Buying a franchise: how to check business licences and permits

A franchise agreement may give you access to a brand, but it does not automatically allow you to start trading legally. Each independent business owner within a franchise network remains responsible for obtaining the licences and permits required for their own activities. Before buying, distinguish between the franchisor’s approval and the authorities’ requirements: establish who will operate the business, exactly what it will offer and which conditions the proposed premises must meet.

1. List the actual activities, not just the name of the concept

Labels such as ‘café’, ‘fitness centre’ or ‘service point’ are not enough to determine which licences and permits you need. What matters is what the business actually does. Selling packaged goods, preparing food, providing specialist services and certain additional activities may be subject to different rules.

Ask the franchisor for a description of day-to-day operations, including secondary sources of income. Include deliveries, online sales, services provided away from the premises and activities you plan to add after opening. Do not simply copy another outlet’s list of licences without checking it: its offering or legal structure may differ from yours.

For each activity, record:

• who will provide it to the customer and charge for it;
• which business licence or authorisation it requires;
• whether professional competence or additional permits are required;
• which authority deals with the relevant requirement;
• which document confirms that the requirement has been met.

The right to use a brand and the right to carry out a business activity are two different things. Even the successful operation of other businesses in the network does not prove that you have met all the requirements yourself.

2. Check that the right person or company holds the licences

The Czech Republic has no specific franchise law or general requirement to register franchise offerings. Franchise agreements are usually treated as contracts not specifically defined by law under Section 1746(2) of Act No. 89/2012 Coll., the Civil Code. Business licensing is also governed by Act No. 455/1991 Coll., the Trade Licensing Act, alongside other sector-specific legislation depending on the activity.

The Trade Licensing Act distinguishes between trades subject to notification and trades requiring a concession. Trades subject to notification are further divided into unqualified, craft and regulated trades. Craft and regulated trades require the relevant professional competence; concession-based trades require a concession to be granted. Some activities fall outside the trade licensing system altogether and have their own statutory framework.

First, decide whether you will enter into the agreement and operate the business as an individual or through a company. The necessary licences and permits must be held by the actual operator. A licence held by the franchisor or another company in the group does not, in itself, authorise you to trade.

Compare the extract from the Czech Trade Register with your planned activities. For a new company, neither its formation nor its entry in the Commercial Register is enough. Where additional permits are required, check their holder, scope, validity and any conditions directly in the relevant documents.

3. Check professional competence and the premises separately

If you intend to use a responsible representative under the Trade Licensing Act, establish who that person will be, whether they meet the statutory requirements and how their actual involvement in running the business will be ensured. A promise that the franchisor will ‘provide someone’ is not enough. Set out the working arrangements, remuneration, availability and procedure for ending their role in writing.

A responsible representative is not automatically a substitute for the professional qualifications of individual staff members where sector-specific legislation requires them for a particular service. The brand’s internal training may be useful, but it does not, by itself, replace legally required competence.

Check the premises separately. An operator’s trade licence does not confirm that the intended activity can be carried out at any premises. Depending on the operation, building, hygiene, fire safety and other requirements may be decisive. The use of buildings is governed by Act No. 283/2021 Coll., the Building Act; other obligations depend on the specific activity.

Ask for documents confirming the permitted use of the premises and compare them with your proposed operation. Neither the premises’ previous use nor the franchisor’s approval of the design will necessarily be sufficient. Changes to equipment, capacity or the products and services offered may require a fresh assessment. Discuss any uncertainties with the relevant authority or a specialist before committing to expenditure you cannot recover.

4. Turn your checks into a concrete plan before buying

For each licence or permit, identify the person responsible, the supporting documents needed and the point by which the requirement must be met. Budget not only for administrative fees, but also for professional services, qualified personnel and any necessary changes to the operation. Check costs for your own project rather than relying solely on the brand’s template budget.

Specify in the contractual documents which supporting materials the franchisor will supply and which you must arrange yourself. A broad promise of ‘help with permits’ does not tell you whether you will receive only a list of authorities or also technical documentation and specialist assistance. Also clarify what happens if a required licence or permit cannot be obtained for the approved concept or premises.

Carry out a final document check before opening. For each document, the holder, scope and fulfilment of any conditions must be clear. Keep the documents accessible and assign responsibility for monitoring changes to the offering, staff or premises that could trigger new obligations.

Practical takeaway: Before buying, bring together your list of activities, the operator’s licences and permits, and the documents relating to the premises. Only when these align will you know whether you can actually start trading under your chosen brand.