Buying a franchise: how to assess a standard-form contract

“All our partners sign this contract.” When joining a franchise network, hearing this need not be a cause for concern: uniform rules help maintain shared standards. But it does not mean that every term is reasonable or legally effective. If you are given a ready-made document with no genuine opportunity to influence its core terms, it is worth examining not only the commercial terms but also how the contract is concluded.

When is a contract treated as a contract of adhesion?

The Czech Republic has no specific franchising act. A franchise agreement is usually an innominate contract — a contract that does not fall within a specifically defined statutory category — under section 1746(2) of Act No. 89/2012 Coll., the Civil Code. Alongside general contract law, rules on licensing, sale or lease, for example, and competition law may apply, depending on the agreement’s content.

For pre-drafted contracts, the rules on contracts of adhesion in sections 1798–1801 of the Civil Code are also important. Neither the document’s title nor the use of a template is decisive. What matters is whether one party determined the core terms and the weaker party had no genuine opportunity to influence their content.

A standard-form contract is therefore neither automatically invalid nor automatically a contract of adhesion. The assessment looks at how negotiations actually took place and the parties’ respective positions. Being able to enter the premises’ address or choose an opening date does not, in itself, show that you could negotiate key obligations.

Before signing, ask in writing which parts are open to negotiation. Distinguish between brand standards and the allocation of legal risks. A consistent appearance across outlets is not the same as a ban on proposing changes to liability for damages.

A business is not a consumer, but it can be the weaker party

A franchisee will generally enter into the agreement in connection with their business. They should therefore not expect consumer protection, such as a general right to withdraw within fourteen days simply because the contract was signed remotely.

However, being a business does not, in itself, rule out being the weaker party in a particular relationship. The assessment may take account of experience, the other party’s informational advantage or the practical scope for securing changes. A difference in company size alone is not enough to draw a firm conclusion.

In business-to-business relationships, particular attention must also be paid to section 1801 of the Civil Code: contractual departures from some of the protections for contracts of adhesion are subject to specific rules. Do not therefore dismiss a clause stating that certain protective provisions do not apply as a meaningless formality. A lawyer needs to assess its effect in the context of the whole agreement and the circumstances of the negotiations.

The practical approach is straightforward: flag every statement declaring that you negotiated the terms individually, understand everything or are not the weaker party. If these statements do not reflect reality, ask for them to be amended. Signing such a declaration may not, by itself, determine the outcome of a dispute, but it can make proving your case more difficult.

Check references, readability and particularly disadvantageous clauses

The rules on contracts of adhesion address, among other things, references to terms outside the contract itself, clauses that are difficult to read or understand, and particularly disadvantageous clauses with no reasonable justification. This does not mean that a court will remedy every commercially unattractive deal. The protection is subject to specific statutory requirements.

When reviewing the agreement, create a simple table with three columns: provision, practical impact and requested amendment. Focus in particular on the following situations:

• References to terms you have not received: the contract binds you to rules that have not been supplied to you, or whose applicable version cannot be identified.
• Unclear wording: even after repeated reading, it remains unclear what obligation you are taking on and when it arises.
• A significant imbalance: one party has broad rights while the other bears the corresponding risk, without an apparent justification.
• Blanket acknowledgements: your signature is intended to confirm receipt of documents or explanations that were never actually provided.

For each disputed clause, ask not only for an explanation but also for the commercial rationale. Protecting confidential know-how may serve a legitimate purpose across the network. That does not, however, justify every restriction on the franchisee. Make sure the explanation is then reflected in clear contractual wording, rather than left as a verbal assurance.

Keep a record of negotiations and address problems before signing

In the Czech Republic, there is no specific statutory requirement to provide a prospective franchisee with a standardised pre-contractual franchise disclosure document. General pre-contractual duties under the Civil Code nevertheless remain applicable. Nor does the absence of a specific franchising act mean that freedom of contract is unlimited.

Keep successive contract drafts, proposed amendments and the franchisor’s responses. If a change is rejected, ask for a brief written explanation. This record will help your adviser distinguish genuinely negotiated terms from wording presented unilaterally.

Before signing, have clauses excluding statutory protection and declarations about the negotiation process assessed separately. Do not assume that you can easily have an unfavourable term declared invalid later. The outcome depends on the specific circumstances, and proving your case can be costly.

Practical takeaway: Treat a standard template as the start of your review, not the end. Request the full text, propose any necessary changes in writing and do not sign acknowledgements of negotiations or explanations that do not reflect what actually happened.