Buying a franchise: how to limit unilateral changes to terms

Buying a franchise means joining a network whose rules evolve over time. New procedures may improve the business, but they can also bring obligations you did not anticipate when investing. Before signing, check not only the current terms but also who can change them, through what process and with what safeguards for the franchisee. A changes clause can significantly affect the actual value of the deal.

1. Identify every power to change the rules

The franchisor’s right to change terms may not appear in a clause headed ‘Contract amendments’. It may sit within provisions on brand standards, the operations manual, franchisee obligations or notices. Pay particular attention to wording such as ‘in accordance with rules set by the franchisor from time to time’ and ‘the franchisee accepts all future changes’.

Ask for the current manual or, if access before signing is restricted for confidentiality reasons, a sufficiently detailed overview of the obligations and the process for changing them. Ask what changes have been introduced recently and how existing franchisees implemented them. The aim is not to secure a promise that nothing will change, but to understand the practical scope of the franchisor’s powers.

Draw up a list of areas that may change, such as:

• service delivery procedures and quality checks;
• mandatory opening hours and availability to customers;
• reporting methods and administrative tasks;
• compulsory training and how it is delivered;
• new services or tasks that the outlet must take on.

For each area, record who makes the decision, how it is communicated and whether your consent is required. Any gap in that table means you need further clarification in the contract.

2. Distinguish adjustments to standards from contract amendments

Croatia has no dedicated franchise legislation or specific mandatory pre-contractual disclosure regime requiring a standardised document and a prescribed waiting period. A franchise agreement is an innominate contract, meaning it is not a separately defined statutory contract type, and the contractual relationship is governed primarily by the Croatian Obligations Act (Zakon o obveznim odnosima). Depending on the nature of the change, other general legislation may also be relevant, such as the Croatian Competition Act.

Freedom of contract does not mean that every power granted to the franchisor in advance is unlimited. Mandatory legal provisions, the principle of good faith and fair dealing, and rules on standard contract terms all matter. The validity and scope of a particular provision depend on its wording and the circumstances, so it is unsafe to assume either that every unilateral change is permitted or that it is automatically void.

During negotiations, distinguish operational adjustments within the agreed business model from changes to core contractual obligations. Updating serving instructions is not the same as requiring an entirely new service that calls for additional staff.

Propose that the contract expressly identify which changes the franchisor can introduce unilaterally and which require a written amendment agreed by both parties. In particular, protect agreed fees, the scope of the business and other key commercial terms from being changed by a simple notice or a new version of the manual.

3. Agree a procedure, not just a right to notice

Notice is of little value if a change takes effect immediately, comes without an explanation or is sent to someone who does not monitor official communications. The contract should therefore define the delivery channel, authorised recipients and the point at which the adjustment period begins.

For each significant change, propose a notice containing:

• a description of the existing and new rule;
• the reason for the change and its expected impact;
• the date it takes effect;
• the actions required of the franchisee;
• the training or other assistance available from the franchisor.

The transition period should reflect the complexity of the change. An administrative adjustment and a reorganisation of working arrangements do not require the same preparation. Do not accept a provision allowing any change to be declared urgent without explanation.

An accelerated procedure may be necessary for changes required to comply with legislation or address an immediate health and safety risk. Even then, ask for a clear explanation of why urgent action is needed and to what extent, followed by written confirmation of the instructions. An agreed procedure cannot postpone a legal obligation that is already in force.

Keep every version of the rules and the corresponding notice. Without a record, it may later be difficult to establish what applied at a particular time and whether you acted within the required deadline.

4. Plan for changes that place a substantial burden on the business

The ability to submit an objection is not sufficient protection on its own. Agree who should receive it, the deadline for a response and a process for discussing adjustments. Explicitly clarify whether an objection suspends implementation of the change: do not assume that the obligation is on hold simply because you have objected.

For more significant changes, propose an assessment of the additional work, investment and time required before implementation. Possible contractual solutions include phased introduction, a temporary exemption for a particular outlet, additional support or an agreed allocation of costs. These are matters for negotiation, not automatic rights available to every franchisee.

If a change exceeds pre-agreed limits, discuss with a lawyer a specific right to terminate the contract and its financial consequences. Such a right must have clear conditions; a vague possibility of ‘reaching agreement later’ offers little certainty.

Practical takeaway: before signing, check whether you can answer four questions about any future change: who decides, what can they change, how much time do you have and what can you do if the change exceeds the agreed limits?