Franchising in Croatia: are business licences transferable?

A successful business may depend on an authorisation issued to your company, the owner’s personal professional qualifications or the suitability of particular premises. None of these should be treated as automatically transferable through a franchise agreement. Before bringing a partner into your franchise network, check whether another business can lawfully operate the same concept — and what it must put in place itself.

Separate the right to operate a franchise from the right to carry out the business activity

A franchise agreement may give the franchisee the right to use a trade mark, know-how and operating methods. However, the franchisor’s contractual permission is no substitute for authorisation from the competent authority, a prescribed qualification or other requirements for carrying out a particular activity.

Croatia has no dedicated law comprehensively governing franchising, nor a specific statutory regime requiring a pre-contractual franchise disclosure document. The contractual relationship is governed by the Civil Obligations Act, including its principles of good faith and fair dealing. Depending on the issue, the Companies Act, Competition Act, Trade Mark Act and sector-specific regulations may also be relevant.

This means that saying ‘we operate as a franchise’ does not establish whether a partner is permitted to provide a particular service. The franchisee is an independent business operating in its own name and for its own account. The requirements that apply to it must be checked separately.

According to government information on the requirements for carrying out business activities, the rules depend on the activity and regulated profession concerned. Many business services do not require specific authorisation, while others may require documentation, licences or professional qualifications. Rather than drawing up a generic list of ‘franchise licences’, prepare a list of requirements for the actual activities involved in your concept.

Identify what makes your existing operation legally compliant

Start with your own outlet. Gather the official decisions, certificates, contracts and evidence of qualifications on which the business relies. Do not stop at the description of the registered business activity: record what employees actually do and what is actually sold to customers.

For each document, establish:

• Holder: does it relate to the company, a sole trader, a particular individual or the premises?
• Scope: which activities does it cover, and are there any restrictions?
• Ongoing requirements: does it require renewal, continued compliance with particular conditions or notification of changes?
• Application to the partner: is a new procedure, separate evidence or a check by the competent authority required?

Pay particular attention to requirements currently met by the founder personally. If the owner holds a necessary qualification, that does not mean the franchisee or one of its employees will hold it too. Equally, equipment that meets the needs of the existing outlet does not establish that different premises will satisfy all applicable requirements.

The result should be a simple table with columns for: activity, legal requirement, evidence, holder, competent authority and outstanding question. Mark any unverified assumption as an outstanding question, not as a requirement that has been met.

Check whether a partner can replicate the model without relying on your personal circumstances

The next step is not to draft a contractual clause, but to assess feasibility. Imagine a partner who does not have your qualifications, your premises or your existing authorisation. Can they lawfully provide the full range of products and services with the staff and equipment available to them?

For example, a concept may combine product sales with a service subject to additional professional requirements. Presenting both as a single offering to customers does not mean the same legal requirements apply to both activities. For each one, establish separately who may carry it out and what evidence is required.

If the answer is unclear, prepare a specific description of the activities and seek clarification from the competent authority. Where necessary, also check regional or local requirements. A general question such as ‘what do you need to run a franchise?’ is usually not precise enough.

The franchisor’s in-house training is not automatically a recognised professional qualification. It may demonstrate competence in your procedures, but it does not replace statutory requirements. If a qualified person is essential, also assess what happens if they take an extended period of leave or stop working for the business.

Where a particular activity is difficult to replicate, consider a more limited initial offering. Have this adaptation legally reviewed in advance and distinguish it clearly from the full concept, rather than promising a partner a service they may not be able to provide.

Introduce record-keeping that tracks changes

The checks do not end once the initial documents have been collected. Changes to equipment, the product or service range, premises or the person responsible may require a fresh assessment of the conditions for operating the business.

Decide who within the franchisor’s business will monitor changes to relevant regulations, and who within the franchisee’s business will retain evidence and report changes. In your documentation, clearly distinguish legal requirements from additional franchise network standards. Partners must know whether an obligation arises from legislation or from the agreed way of working.

For each check, record the date, the person who carried it out and the basis for the conclusion. Collect sensitive personal documents only to the extent necessary. Where an issue is uncertain, involve a lawyer or a specialist in the relevant sector, rather than treating an old authorisation for another outlet as a universal template.

Practical takeaway: before offering a franchise, draw up a table of requirements for each activity. For every requirement, identify the holder, the evidence needed and how the partner will meet it independently. Pass on a proven way of working, not the assumption that its licences come with it.