Buying a franchise: who is responsible for customer complaints?

Customers see a familiar brand, but responsibility for the sale may lie with the local franchisee, head office or another member of the network. This distinction determines who must deal with faulty goods, issue refunds and communicate with customers when they complain. A franchise network therefore needs more than a standard complaints form. Before buying, check that the contracts and operating procedures clearly allocate both responsibility towards customers and costs between the businesses involved.

1. First, identify the seller

A franchisee generally operates in their own name, for their own account and at their own risk. The logo above the door does not, by itself, make the franchisor responsible for their sales. What matters is which business the customer enters into a contract with. This must be clearly reflected in the pre-purchase information, the ordering process and the sales documentation.

Ask for a sample receipt, the terms and conditions, the complaints procedure and an example of an order placed through the shared website. Then review each sales channel:

• purchases made and paid for directly at the premises;
• online orders collected in person;
• online reservations followed by a purchase completed on the premises;
• orders placed through a third-party sales or delivery platform.

For each option, record who the seller is, who takes payment and who handles complaints about faulty goods. These roles need not be performed by the same party. If the outlet merely hands over goods sold by head office, it must be clear whether it also accepts complaints on head office’s behalf and what authority it has to do so.

An answer such as “the customer deals with the brand” is a warning sign. The brand itself does not identify the contracting party or determine the refund procedure.

2. Separate statutory duties from network rules

The Czech Republic has no specific franchising act. A franchise agreement is usually an agreement not specifically defined by statute, entered into under Section 1746(2) of Act No. 89/2012 Coll., the Civil Code. Nor is there a specific mandatory pre-contractual disclosure document or a requirement to register franchise agreements, although general pre-contractual disclosure duties apply.

Customer relationships are governed primarily by the Civil Code and Act No. 634/1992 Coll., on Consumer Protection. An internal agreement with head office cannot restrict consumers’ statutory rights. If you are the seller, you cannot simply refer the customer to the supplier because the franchise agreement assigns responsibility for defects to that supplier.

As a general rule, a consumer’s complaint about faulty goods must be resolved, including remedying the defect, and the consumer informed within 30 days, unless the consumer and seller agree to a longer period. Waiting for head office’s approval does not, in itself, extend this deadline. The process must also provide the legally required confirmations that the complaint has been received and resolved.

Check the arrangements for accepting complaints across outlets as well. Under specified conditions, the law requires complaints to be accepted at another suitable outlet operated by the same seller. This does not, however, automatically require every independent franchisee to accept complaints relating to other network members’ sales. The brand may voluntarily offer a wider service, but it must establish the necessary authorisations, document-transfer procedures and cost reimbursement arrangements.

3. Find out who actually pays

Liability towards the consumer and your rights against the supplier are two separate matters. Refunding a customer does not guarantee that head office or the manufacturer will automatically reimburse you in full. Before signing, therefore, also check the supply terms and the procedure for pursuing your own claims for defective goods.

Ask for a written allocation of at least the following costs:

• replacement products, repairs or refunds of the purchase price;
• transport, expert assessments and any disposal costs;
• staff time spent receiving and handling complaints;
• costs of valid complaints accepted on behalf of another outlet;
• voluntary compensation beyond statutory entitlements.

Pay particular attention to arrangements where head office decides whether to uphold a complaint but the franchisee bears all the costs. Negotiate a deadline for its response, a procedure for dealing with a failure to respond and rules on documenting costs. Internal decision-making must leave enough time to meet statutory obligations.

Ask for anonymised examples of actual complaints and how the costs were settled. The number of complaints is not the only issue: it also matters how long the outlet has to fund the customer’s remedy before receiving reimbursement from the supplier. Base your financial plan on documented experience from comparable outlets, rather than general assurances that the goods are trouble-free.

4. Test the procedure before signing

Ask for a demonstration of the entire process using a specific example. A customer collects an online order from your outlet, having paid head office, and later brings back a faulty product. Who accepts the complaint? Who issues the confirmation, decides whether the claim is valid, sends the refund and informs the customer? Who covers for an absent member of head office staff?

For the second test, focus on the brand’s voluntary promises, such as allowing customers to return non-faulty goods bought in a physical shop. This is not a general statutory right, unlike the cancellation rights available for certain distance purchases. If the brand offers it, however, you need to understand the conditions and how the costs are settled. Also check whether head office can extend the offer at your expense.

Practical takeaway: Before buying a franchise, draw up a simple table identifying the seller, the party accepting complaints, the decision-maker, who pays the costs and the relevant deadlines. Resolve any unclear entries in writing before signing, rather than waiting for the first customer complaint.