Commercial Partnership Agreements in Belgium

Book X of the Code of Economic Law (CDE), in force since 31 May 2014, is the reference Belgian legal framework for commercial partnership agreements. It replaces the former law of 19 December 2005 on pre-contractual information in commercial partnership agreements, modernising it and folding it into the CDE. This framework protects the economically weaker party, particularly in franchise, dealership and trademark licence relationships.

What Is a Commercial Partnership Agreement?

Legal Definition (Article X.26 of the CDE)

Under article X.26 of the CDE, a commercial partnership agreement is an agreement between two persons, each acting in their own name and on their own account, whereby one party grants the other the right to use, when selling products or providing services, a business formula in one or more of the following forms:

• A shared shop sign, a shared trade name, or a transfer of know-how
• Commercial or technical assistance linked to operating the business formula
• A collection of products or a set of services marked with a shared sign

All in exchange for direct or indirect remuneration.

Types of Agreements Covered

Agreements Excluded From the Scope

Book X does not cover:

• Cooperation agreements between companies in the same group (article X.27, 1°)
• Agreements between an employer and an employee
• Commercial agency agreements (governed by Book X, Title 1, Chapter 2 of the CDE)
• Simple distribution contracts without a transfer of know-how or a shared shop sign
• Agreements where the entry fee and annual purchases do not exceed a threshold set by royal decree

Pre-Contractual Obligations: The Heart of the System

The Pre-Contractual Information Document (DIP)

Article X.28 of the CDE requires the franchisor (or the party granting the right) to give the prospective franchisee a Pre-Contractual Information Document (DIP) at least one month before the agreement is concluded or before any payment is made.

Mandatory Content of the DIP

Under article X.28, § 1, the DIP must contain the following information:

1. Identity and legal data:

• Company name, legal form and enterprise number (CBE)
• Address of the registered office and operating locations
• Identity of the directors/managers
• Holdings in other companies linked to the network

2. Financial data:

• Annual accounts for the last three financial years (or since incorporation if under 3 years old)
• Amounts of entry fees, periodic royalties and other payments
• Estimated initial investment budget
• Forecast results or figures (if provided, they must be realistic and verifiable)

3. Network data:

• Total number of franchisees in Belgium and abroad
• Number of franchisees who left the network in the last 3 years, with reasons
• Identity and contact details of Belgian franchisees (to allow contact)
• Existence of a franchise council or franchisee association

4. Contractual information:

• Duration of the agreement and renewal conditions
• Termination and transfer conditions
• Non-compete clauses (during and after the contract)
• Territorial exclusivity clauses
• Minimum purchase or exclusive supply obligations

5. Market information:

• Description of the relevant market and its expected development
• Network market shares (if available)
• Local particularities of the territory granted

Costed Example of a DIP for a Fast-Food Franchise in Belgium

The Draft Contract

Alongside the DIP, article X.28, § 2 requires that a complete draft contract be provided, including:

• All the final clauses of the agreement
• The applicable general terms and conditions
• The annexes (product list, description of the territory, specifications)
• The network's internal regulations (if any)

The One-Month Period: A Mandatory Protection

The one-month period between the delivery of the DIP/draft contract and signature is a matter of public policy. This means:

• The period cannot be shortened, even with the prospective franchisee's agreement
• No substantial change can be made to the draft during this month without restarting the period
• The period starts again if significant changes are made to the DIP
• The candidate cannot be forced to make any commitment during this period (article X.29)
• No payment may be requested or accepted during this period (article X.30)

Protecting the Commercial Partner

Clauses Deemed Unwritten (Article X.31)

The CDE provides that certain clauses are automatically deemed unwritten, without needing to be set aside by a judge:

Post-contractual non-compete clause:

• Limited to a maximum of 12 months after the end of the contract
• Must be limited to the geographical territory where the franchisee actually operated
• Must concern only activities competing with those of the network
• If any of these conditions is not met, the entire clause is deemed unwritten

Clauses excluding the courts:

• Any clause preventing recourse to Belgian courts is void
• Arbitration clauses remain valid but cannot deprive the franchisee of their legal rights

Termination and Notice

Fixed-term agreement (CDD):

• The contract ends at the agreed term
• Early termination is only possible in the event of serious misconduct by one of the parties
• Non-renewal must be notified within a reasonable period before the term (generally 6 months, according to case law)

Open-ended agreement (CDI):

• Either party may terminate the agreement subject to reasonable notice
• The length of reasonable notice is assessed by the judge based on the duration of the relationship, the scale of investments, and the time needed to redeploy
• Belgian case law generally grants between 3 and 24 months' notice depending on the circumstances

Clientele compensation:

• The franchisee may claim compensation if they contributed to building the network's clientele
• This compensation is not automatic: the franchisee must prove the contribution of clientele
• The amount is determined by the judge on a case-by-case basis

Comparison Table: Termination Depending on Contract Duration

Penalties for Non-Compliance

Civil Penalties

Failure to provide the DIP, or an incomplete DIP (article X.30):

• The franchisee may seek annulment of the agreement within 2 years of the contract's conclusion
• The franchisee keeps the benefits acquired under the annulled contract
• Repayment of sums paid (entry fee, royalties, etc.)
• Damages for the harm suffered (lost investment, loss of profit)

Failure to respect the one-month period:

• The same penalty as failing to provide the DIP
• The judge can annul the agreement even if the DIP was complete

Incorrect information in the DIP:

• The franchisee may invoke a defect in consent (erreur – mistake, or dol – fraudulent inducement)
• Annulment of the contract and/or damages

Criminal Penalties

Article XV.83/7 of the CDE provides for criminal penalties:

• A fine of EUR 26 to 10,000 (multiplied by the statutory additional decimes, i.e. in practice EUR 208 to 80,000) for failing to meet pre-contractual information obligations
• The FPS Economy's economic inspectorate is responsible for establishing infringements

Cease-and-Desist Action

The president of the enterprise court can order the cessation of practices that breach Book X of the CDE, on the request of any interested party or the public prosecutor.

Competent Courts

Disputes relating to commercial partnership agreements fall under the enterprise court (formerly the commercial court). In Belgium:

The competent court is, in principle, that of the defendant's domicile or registered office, but the parties may include a choice-of-forum clause in the contract.

Best Practices for the Franchisor

1. Draw up a complete, professional DIP: have it drafted by a lawyer specialising in distribution law
2. Document the delivery of the DIP: registered letter with acknowledgement of receipt, or hand delivery against a dated signature
3. Keep the DIP up to date every year (new financial data, network developments)
4. Plan information meetings during the reflection month to answer questions
5. Keep evidence of all information communicated for at least 5 years
6. Train your recruitment teams to strictly comply with pre-contractual obligations
7. Anticipate problems by including a mediation clause before any legal proceedings

Best Practices for the Franchisee/Candidate

1. Read the DIP and draft contract carefully: do not be swept along by commercial enthusiasm
2. Consult a lawyer specialising in franchise or distribution law (budget: EUR 500 to 2,000 for a full review)
3. Contact at least 5 franchisees in the network to get real feedback
4. Check the franchisor's annual accounts via the CBE – Crossroads Bank for Enterprises (BCE) or the National Bank of Belgium's Central Balance Sheet Office (BNB)
5. Negotiate the clauses before signing: territory, exclusivity, duration, exit conditions
6. Commission an independent local market study for the proposed territory
7. Never sign under pressure: the reflection month is a mandatory right
8. Plan a financial fallback option in case the franchise fails

Recent Legislative Developments and Trends

Transposition of the Omnibus Directive (2022)

European Directive 2019/2161 (the Omnibus Directive), transposed into Belgian law, strengthens transparency in commercial relationships, including within commercial partnership agreements:

• Enhanced information obligations on online commercial practices
• Heavier penalties for unfair commercial practices (up to 4% of annual turnover)

Recent Case Law

Belgium's Supreme Court (Cour de cassation) has confirmed in several rulings that:

• Failure to respect the one-month period results in the relative nullity of the contract, which only the franchisee may invoke
• The DIP must contain honest and verifiable information: deliberately optimistic financial projections can amount to fraud
• The post-contractual non-compete clause must be proportionate: the judge may reduce it rather than annul it entirely

Useful Resources and Contacts

• FPS Economy (economie.fgov.be): information on legal obligations and forms
• Belgian Franchise Federation (FBF): support for franchisors and franchisees
• CBE – Crossroads Bank for Enterprises (BCE): verification of a company's data (kbo.fgov.be)
• BNB Central Balance Sheet Office: consultation of published annual accounts (nbb.be)
• Competition authority: for questions on restrictive competition clauses
• Accredited enterprise counters: Partena, Liantis, Acerta, Securex, UCM, Xerius for administrative support

Conclusion

The Belgian framework for commercial partnerships, codified in Book X of the CDE, is one of the most protective in Europe. It imposes strict pre-contractual information obligations and protects the commercial partner through nullity mechanisms and limits on unfair clauses. Whether you are a franchisor or a prospective franchisee, a thorough understanding of these rules is essential to building a sound, transparent and legally secure commercial partnership agreement. If in doubt, do not hesitate to consult a lawyer specialising in distribution law: it is an investment that can prevent costly disputes.