Buying a franchise: who pays if opening is delayed?

The planned opening of a franchise outlet is more than a date in the diary. Rent, staff start dates, stock deliveries and initial loan repayments all depend on it. If preparations overrun, you could be paying out without a single customer. A responsible approach to joining a franchise network therefore includes agreeing who bears the consequences of delays. A promise that head office will “do everything it can” is not enough: before signing, you need to distinguish between a binding deadline, the conditions for opening and specific responsibilities.

1. Turn the planned date into a schedule you can verify

First, establish what the date in the offer actually means. Is it a non-binding estimate, the latest permitted opening date, or the day you start paying recurring fees? Each has different implications. The label “anticipated opening” does not, on its own, guarantee that the other party is responsible for meeting that date.

Ask for a schedule showing tasks and their dependencies. For each task, record who is responsible, the deadline, any input or assistance required, and how completion will be confirmed. Typical tasks include approving the outlet design, providing technical specifications, delivering equipment, training and a final readiness check.

Pay particular attention to steps that must be completed before someone else can proceed. If, for example, the franchisor approves the equipment layout, you need to know how long it has to respond and what happens if it requests changes. Otherwise, a seemingly brief approval process could delay the equipment order and, in turn, the entire opening.

Specify supporting evidence for each milestone: a handover record, written approval or confirmation that training has been completed. A shared calendar alone may not prove who has actually fulfilled their obligations.

2. Distinguish between the causes of delay and allocate responsibility

The Czech Republic has no dedicated franchising law and no specific mandatory pre-contractual disclosure document for franchise purchases. A franchise agreement is usually concluded as an agreement of a type not specifically defined by law under Section 1746(2) of Act No. 89/2012 Coll., the Civil Code. Among other provisions, the Code’s general rules on pre-contractual dealings, performance of obligations, delay and damages apply.

This does not mean, however, that the franchisor is automatically liable for everything that holds up the opening. What matters is who undertook the specific obligation, whether they breached it and what consequences that breach caused. The obligations of a building contractor, landlord or independent supplier cannot simply be attributed to head office.

Before signing, work through at least the following scenarios:

• Delays caused by the franchisor: for example, late provision of required specifications or failure to provide agreed training.
• Delays on your side: for example, placing an order or making a payment late, or failing to supply information needed for approval.
• Third-party delays: for example, delays by a supplier with whom you have a separate contract.
• Concurrent causes: several obstacles arise at once, and removing one would still not allow you to open.

The agreement should specify how an obstacle must be reported, documented and addressed. In exceptional circumstances, do not assume that describing an event as “force majeure” automatically removes payment obligations or extends every deadline. The legal consequences depend on the circumstances and the specific contractual terms.

3. Separate the start of payments from the act of signing

List the costs you will incur even while the outlet remains closed. As well as rent and wages, these may include equipment storage, repeat deliveries, insurance, financing costs or spoiled stock. It is not just the level of monthly spending that matters: you also need to know when each financial commitment becomes irreversible.

Next, check which payments to the franchisor start when you sign the agreement and which begin only when you open. A percentage-based fee on zero sales may be zero, but an agreed minimum monthly fee may still be payable. Fixed charges for systems or other services may also continue to accrue.

You could negotiate, for example, a deferral of minimum fees where the franchisor causes the delay, reimbursement of documented additional costs, or a later start to the agreed operating term of the franchise relationship. These are contractual options, not automatic statutory entitlements. The terms must specify the conditions, scope and any limits.

Take care with damages too: a right to damages is not the same as automatic reimbursement of every expense. You may need to prove a breach of obligation, the loss suffered and a causal link between them. Ask a lawyer to check any limitations of liability and how contractual penalties interact with claims for damages.

4. Agree a procedure for delays and a final cut-off date

A sound procedure for dealing with delays starts with early notification. Specify who must be told about a problem, what the notice must contain and when a revised schedule must be produced. Confirm any change of date in writing, and clarify whether accepting it merely updates the plan or also changes liability for the delay that has already occurred.

Set a final cut-off date beyond which the project may no longer be commercially viable. If you are to have a right to end the relationship, the agreement must clearly state the conditions and how payments already made and goods or services already supplied will be dealt with. A general statement that the parties may “agree on next steps” offers little certainty.

Before signing, run a simple test: imagine you cannot open on the planned date because head office approval is missing. Can you tell from the agreement who must act, which payments remain due and when you can bring the matter to a definitive resolution?

Practical takeaway: Do not buy into an opening date alone. Agree a documented schedule, rules on who pays the costs of delays and a clear point beyond which you no longer have to wait.