at the result delivered.
At whose expense and risk?
Thirdly, the franchisee acts in his own name and at his own risk, whereas the commercial agent acts in the name of the principal and, in principle, also at the risk of the principal (Section 7:428 of the Civil Code). In the case of an agency, the economic risk rests in principle with the principal. In the case of franchising, the economic risk lies in principle with the franchisee.
Strict distinction
A strict distinction between franchise and agency can be made if and to the extent that one adheres to the definition of the franchise agreement where the franchisee typically runs a business at his own risk and expense. In the case of an agency this is never the case, the agent does not act for his own account and risk. However, there is no legal or universally applicable definition of the franchise agreement and thus in practice agreements for that franchise agreement are referred to but can in fact be qualified as an agency.
Please contact us
At Legal Q, we work in a different way compared to traditional attorneys and lawyers. We advise you with practical solutions and understand commercial relationships. Would you like support in drawing up an agency or franchise agreement? Or are you dealing with a dispute about an agency or franchise agreement? Our lawyers will be happy to assist you. Feel free to contact us for more information.