Franchise agreement template: checks for Croatia

When preparing an existing business for expansion, a downloaded franchise agreement template may seem like a quick route to securing your first partner. However, a document drafted for another country or a different business model may contain inapplicable obligations, outdated procedures and promises you cannot fulfil. To build a franchise network responsibly, treat a template as a working document, not a finished legal product.

1. Establish its origins and legal assumptions first

Before changing names and amounts, note which country the template comes from, when it was drafted and what type of business it was designed for. An agreement for a retail network will not automatically suit a service concept, and a document governing a relationship with a large regional partner is not the same as an agreement for a single outlet.

Croatia has no dedicated law comprehensively regulating franchising. A franchise agreement is treated as an innominate contract—a contract not specifically defined by law—and is subject to the general rules of the Croatian Civil Obligations Act. Freedom of contract is not unlimited, however: its provisions must comply with mandatory rules and public morals, and the contracting parties must observe the principle of good faith and fair dealing.

Depending on the nature of the relationship, the Competition Act, Trade Mark Act, Companies Act and sector-specific regulations may also be relevant. European Union competition rules also apply where the conditions for their application are met.

Make a list of every law, authority, register and certificate mentioned. Mark each item as applicable, inapplicable or requiring further legal review. Simply translating the name of a foreign authority does not adapt a document to Croatian law.

2. Remove outdated and incorrectly imported obligations

Older materials may refer to submitting a franchise agreement to the Croatian Competition Agency (AZTN) within 30 days. There is currently no general obligation to notify AZTN of every franchise agreement for approval. This does not mean the agreement is exempt from competition rules: the contracting parties are responsible for ensuring that its provisions comply.

Pay particular attention to clauses restricting the setting of resale prices, sales outside a defined territory or dealings with competitors. The fact that a clause appears in a well-known brand’s template does not establish that it is lawful.

Take equal care with pre-contractual disclosure forms from other countries. Croatia has no specific statutory franchise disclosure document or uniform, franchise-specific statutory deadline for providing one. Nevertheless, the absence of such a form does not remove obligations arising from the general rules on negotiations and good-faith conduct.

The European Code of Ethics for Franchising is a useful self-regulatory framework, but it is not Croatian law. Check whether you are bound to comply with it through association membership or contractual agreement. Clearly distinguish in the document between statutory obligations and standards you voluntarily adopt.

3. Check who actually grants the rights and fulfils the promises

A template often assumes that the franchisor is also the trade mark owner, the author of the manual, the equipment supplier and the support provider. In an existing business, these roles may belong to different individuals or companies.

For example, the trade mark may be registered in the founder’s name, while their company enters into the franchise agreement. In that case, check whether the company has the necessary right to use the trade mark and to authorise the franchisee to use it. It is not enough for everyone involved to regard the brand as “theirs”.

For each promise in the template, carry out a brief check:

• Responsible party: which company or individual must deliver it?
• Legal basis: is there a right to use it, or has the necessary consent been obtained?
• Operational capacity: do you have the people, equipment and time to fulfil it?
• Evidence of fulfilment: how will you record delivery or the service provided?

If the template promises a continuously available IT system, check what your supplier actually guarantees. If it includes photographs, software or training materials created by third parties, check whether your existing agreements allow their use across the franchise network. You cannot safely grant rights under a franchise agreement that you do not hold.

4. Test the document against real business situations

Before the final legal review, go through the template with the people responsible for operations, finance and support. The aim is not for them to replace a lawyer, but to identify provisions that do not reflect how the business actually works.

Choose a few common situations: handing over the initial package, calculating the monthly fee, a breakdown of mandatory equipment and the temporary unavailability of a key supplier. For each one, try to establish from the documentation alone who takes action, what they must do, by when and who bears the cost.

Then compare the agreement with its schedules, the offer made to the prospective franchisee and the operations manual. Check that they all use the same name for each fee, the same description of each service and the same definitions of an outlet. Blank fields, incorrect cross-references and inconsistent schedules are not merely editorial oversights: they can create different expectations about what an obligation entails.

Give your lawyer the annotated template, a list of outstanding questions and a description of the actual business model. This allows the legal review to address the specific relationship, rather than simply polishing the wording.

Practical takeaway: before offering your first franchise, check the template’s origins, the applicable law, the franchisor’s authority and the feasibility of every promise. A good agreement does not copy someone else’s franchise; it accurately governs your own.