Buying a franchise: how to limit unilateral changes to the terms

When buying a franchise, do not assess only the terms in force on the day you sign. It is just as important to establish who can change them later and whether they need your consent. A franchise network needs shared rules and room to develop, but a broad obligation to comply with all future instructions can substantially alter the original agreement. Before signing, therefore, examine the mechanism for making changes, not just the current versions of the documents.

1. Identify every power to change the rules

The franchisor’s right to amend the terms may not be confined to a single clause. It may appear in the agreement, the terms and conditions, a price list or a reference to the current rules available on an internal system. Look for wording such as “as amended from time to time”, “in accordance with current instructions” or “the franchisor may amend at any time”.

For each such provision, note:

• What can be changed: an operating procedure, the scope of your obligations, the price of a service or another aspect of the relationship.
• On what grounds: for example, legal requirements, safety or development of the franchise concept.
• How the change is made: by signing an amendment, issuing a notice or simply publishing it.
• When it takes effect: immediately, after a specified period or only once you have accepted it.
• What you can do: ask for an explanation, raise an objection, reject the change or terminate the contractual relationship.

The result should be a clear overview of the franchisor’s actual powers. A sales representative’s assurance that the rules rarely change is not enough. What matters is what the wording you sign allows.

2. Distinguish between an agreed amendment and a unilateral change

The Czech Republic has no specific franchising statute and no specific mandatory pre-contractual disclosure document covering all franchise offers. A franchise agreement is usually concluded as an unnamed contract under Section 1746(2) of Act No. 89/2012 Coll., the Civil Code. General contract law and pre-contractual information duties apply, alongside rules governing licensing, sales or leases, depending on the agreement’s content. Czech and EU competition law also continue to apply.

The starting point is that a contract binds the parties. A new version of a document does not, in itself, allow agreed rights and obligations to be rewritten automatically. The position is different if the contract contains a valid and sufficiently specific mechanism for making changes.

For certain long-term contractual relationships entered into with a large number of parties, Section 1752 of the Civil Code may be relevant. Subject to specified conditions, it allows the parties to agree a mechanism for reasonable unilateral changes to terms and conditions. Among other things, it requires agreement on how changes will be notified and on the other party’s right to reject a change and terminate the relationship on sufficient notice, without any special burden associated with termination.

This provision is not a blanket authorisation to amend any franchise agreement. Ask a lawyer to assess both its applicability and the specific clause. Also, do not assume that, as a business operator, you automatically enjoy the same protection as a consumer.

3. Agree different procedures according to the significance of the change

A sensible agreement need not require a signed amendment for every minor detail. It should, however, distinguish routine operational updates from changes to the substance of the relationship. A practical approach is to propose three categories of change.

Routine operational adjustments might include, for example, changing the order of administrative steps without significant costs. For these, you can agree on a simple notification process, a description of the change and a reasonable implementation period.

Urgent measures may address a specific safety risk or a new legal obligation. The agreement should specify how the franchisor will substantiate the urgency, whom it will inform and whether the measure is temporary. Labelling a change as urgent should not replace an explanation of why it is needed.

Fundamental contractual changes may alter the scope of services provided, the allocation of responsibility or other key obligations. For these, insist on a written amendment or a precisely defined procedure with appropriate safeguards for the franchisee. Avoid giving open-ended consent to any changes the franchisor considers appropriate.

In particular, clarify whether silence or continuing to operate the outlet counts as acceptance of a change. Such wording can put you under uncomfortable pressure: you need to keep trading, yet you disagree with the new terms. The agreement should specify in advance how to raise an objection and which rules apply while it is being resolved.

4. Test the procedure against a specific scenario

Before signing, ask the franchisor for an example of a previous change notification, if one is available, and work through a hypothetical case. For example, head office introduces a new mandatory reporting process that requires additional administrative work. Who will explain the impact, how much time will you be given and whom should you contact with an objection?

The notice should include the original and revised wording, the reason for the change, its effective date and the procedure for responding. Agree that notices will be sent to a named contact and that previous versions will be retained. Simply overwriting a page on an internal system makes it harder to prove which rules applied at a particular time.

Also check whether other provisions undermine the stated right to reject a change. If the agreement also imposes a specific penalty for doing so, the entire mechanism needs to be assessed together, rather than looking at the termination clause in isolation.

Practical takeaway: Before signing, ask for a one-page summary of who can change what, how you will be notified and what options you have if you disagree. If the answer is simply “head office decides”, negotiate more specific rules.