Buying a Franchise: Pre-contract Disclosure in Croatia

Before joining a franchise network, a brand presentation and a draft agreement are not enough. To make a sound decision, you need verifiable information about what you are buying, the obligations you are taking on and any issues that remain unresolved. In Croatia, it is particularly important to agree in advance what information the franchisor will provide, as there is no specific statutory pre-contract disclosure package for franchises.

What Croatian law requires — and what it does not

Croatia has no specific franchise law requiring a standardised disclosure document for prospective franchisees, a particular deadline for providing it or a mandatory register of franchise offers. A franchise agreement is generally an innominate contract: it is not separately and comprehensively regulated as a distinct type of contract.

This does not mean that negotiations fall outside the law. The Croatian Civil Obligations Act applies, including the principle of good faith and fair dealing and the rules on liability for negotiating in breach of that principle. Depending on the circumstances, deliberate deception or a material mistake may provide grounds for challenging the agreement and claiming damages. However, an incomplete answer does not, in itself, automatically entitle you to recover your entire investment.

Other relevant legislation also applies to the relationship, including the Croatian Competition Act and applicable European Union rules, while brand rights are covered by the Trade Marks Act. The European Code of Ethics for Franchising is not Croatian law and does not replace statutory protection.

If a foreign franchisor supplies a document prepared under the rules of its home country, do not assume that this confirms the offer complies with Croatian law. A lawyer should check which law governs the particular relationship and which mandatory rules apply regardless of the parties’ choice of law.

Request a single information package

Rather than asking a series of verbal questions, send a written request listing the information you need. The aim is not to collect as much paperwork as possible, but to link every important statement to a document, a responsible person and a date.

For your pre-contract review, request:

• Details of the offer: the full legal name of the contracting party, a description of the franchise model and the market in which it is being offered.
• Contractual documentation: the complete draft agreement, all schedules and a list of any additional agreements you will need to enter into.
• A breakdown of financial obligations: all fees payable to the franchisor or related parties, how they are calculated and the conditions under which they may change.
• A description of what you will receive: specific deliverables, deadlines and the terms on which the franchisor provides support.
• Network information: an overview of company-owned and franchised outlets, together with information on closures and franchise relationships that have ended over a clearly defined period.
• Known material constraints: disputes or other circumstances that could affect the franchisor’s ability to fulfil the obligations being offered.

This is a practical due diligence request, not a list of information that every franchisor must disclose under a specific Croatian franchise law. If a request is refused, ask for an explanation and consider how much the missing information increases your risk.

Distinguish between facts, forecasts and promises

Sort the answers you receive into three categories. A fact might be the number of outlets on a particular date. A forecast is an expectation about the network’s future development. A promise is a commitment by the franchisor to do something for you. Each category requires a different approach to verification.

For facts, ask who compiled the information, what period it covers and whether supporting documents are available. For forecasts, request the underlying assumptions and a clear indication of the uncertainties involved. Promises that are crucial to your purchase decision should become specific contractual obligations, rather than remaining solely in a sales presentation.

Keep a simple table recording the question, answer, evidence, date and any unresolved issue. This will help you see whether a claim is supported by evidence or merely repeated across several promotional materials.

Pay particular attention to phrases such as “full support” or “ready for the Croatian market”. Ask what they mean in your specific case. For example, who checks local operating requirements, and which parts of the system have already been adapted? A broadly positive answer is no substitute for clearly assigned responsibility.

Agree the process before signing or paying

Propose that the documentation be provided early enough to allow an independent legal and financial review. As there is no specific statutory deadline for supplying a franchise information package, expressly agree a reasonable review period. Do not treat an agreed deadline as a statutory right.

Also request written confirmation of any significant changes made during negotiations. If fees, the scope of support or other material terms change, review the revised version before making your decision. Keep presentations, emails and dated documents; after a meeting, send a summary of what was agreed and ask for confirmation.

Confidentiality may justify controlled access or anonymised information, but it does not remove the need to understand the obligation you are taking on. If key information remains unavailable, decide whether you can limit the risk through the contract or whether it would be safer to stop negotiations.

Practical takeaway: before signing, draw up a list of critical questions and do not consider them resolved without evidence or a clear contractual commitment. A good information package does not guarantee success, but it provides the foundation for an informed decision.