Buying a franchise in Belgium: who owns the fit-out?

An attractive franchise outlet may come fully fitted and ready to open. Yet paying the start-up costs does not mean that the counter, refrigeration system or till then belongs to you. Across the franchise sector, assets may be purchased, rented or made available for use. Checking who owns the fit-out before signing helps you avoid paying twice for the same investment or offering assets as security when they do not belong to you.

1. Distinguish between use and ownership

Start by asking for a list of all the physical assets needed to run the outlet: furniture, machinery, kitchen equipment, computers, tills and external signage. Include built-in installations too. For each item, record who supplies it, who owns it and on what basis you are entitled to use it.

There are several possibilities:

• Purchase: you buy the asset, but should check when ownership actually passes to you.
• Rental: you pay to use the asset; this does not normally make you its owner.
• Leasing: the agreement determines ownership and any option to purchase.
• Provision for use: the franchisor lets you use equipment on agreed terms, without necessarily transferring ownership to you.

A payment described as a ‘fit-out package’ does not answer these questions. Ask for a breakdown covering goods, installation, design work and usage charges. Paying for a design or installation does not, in itself, give you ownership of the equipment installed.

When taking over an existing business, you also need to establish which assets the seller can actually transfer. A machine on the premises may belong to a rental provider or leasing company.

2. Check the evidence behind the inventory

Ask to see purchase invoices, rental or lease agreements and relevant supply terms for significant assets. Compare the descriptions and, where available, serial numbers with the equipment on site. An accounting fixed asset register is a useful starting point, but is no substitute for these checks.

When buying, look for any retention of title clause: a supplier may stipulate that ownership passes only once payment has been made in full. Ask not just for the invoice, but also for confirmation of the payment status and the applicable terms. If in doubt, have an adviser check whether the seller can transfer the asset free of third-party rights.

Then ask three specific questions:

1. Do any third parties have rights over the equipment?
2. Is consent required to take over a rental or lease agreement?
3. Who will ensure that outstanding obligations are settled before or at completion of the transfer?

Deal with built-in items separately. For fixed refrigeration or ventilation systems, for example, the premises lease and rules governing immovable property may be relevant. Establish who has rights over them and who, if anyone, is entitled to remove them; do not rely solely on who paid for the installation.

3. Calculate the true cost of each item

Ownership does not automatically determine who bears all the costs. Even with rented equipment, you may be contractually responsible for maintenance, repairs or insurance. Alongside each ownership arrangement, list the associated financial obligations.

Do not simply compare the purchase price with a monthly rental charge. Include delivery, connection, maintenance, mandatory inspections where applicable, insurance and any replacement costs. Check whether maintenance is already covered by another fee. This will help you avoid budgeting twice for the same service.

For used equipment, ask about its age, maintenance history and known faults. Agree on the condition in which it will be supplied and how defects identified at handover will be dealt with. Also clarify who will replace faulty equipment and who will bear the costs if a breakdown temporarily prevents the business from operating.

Discuss the ownership list with your finance provider. Equipment that you merely rent or use cannot simply be presented as your own assets. Nor is a future purchase option the same as current ownership. Make sure your financing plan reflects the actual contractual arrangements.

4. Put the arrangements in writing before committing

Belgium does not have a single, comprehensive franchise law. However, Book X, Title 2, of the Belgian Code of Economic Law (WER) sets out specific pre-contractual disclosure obligations for commercial cooperation agreements, including franchise agreements that fall within the statutory definition.

Under Article X.27 of the Code, you must receive the draft agreement and the pre-contractual disclosure document at least one month before entering into the agreement. Use this period to have the fit-out arrangements reviewed from both a legal and a financial perspective. The statutory disclosure obligation is no substitute for checking ownership of each asset. Purchases, rentals and ownership are also governed by the applicable general rules of law and separate agreements.

Set out in writing which assets you are buying, when ownership passes and which assets are merely being made available for your use. For equipment belonging to the franchisor, the return arrangements also matter: check the required condition, any removal costs and how wear and tear will be handled. Equipment that must be returned should not appear in your business plan as a source of future sale proceeds.

Practical takeaway: do not sign until four things are clear for every significant item: who owns it, your right to use it, your total costs and what happens to it when your use ends.