Buying a franchise: which document takes precedence?

When you join a franchise network, you may be agreeing to more than a single document. Alongside the main agreement, you may be bound by schedules, an operations manual, price lists and rules on the franchisor’s internal portal. If these documents deal with the same issue differently, there is scope for a dispute. Before buying a franchise, establish which document takes precedence, which version applies and how the rules may be changed.

1. Establish what actually forms part of the agreement

Not every document you receive from the franchisor automatically forms part of the agreement. Equally, a document you have not signed separately may still be relevant if the agreement refers to it and the legal requirements for incorporating it into the contractual relationship have been met.

Go through the draft and highlight phrases such as “forms an integral part of this agreement”, “under the current manual” and “in accordance with the franchisor’s rules”. For each reference, note:

• the document’s full title and purpose;
• its date or version number;
• how it was supplied to you;
• the provisions of the main agreement that it supplements;
• the person or body authorised to amend it.

Pay particular attention to whether a schedule refers to another document. For example, the agreement may refer to the manual, which in turn refers to separate digital rules you have never seen. This creates a chain of obligations whose full scope is not apparent from the document you sign.

Ask for a definitive, clearly identified list of contractual documents. If the franchisor restricts access to the manual on confidentiality grounds, arrange to review it under appropriate confidentiality safeguards before committing. Do not confirm that you have read and accepted a document unless you have actually been given access to it.

2. Distinguish legal rules from ethical guidelines

Croatia has no dedicated law comprehensively governing franchising, nor a specific general regime requiring pre-contractual disclosure and registration of franchise offerings. A franchise agreement is an innominate contract — one not specifically defined as a contract type in legislation — and its principal legal basis is the Croatian Civil Obligations Act. Depending on the nature of the relationship, the Competition Act, the Trade Mark Act and other applicable legislation may also be relevant.

The Civil Obligations Act’s rules on standard terms and conditions are particularly important when considering the relationship between the main agreement and supporting documents. They determine when standard terms bind the other party. Where standard terms conflict with specifically agreed terms, the specifically agreed terms prevail. However, not every schedule automatically constitutes standard terms, and not every ambiguity has an obvious answer in advance.

The European Code of Ethics for Franchising, adopted by the European Franchise Federation, provides self-regulatory guidelines; it is not Croatian law. Check whether the franchisor is required to comply with it through membership of an association or expressly incorporates it into the agreement. A commitment to ethical business practices does not, by itself, replace precise contractual provisions.

Give your lawyer the full set of documents, not just the main agreement. Without the schedules, it is impossible to assess reliably the full extent of the obligations you are taking on.

3. Agree an order of precedence and limits on the manual

The most practical solution is an express clause setting out the order of precedence between documents. It should explain which provision applies when two provisions address the same issue in incompatible ways.

As a starting point for negotiations, you could propose that individually agreed and signed amendments take precedence over the main agreement, the main agreement over the schedules, and the schedules over the operations manual. This is not a universal legal rule: the order should reflect the actual content. If specific commercial terms are set out in a schedule, that schedule may need to take precedence for the matters it covers.

For example, the main agreement might permit a particular service while the manual prohibits it. Simply saying that the documents should be “read together” is not enough. You need to establish which provision prevails and how the contradiction will be resolved.

Also distinguish the purposes of the different documents. The manual may set out detailed operating procedures, but the agreement can limit the extent to which amendments to it may change fundamental commercial rights and obligations. Ask for a clear notification procedure, an effective date for changes and an accessible record of previous versions.

4. Include agreed promises in the final text

Drafts often contain a clause stating that the agreement constitutes the entire agreement between the parties and supersedes earlier discussions, presentations and correspondence. Do not treat this as a mere formality.

If a promise made in an email or offer is crucial to your decision, ask for it to be included in the agreement or a clearly identified schedule. “We will agree this later” is not the same as a definite obligation. Specify what must be done, who is responsible and when it must be done.

This does not mean that an entire agreement clause automatically removes all liability for inaccurate statements made during negotiations. However, recording a promise properly reduces difficulties in proving what was agreed and the risk of conflicting interpretations.

Before signing, compare the final package with the last agreed draft. Keep the signed agreement, all schedules and the accepted versions of the rules in a format you can continue to access, rather than relying solely on a portal that the franchisor may later change.

Practical takeaway: before signing, you should be able to answer three questions: which documents bind you, which takes precedence, and who is authorised to change their content? If the answers are unclear, the contractual package is not yet ready to sign.