New precontractual information obligations for commercial cooperation agreements

The Belgian law on precontractual information, integrated in articles X.26-X.34 of the Belgian Code of Economic Law (the “CEL”), imposes specific information obligations on the party granting the right to use a certain commercial formula in the sale of products or the provision of services (e.g., a franchisor) prior to the conclusion of a commercial cooperation agreement (such as franchise, distribution and agency agreements, …), when the beneficiary is conducting his activities mainly on the Belgian territory. 

These precontractual information obligations can be summarised as follows:

• At least one month prior to the entry into force of a cooperation agreement, (i) the draft cooperation agreement and (ii) a precontractual information document (“PID”) containing all essential commercial, corporate, financial and marketing information, must be provided.
• The information to be included in the PID is set forth in article X.28 CEL and is divided into two groups:

o   Article X.28 § 1, 1° CEL: A list of contractual clauses that are deemed to be crucial (insofar as they are stipulated in the draft cooperation agreement); 

o   Article X.28 §1, 2° CEL: Information that is deemed necessary to enable the beneficiary to assess (the financial consequences/impact of) the cooperation agreement. 

With the entry into force (on 1 September 2024) of the law of 9 February 2024 (the “Law”), the list of contractual obligations that must be taken up in the PID (article X.28 § 1, 2° CEL) was already updated and expanded.

Now, with a decree published in the Belgian Official Journal of 11 September 2024 (the “Decree”), significant additional information requirements will be introduced in article X.28 § 1, 2° CEL.

Scope of the Decree

The Decree aims to increase transparency and provide greater protection for the beneficiary (such as franchisees, agents and distributors) by further expanding the list of important (financial) precontractual information (article X.28 §1, 2° CEL) to be included in the PID, in terms of market conditions and financial expectations.

Pursuant to the Decree, the following additional information should be included in the PID:

• any known expansion projects within the relevant market area, informing beneficiaries of potential changes in their competitive environment;
• if applicable, information on applications for operating licences or authorisations submitted to the competent authority for competing businesses in the market; 
• details on any recurring investments required within the grantor’s network (including an estimate of the amounts to be invested);
• an estimated operating account (based on a model included in the Decree) over a minimum period of three years enabling the beneficiary to draw up his own operating account on such basis. 

The disclosure of the above information aims to provide the prospective candidate with a reliable financial planning tool, which will help create a stable business framework and support informed decision-making.

Entry into force

The Decree enters into force on 1 March 2025 and is applicable to all commercial cooperation agreements concluded, renewed or modified as of this date (also in terms of a simplified ‘PID’).

Actions to be taken

Together with the Law (effective as of 1 September 2024), the Decree significantly expands the information to be included in the PID.

Failure to comply with these mandatory information obligations can lead to the nullity of non-disclosed clauses or even of the entire agreement.

Companies acting as grantor should thus verify that their templates and processes comply with the Decree (as well as with the Law). On the other hand, beneficiaries should check that the PID is provided within the stipulated deadline and contains all mandatory information.

Please do not hesitate to reach out, should you require any advice or assistance in making your current or future agreements and PID’s compliant with the Law and the Decree.