Article 7:920 Dutch Civil Code, Book 7

Paragraph 1

The franchise agreement specifies at least:

1. the manner in which it is determined:

   1. whether goodwill exists in the franchisee's business;

   2. if so, what its extent is; and

   3. to what extent it is attributable to the franchisor;

2. the manner in which goodwill that is reasonably attributable to the franchisee is compensated to the franchisee on termination of the franchise agreement, if the franchisor takes over the franchise business of the franchisee concerned in order to continue this business itself, or to transfer it to a third party with whom the franchisor concludes a franchise agreement.

Paragraph 2

A stipulation that restricts the franchisee in its freedom to carry on activities in a certain manner after the end of the franchise agreement is valid only if:

1. it has been laid down in writing;

2. the restriction on carrying on activities relates only to goods or services that compete with the goods or services to which the franchise agreement relates;

3. the restriction is indispensable to protect the know-how transferred by the franchisor to the franchisee;

4. it does not exceed a duration of one year after the end of the franchise agreement; and

5. its geographical scope is not wider than the area within which the franchisee exploited the franchise formula under the franchise agreement concerned.