Commission must act to protect franchise holders

12 September 2017

Commission must act to protect franchise holders

Foto: SP

The European Parliament today voted by an overwhelming majority to adopt a report by SP Euro-MP Dennis de Jong on how to tackle abuses in the franchise system. “Franchises are seen principally in the retail trade, but they’re found in many other sectors too,” explained De Jong. “In itself franchising can be a useful formula, but unfortunately a large number of abuses result from the fact that in most cases the franchise-giver is much more powerful than the franchise-holder. To date the European Commission has taken no action in relation to this. This has to change. The European code of conduct for the sector must be tightened up and enforced, and the Commission needs to prepare a list of dishonest trade practices. And competition laws must be adjusted.”

Last year problems emerged regarding – amongst other instances – the formula known as Bakker Bart (Baker Bart) , which led to the franchise holders going to court because of what they saw as unfairly high prices for dough charged by the parent group Bart ´s Retail, but the issues are much broader. Former ‘Bread & Butter’ franchise holder Jan Hilhorst complains of the unrealistically high expectations dished up to potential franchise-holders. They are limited as to where they can buy in products and support given by the franchise-giver is inadequate.

De Jong’s report calls amongst other things for the drawing up of an inventory of best practices across the member states. “In the Netherlands a bill has been presented which would make the Dutch Franchise Code legally enforceable,” he noted. “That could lead to enormous improvements in franchise holders’ negotiating position. Proper information would have to be given before a contract is signed, no impossible-to-meet conditions imposed, and a decent formula guaranteed. I hope that the Commission will deal with this and in the next few months I’ll be continuing to put pressure on the European Commissioner responsible, Elżbieta Bieńkowska, as well as her staff. The Commission is obliged to respond to EP resolutions within six months and I’m looking for a concrete and positive reaction´.

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