Buying a franchise: aligning the agreement, schedules and sales promises

When you join a franchise network, you are not simply buying the promise of an established brand. You are taking on a set of obligations that may be spread across the agreement, schedules, terms and conditions, and other documents. Problems arise when they say different things: the offer promises an individual exemption, the schedule makes no provision for it, and the agreement declares that all previous arrangements have been superseded. Before signing, therefore, check not only the individual terms but also how the documents work together.

1. Draw up a complete list of binding documents

Ask the franchisor for the final set of documents to be signed, together with all the material they refer to. The main agreement alone, accompanied by a note saying that the schedules will follow later, is not enough. If your signature confirms that you have received or read them, you must have a genuine opportunity to review them.

For each document, record its title, date, version number or identifier, and purpose. Distinguish between three groups:

• Contract documents: the main agreement, amendments, schedules and terms and conditions intended to form part of the agreement.
• Separate agreements: for example, a licence or service agreement entered into with another company.
• Material informing your decision: presentations, offers, meeting notes and emails containing important promises.

Where documents refer to an online repository, also request a copy you can save of the version applicable at signing. A web address alone does not prove what content was available there on a particular date. Pay particular attention to blank schedules, missing details and wording such as “to be determined by head office”.

The result should be a simple checklist that allows you to see whether anything is missing. Give the same list to your lawyer: reviewing only the main agreement may not reveal an obligation hidden in the terms it refers to.

2. Understand the protection offered by Czech law

The Czech Republic has no specific franchise law. A franchise agreement is generally concluded as an agreement of a type not specifically defined by law under Section 1746(2) of Act No. 89/2012 Coll., the Civil Code. Depending on its content, general rules governing matters such as licensing, sales or leases will also apply, alongside other relevant legislation, including competition law.

There is no specific requirement to register franchise agreements or to provide prospective franchisees with a standard statutory disclosure document. This does not, however, give franchisors free rein to withhold material information. The Civil Code’s general rules on good faith in pre-contractual negotiations and duties to provide information still apply.

When reviewing schedules, the rules on terms and conditions, their incorporation into the agreement and unexpected provisions are also important. A reference to another document may not, in every circumstance, be enough to give all its provisions their intended effect. The assessment depends on the precise wording and the circumstances in which the agreement was concluded.

The European Code of Ethics for Franchising is neither Czech law nor state approval of an agreement. If the franchisor refers to it, check what obligations this actually creates for them. Do not base your protection on the assumption that the law will automatically resolve ambiguities in your favour later.

3. Put decisive promises into the signed agreement

List the statements without which you would not buy the franchise. These might include approval for a particular premises layout, an exemption from a specific standard or permission to continue using an existing administrative system. For each statement, find the corresponding provision in the final documents.

If you cannot find it, ask for it to be added. Replace a general assurance such as “that won’t be a problem” with a precise description: what is permitted, at which premises, for how long, and under what conditions the approval can be changed. Also check that the arrangement is confirmed by someone authorised to act for the relevant contracting party.

Watch out for a clause stating that the contract constitutes the entire agreement between the parties and supersedes previous negotiations. Such wording can make it considerably harder to enforce a sales promise that appears only in a presentation. It does not, however, automatically exclude all liability arising from pre-contractual negotiations.

Keep the original offers and correspondence even after signing. They may be important when interpreting the agreement or establishing what happened during negotiations. Keeping these records is no substitute, however, for a clearly agreed contractual right.

4. Agree the order of precedence and check the final version

The agreement should clearly state which document takes precedence if there is a conflict. An individually negotiated exemption should not fall away simply because a general schedule contains a conflicting rule. Ask for a specific solution for each such exemption, rather than a vague statement that “special provisions” take precedence.

At the same time, distinguish between the order of precedence and the power to amend documents. Giving a schedule precedence does not, in itself, answer the question of who may update it or what effect an update will have. Check how changes must be notified, when they take effect and what procedure applies if a change affects individually negotiated terms. Have the lawfulness of unilateral changes assessed separately.

Carry out a final check before signing:

• Compare the version to be signed with the last agreed version.
• Check the numbers and titles of all schedules and ensure that the correct contracting parties are named.
• Remove blank spaces and broken links.
• Save the signed set of documents, including schedules and proof of delivery.

Practical takeaway: Do not sign until you can point to a binding provision for every decisive promise and explain why it takes precedence if a conflict arises.