A recent ruling by the Limburg District Court (ECLI:NL:RBLIM:2026:3386) shows that a non-compete clause in a franchise agreement does not automatically remain valid after the cooperation ends. The court does not look at the mere existence of the clause, but at the question of whether the clause is actually necessary to protect concrete, transferable know-how.
In practice, that is often precisely the sticking point. If it is not clear exactly what knowledge was transferred and why it deserves protection through such a clause, an apparently robust non-compete clause can have little practical value.
The case in brief
In this case, an Italian franchisor worked with a Dutch franchisee who operated two shops within a franchise formula. After the franchisor terminated the agreement in 2025 with immediate effect and the companies involved went bankrupt, the entrepreneurs behind them continued their activities from the same location, but under a different, competing clothing concept.
The franchisor tried to stop those activities through interim relief proceedings (preliminary injunction proceedings) before the court. In doing so, it invoked a post-contractual non-compete clause and argued that the directors involved were engaging in unlawful competition.
The court’s ruling
The court rejected the requested interim relief. A key factor was that the urgency of such an interim measure had not been sufficiently concretely substantiated. The alleged damage and harm to goodwill remained too general to justify immediate intervention. Merely claiming mounting damage is not enough.
In addition, there was uncertainty about the legal basis of the claim, namely whether there was actually a valid and enforceable non-compete clause. That would genuinely require further assessment in full proceedings on the merits. Because of that uncertainty, it was too risky and there was insufficient ground to pre-empt the outcome of those main proceedings.
The role of know-how
In assessing a non-compete clause in franchising, Section 7:920 of the Dutch Civil Code is central. It follows from that provision that such a clause is only valid if it is necessary to protect transferred know-how. This means that enforceability is directly dependent on what knowledge was actually transferred.
In this case, that appears to be precisely where the weakness lies. The franchisor failed to sufficiently specify what know-how was transferred and why it justifies the protection of such a clause. That raises doubt about the nature, scope and distinctive character of that knowledge.
The ruling shows that this uncertainty alone can already be enough to block interim relief. Without sharply defined and demonstrable know-how, a non-compete clause quickly loses its practical value.
What does case law say?
Courts are setting increasingly high requirements for substantiating know-how. For example, it follows from the Midden-Nederland District Court (ECLI:NL:RBMNE:2025:1235) that general support materials or standard documents are not sufficient when it is not made concrete which specific and non-publicly accessible knowledge was actually transferred, certainly when the franchisee already has relevant industry experience of their own.
The Amsterdam District Court (ECLI:NL:RBAMS:2025:8931) also followed this line. There, both the non-compete clause and the non-solicitation clause were suspended in the interim phase, because it had not been sufficiently substantiated which know-how justified protection. It was also confirmed that non-solicitation clauses are assessed against the same strict test.
What does this mean for your practice?
This ruling by the Limburg District Court makes clear that a non-compete clause is not an automatic safety net. Its effect depends entirely on the underlying question of whether there is concrete, transferable and protection-worthy know-how.
For franchisors, this means it is not enough to simply include a standard clause or refer to a formula. You must be able to demonstrate that specific specialist (not generally known) knowledge was transferred, why it is distinctive, and why protection is necessary. If that substantiation is lacking, it is realistic that a court will not apply the clause, or will apply it only reluctantly, certainly in urgent proceedings. The way the formula has been built up and the know-how documented ultimately determines whether the clause holds up in practice.
For franchisees, this means that a non-compete clause does not automatically mean that there is no room to engage in competing activities after termination. The court will always test whether the franchisor can actually point to protection-worthy know-how. If that substantiation is missing, the enforceability of the clause is also under pressure.
Conclusion
The main proceedings will ultimately have to determine whether the non-compete clause in this franchise agreement holds up and how the court values the know-how put forward.
For now, the ruling above all confirms that enforcement is not a given. The strength of a non-compete clause lies not only in its wording, but in the underlying substance of the franchise formula. Anyone who has not worked this out sharply and thoroughly in advance often only realises, at the point of enforcement, that the clause is less solid than assumed. Something is not a franchise formula merely because it is given that name. The franchisor’s performance and deliverables must genuinely add value for the franchisee.
Do you need help drafting or assessing franchise agreements or non-compete clauses? The corporate lawyers of The Legal Company are happy to help. Please feel free to contact us via info@thelegalcompany.nl or call 020-3450152.
