Buying a franchise: how to check permits before opening

Choosing a brand, finding suitable premises and securing finance do not, on their own, mean you can open for business. Experience and operating procedures are shared across the franchise community, but legal requirements must be met by the individual business operator and at the specific premises. Before buying a franchise in the Czech Republic, check whether you can actually start your intended activities at the chosen location. Otherwise, you could be paying staff and making repayments on equipment while waiting for an opening date beyond your control.

1. Separate the brand licence from authorisation to trade

The Czech Republic has no specific franchise legislation or compulsory state registration of franchise concepts. A franchise agreement is usually an agreement not specifically defined by law, concluded under Section 1746(2) of Act No. 89/2012 Coll., the Civil Code. A licence from the franchisor is therefore not official permission to operate and does not replace a trade licence or any other required authorisation.

Act No. 455/1991 Coll., the Trade Licensing Act, is particularly important when setting up a business. Depending on the activities actually carried out, a business may fall within the Czech categories of unqualified, craft, regulated or concession-based trades. Some activities are governed by specific legislation outside the trade licensing system. Simply copying another outlet’s list of authorisations is not enough: its range of services may differ from yours.

List all your planned activities, including ancillary ones. A café may sell packaged products as well as prepare drinks; a sports franchise may also offer professionally led classes. For each activity, check the required authorisation and any professional qualification requirements. If you need a responsible representative under Czech trade licensing law, establish their availability and check the statutory requirements before making a binding investment commitment.

The right to use a brand and the right to carry out an activity are two different things. An overview from head office is a useful starting point, not confirmation that your business meets every requirement.

2. Check the specific premises and how you intend to operate

Premises may suit the brand’s image without being suitable for the intended use. Ask for documentation confirming their permitted use and compare it with your planned operations. Capacity, building alterations, ventilation, sanitary facilities, noise and fire safety may all be decisive. Building matters are governed primarily by Act No. 283/2021 Coll., the Building Act, as amended; the specific procedure depends on the proposal and the condition of the premises.

Have the premises assessed by an appropriate specialist before ordering bespoke equipment. Where necessary, check the procedure with the building authority or other relevant authorities. Distinguish between a preliminary consultation and a formal decision: a helpful phone call does not constitute permission.

Food businesses are also subject to food safety and hygiene rules, including Regulation (EC) No. 852/2004 of the European Parliament and of the Council. Depending on the nature of the activity, notification, registration or approval requirements may apply. Do not rely on a general assurance that ‘head office deals with hygiene requirements’. Establish which authority must be notified or approached, who will sign the submission and what documentation you need before starting operations.

The same caution applies to body care services, children’s activities and other services with specific requirements. The successful opening of another outlet does not prove that your premises are suitable.

3. Create a checklist of requirements, responsibilities and costs

Turn your checks into a working spreadsheet, rather than a folder of vague promises. Each row should include:

• the required authorisation, notification or technical condition;
• the person responsible for preparation and submission;
• the supporting documents required and who will supply them;
• the expected completion date and dependencies on other steps;
• the costs and who will bear them;
• the document that will confirm compliance.

Clearly flag the requirements that must be met before you can legally open. Distinguish these from internal head office approval, such as checks on the outlet’s appearance or the team’s readiness. Both may be important, but they have different legal significance.

Your budget should cover not only administrative fees but also design work, specialist assessments, alterations to the premises and the costs of waiting. Prepare both a baseline cash-flow forecast and a delayed-opening scenario. For each expense, establish whether it can be deferred or will arise regardless of whether you have opened. Check with your bank that the conditions for drawing down finance match your timetable and that repayments will not start before you expect your first sales.

4. Separate signing the contract from the obligation to open

Czech law does not require a specific pre-contractual disclosure document for franchises. However, the Civil Code’s general rules on pre-contractual dealings apply, including duties to provide information depending on the circumstances. In practice, this means actively requesting the documents you need and reflecting key assumptions in the contract.

Discuss with a lawyer which obligations should be conditional on obtaining the necessary authorisations or confirming that the premises are suitable. Explicitly agree when the period allowed for opening begins and when the term of the franchise rights starts. Automatically counting from signature may shorten your actual operating period if meeting the requirements takes longer than expected.

Also agree a final deadline for meeting the conditions and what happens if they are not met. Distinguish between delays caused by your incomplete submission, missing documents from head office and an obstacle for which neither party is responsible. Specify what happens to sums already paid and orders already in progress. Do not assume that a refusal of permission automatically cancels all related obligations.

Practical takeaway: Before buying a franchise, prepare a checklist of opening requirements, with supporting documents, deadlines, responsible people and a budget. Use it to set your contractual timetable and decide when to commit to non-refundable expenditure.