Franchise Agreements: the (legally compliant) instruction on the right to withdraw

1. The “eternal right of withdrawal” – it finally comes to an end

First, the good news: the “perpetual right of withdrawal” no longer exists.

The danger of a consumer (franchisee) exercising an eternal right of withdrawal had already been largely eliminated since June 13, 2014, following the entry into force of the Act Implementing the Consumer Rights Directive (Federal Law Gazette I 2013, No. 58 of September 27, 2013): since then, the right to withdraw has been limited to a maximum of 12 months and 14 days (Section 356(3) German Civil Code (BGB)). However, an exception still applied to contracts for financial services.

On June 19, 2026, the Consumer Contracts Act, adopted on February 3, 2026, will come into force (Federal Law Gazette 2026 I No. 28 of February 5, 2026). This implements the Consumer Credit Directive (Directive EU 2023/2673) in Germany. In the future, contracts for financial services will no longer be subject to a “perpetual right of withdrawal.” These contracts, too, can no longer be rescinded after 12 months and 14 days have elapsed, even if the information provided was incorrect or omitted. This standardization serves to enhance legal certainty.

2. The Cancellation Button

However, the new consumer contract law introduces new obligations—including for franchisors—regarding the right of withdrawal. Significant changes apply in particular to online retailers, who must provide information on their websites about the right of withdrawal when entering into sales contracts with consumers. In the future, they will be required to provide a “cancel” button.

But there are also changes for franchisors who enable the conclusion of franchise agreements digitally, which must be implemented by June 19, 2026: if the franchisee is a first-time entrepreneur and a consumer within the meaning of Section 13 of the German Civil Code (BGB), and if the value threshold of Section 513 BGB (EUR 75,000) is not exceeded, a franchisor must also, pursuant to Section 356a BGB (new version), provide a prominently placed function (a “cancel button”) that must be continuously available until the expiration of the 14-day cancellation period and through which the franchisee can exercise the right to withdraw electronically. If the franchisee uses this function within the deadline by clicking the cancellation button, this initially triggers the withdrawal, but the franchisee must also confirm it again via a confirmation function (which must also be set up by the franchisor).

The consumer protection provision found in Section 312c BGB, which is central to online and distance contracts, also applies here: if the means of distance communication listed in Section 312c(2) BGB are used and the above conditions are met (consumer status and the value of the contract falling below the cancellation threshold), the withdrawal of the franchise agreement must in future be made possible “at the touch of a button.”

This will (necessarily) be accompanied by a change in the form to be used for the information on the right to withdraw, which has given rise to countless changes and points of contention over the past decades.

3. The Importance of the Telephone in the Age of the Internet

While, on the one hand, advancing digitalization is also making its mark in consumer contract law, the good old telephone apparently retains its very own significance: for instance, in its indicative court order dated April 15, 2025 (12 U 130/24), the Higher Regional Court of Brandenburg ruled in a case involving a consumer construction contract that an information on the right to withdraw without a telephone number is invalid. In the case in question, this resulted in the legal consequence that the withdrawal period was extended to the maximum duration of 12 months and 14 days, which had not yet expired due to the failure to provide proper information (Section 356e, sentence 2 BGB). The Higher Regional Court of Brandenburg is thus in line with the case law of the Federal Court of Justice (decision of September 24, 2020, I ZR 169/17), which in turn stems from a judgment of the European Court of Justice of May 14, 2020 (C‑266/19, EIS GmbH v. TO). The Federal Court of Justice had stated that the failure to provide a (available) telephone number in the information on the right to withdraw was likely to lead the consumer to believe that they could not exercise their right of cancellation by telephone, thereby potentially deterring them from exercising this right. In the court’s view, such an omission was likely to significantly impair the interests of consumers.

It is noteworthy that the ruling of the Federal Court of Justice requires the inclusion of a telephone number, given that the model withdrawal form in Annex 1 to the Consumer Rights Directive (Directive 2011/83/EU) did not provide for the exercise of the right of withdrawal by telephone at all: the notification of the decision to withdraw from the contract should be made “… by means of a clear statement (e.g., a letter sent by post, fax, or email)…” Courts therefore ruled, in accordance with this provision, that withdrawal instructions that (also) included a telephone number were invalid.

In Note 2 to the model withdrawal form in effect since May 28, 2022, it is stated that the telephone number must be included in addition to the name, address, and email address. Nevertheless, several regional courts have issued rulings deeming the omission of a telephone number in the information on the right to withdraw to be immaterial. As a precaution—and in light of the Brandenburg Higher Regional Court’s decision—franchisors should not rely on these rulings as a standard.