Favre, who previously coached Hertha Berlin and Borussia Mönchengladbach, has brought some stability to Dortmund since arriving from French club Nice. However, after a strong opening half of the season, Dortmund dropped a nine-point lead to allow Bayern Munich to win a seventh straight league title.
The club has already signed internationals Thorgan Hazard, Julian Brandt and Nico Schulz to boost its chances for next season. Dortmund is also reportedly in talks with Bayern about bringing former captain Mats Hummels back to the club.
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