Opening a franchise in Croatia: agree deadlines and prerequisites

Between signing a franchise agreement and serving the first customer, there is a period when costs are already mounting but no revenue is coming in. For an established business owner developing a franchise network, this presents an important contractual task: defining what must be ready before opening, who is responsible for providing it and what happens if preparations stall. An opening date alone is not enough without clear prerequisites and an allocation of responsibilities.

1. Distinguish the target date from the binding deadline

The target date helps with planning recruitment, deliveries and promotion. The binding deadline sets the date by which the franchisee must fulfil a contractual obligation. These dates may be the same, but that should not happen by accident — for example, because a date from a sales presentation has been copied into the agreement without proper consideration.

Before agreeing a deadline, map out the sequence of tasks. Fitting out the premises may depend on design plans, installing equipment on completed utility installations, and practical training on the availability of equipment. Do not plan every task as though it can start at the same time.

For each key stage, record:

• the person responsible for completing it;
• the prerequisite for work to begin;
• the expected completion date;
• evidence that the task has been completed;
• the procedure for reporting a potential delay.

Link the deadline to a clearly defined event. If the time allowed runs from the handover of the premises or delivery of design plans, define what constitutes a proper handover or a complete set of documents. Otherwise, the two parties may calculate different dates while believing they have agreed the same thing.

2. Draw up a checklist of opening prerequisites

Opening prerequisites should be verifiable, rather than expressed in terms such as “the outlet is fully ready”. Distinguish between the legal requirements for carrying out the business activity and the franchise network’s internal standards. The franchisor’s approval does not replace any official approvals, permits or other obligations under the regulations applicable to that particular activity.

A practical checklist might cover the right to use the premises, completed building works, functioning equipment, sufficient stock, trained staff and testing of the payment system. Specify suitable evidence for each item. Depending on the task, this might be a handover report, confirmation that training has been completed or the results of a functional test.

The checklist must also include the franchisor’s obligations. The franchisee cannot complete preparations if agreed drawings, software access or outlet signage materials are late. Allocate responsibility to the party that can actually control each task.

A jointly prepared readiness report is useful, with three possible outcomes: ready to open, defects requiring correction, or permission to begin trading with minor defects that do not compromise legal compliance or safety. The last option requires limits and a deadline for corrective action to be defined in advance; it must not become a way of circumventing mandatory requirements.

3. Agree a postponement procedure, not just the consequences

Croatia has no dedicated franchise law or specific statutory regime requiring pre-contractual franchise disclosure or franchise registration. This does not mean that parties have unlimited freedom when drafting their agreement. Contractual obligations, delays and liability are governed by the Croatian Civil Obligations Act (Zakon o obveznim odnosima). Depending on the nature of the relationship, the Competition Act, the Trade Marks Act and sector-specific regulations may also be relevant.

The European Code of Ethics for Franchising can serve as an industry guideline, but it is not Croatian law and does not replace statutory obligations. The agreement and its annexes should therefore undergo legal review as a single, integrated set of documents.

Provide for written notice of a delay, stating the reason, the tasks affected, the proposed new deadline and measures to reduce its impact. Then specify who approves the revised schedule and how quickly they must respond.

Distinguish between delays caused by the franchisee, delays caused by the franchisor and external circumstances. A supplier delay is not automatically force majeure, nor does every administrative hold-up justify an indefinite extension. The legal consequences depend on the facts and the agreement.

If you intend to include a contractual penalty for delay in fulfilling the non-monetary obligation to open, a lawyer should check whether it is permissible and how it is worded. A contractual penalty cannot be agreed for monetary obligations. Also clearly define any additional period allowed for performance and the conditions for possible termination.

4. Link deadlines to costs and the opening announcement

Every change of date affects cash flow. Rent, staff wages before trading begins, equipment storage and promotional activity already commissioned may continue to generate costs. The opening plan should show which financial commitments arise immediately and which arise only after a particular stage.

The agreement should clearly state when each franchise fee becomes payable. Signing the agreement, handing over the franchise system and starting to trade are different events. Do not leave the franchisee to discover from an invoice which event triggers payment. In particular, clarify what happens if opening is delayed because the franchisor has failed to fulfil an obligation.

Coordinate the public announcement of the opening date with the readiness check. For example, it is not sensible to advertise an opening date as definite while a delivery date for essential equipment remains unconfirmed. Specify who approves the announcement and who informs customers if opening is postponed.

Practical takeaway: before signing, prepare a single, jointly agreed opening plan covering deadlines, evidence of completion, responsibilities and the postponement procedure. Align it with the agreement so that both parties know not only when the outlet is due to open, but also under what conditions.