Buying a franchise: how to agree terms for access to business software

Your tills, bookings, stock ordering and customer records may depend on a system chosen by the franchisor. So, when joining a franchise network, a software demonstration is not enough. You need to establish who grants you the right to use it, what it really costs and whether you can keep trading if access fails. Check these details before signing, while you can still negotiate safeguards for your business.

1. Establish what you are getting and from whom

Ask for a list of all mandatory digital tools: point-of-sale software, booking systems, online shops, ordering apps, accounting integrations and reporting tools. For each one, identify its purpose, service provider and the document governing its use.

A franchise agreement is not necessarily a software licence. You may contract directly with a technology supplier, receive access through the franchisor or use a combination of these arrangements. If the franchisor promises a service that is actually provided by a third party, check who is accountable to you if that service is not delivered.

Before deciding, ask for:

• a demo user account and a demonstration of everyday tasks;
• the terms of use and any supplementary agreements;
• a list of required equipment and internet connectivity requirements;
• confirmation of any adaptations needed to operate in Croatia;
• a description of the franchisee’s, franchisor’s and external supplier’s access permissions.

In particular, check whether your accountant can obtain the reports they need. A sales demonstration does not prove that the system supports proper accounting or compliance with applicable fiscalisation requirements — Croatia’s rules on reporting transactions to the tax authorities. Check this separately with your accountant and the software supplier.

2. Calculate the cost over the full period of use

The phrase “software included” may mean basic access only. There may be additional charges for user accounts, outlets, modules, transactions, storage, support, integrations with other software or migration of existing data.

Ask for a consolidated cost breakdown that separates initial setup from recurring and occasional costs. Include equipment, training, maintenance and any exit fees. Check whether prices include VAT and who issues the invoices.

Prepare comparable calculations for your expected level of business and for growth in staff numbers or orders. This will show whether your bill rises just as turnover starts to grow.

Agree a procedure for price changes and system replacement. Propose advance written notice, a clearly defined basis for increases and an allocation of migration costs. If the franchisor can require you to use new software, you need to know who pays for new equipment, data migration and additional training. These are points to negotiate, not rights that arise automatically from membership of a franchise network.

3. Clarify data access and the Croatian legal framework

Croatia has no specific franchising law or dedicated mandatory pre-contractual disclosure regime requiring a standardised document and a prescribed waiting period. A franchise agreement is an innominate contract — one not specifically defined as a contract type in legislation — governed primarily by the Croatian Obligations Act. Obligations relating to digital tools should therefore be clearly set out in the contract, while complying with other applicable legislation.

Personal data is subject to the General Data Protection Regulation, or GDPR, and Croatia’s Act on the Implementation of the General Data Protection Regulation. Roles depend on who actually determines the purposes and means of processing: simply stating in the contract that all data “belongs to the brand” is not enough. Depending on the processing involved, the franchisor and franchisee may have different roles as data controllers or processors.

If one party processes personal data on behalf of the other, appropriate contractual arrangements for that processing are required. Also check where the data is stored and whether any transfers outside the European Economic Area require additional safeguards.

Agree access to business records separately, including transactions, stock, orders and reports. Ask for the ability to export them regularly in a usable format. An individual’s right to data portability under the GDPR is not a general right for your company to download its entire business database. Transferring customer data to a new system must have an appropriate lawful basis and comply with purpose limitation requirements.

4. Agree procedures for interruptions and termination of access

Distinguish between technical failures, security incidents, suspension for non-payment and the end of the franchise agreement. Each situation requires a separate procedure.

The contract or a schedule should specify how to report problems, support availability, response times and recovery procedures. Ask whether backups exist, who creates and checks them, and how orders placed during an outage are handled. Any fallback arrangements must comply with applicable rules, not merely be technically feasible.

For suspension over a disputed invoice, propose advance notice and a reasonable review procedure, with exceptions where urgent action is needed to protect system security. For the end of the franchise relationship, agree a deadline for exporting records, the handover format, assistance costs and the possibility of limited access to meet statutory record-retention requirements. Do not assume that termination removes your obligations to retain business records or protect personal data.

Practical takeaway: before signing, ask for a single written schedule covering pricing, access permissions, data exports and procedures for loss of access. Review it with a lawyer, an accountant and an IT specialist before your business becomes dependent on the system.