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In September and
November last year we sent out 2 FranFlashes
informing you about the proposed new disclosure
law in Belgium which was expected to become law on
18 October 2005 with retrospective effect from 1
September 2005.
As explained in our second
FranFlash, in mid-October the Belgian Senate
invoked its right to review the text of the
proposed law and the Senate Commission on Finances
and Economics was obliged to review the proposed
law.
The proposed law was discussed in the
Senate and approved by the Chamber of
Representatives in its current format on 19
December 2005. Only one very small change was made
which does not affect the contents of the law.
Although the Statute
setting out the law provides that it will come
into force with retrospective effect from 1
September 2005, the Stature has already been
modified and, on 23 January 2006, a Decree was
published in the Belgian Official Gazette which
states that the new law will come into force on 1
February 2006.
To summarise, the new law requires
franchisors to deliver a formal disclosure
document and a copy of their franchise agreement
to potential franchisees one month before the
franchise is entered into. The disclosure document
must comprise of two separate sections. The first
summarising the main terms of the franchise
agreement and the second detailing "information
relating to the correct evaluation of the
commercial partnership agreement".
In the
event that the franchisor fails to comply with the
disclosure requirements the franchisee may choose
to have the agreement become null and void within
a period of two years of the date that the
agreement is entered into. If the disclosure
document fails to properly summarise the terms of
the franchise agreement those terms will not be
enforceable.
Both parties are
placed under a duty of confidentiality as regards
information that they obtain "with a view to
entering into a [franchise] agreement, and may not
use the information, either directly or
indirectly, other than for the purposes of the
commercial partnership agreement to be entered
into.
If you would like any further
information please contact Babette
Märzheuser-Wood or Mark
Abell.
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