Customer complaints in a franchise: who is responsible?

When you expand your business through franchising, customers often cannot tell that individual outlets are run by independent businesses. A consistent experience benefits the franchise network, but it can cause confusion when a customer raises a complaint about faulty goods or services. Before opening your first franchise outlet, establish who sells to the customer, who receives their claims and who pays for putting things right. Do not simply assume that partners will always find a way to agree.

1. First, establish who the seller is

A franchisee generally trades in their own name, for their own account and at their own risk. Using a shared brand does not, in itself, make them a branch of the franchisor’s company. The business with which the customer enters into a contract is primarily responsible for fulfilling it. In consumer sales of goods, customers therefore exercise their statutory rights concerning faulty goods against the seller, not automatically against the brand owner.

Before expanding, review every sales channel: in-store purchases, orders through a shared website, telephone reservations and collection of goods ordered elsewhere. For each, write down:

• Which business enters into the contract with the customer?
• Who takes payment and issues the receipt or invoice?
• Where can the customer find the seller’s identity before buying?
• Where can they submit a complaint?

The recipient of the payment or the collection point does not, on its own, necessarily determine who the seller is. What matters is the actual contractual arrangement and how clearly it is explained to the customer. Information on the website, on receipts and invoices, and at the outlet must be consistent.

A common mistake is to reuse the original company’s terms and conditions, leaving head office named as the seller even though franchisees are now entering into contracts with customers. Resolve this discrepancy before sales begin, rather than waiting for the first dispute.

2. Separate statutory obligations from the brand promise

The Czech Republic has no specific franchising legislation or mandatory registration of franchise agreements. A franchise agreement is generally concluded as a contract not specifically defined by law under Section 1746(2) of Act No. 89/2012 Coll., the Civil Code. Customer relationships, however, are subject to general legal rules regardless of how the franchise arrangement is structured.

The key legislation governing complaints is the Civil Code and Act No. 634/1992 Coll., on Consumer Protection. The precise obligations also depend on whether you sell goods or provide services, and whether the customer is acting as a consumer. An internal agreement between head office and a franchise partner cannot restrict consumers’ statutory rights.

For consumer complaints, the Consumer Protection Act generally requires the complaint to be resolved, including rectification of the fault and notification of the consumer, within 30 days, unless the seller and consumer agree to a longer period. It also sets out requirements for written confirmation that a complaint has been received and dealt with. Have your procedure checked against the goods and services your franchise actually offers.

Keep statutory claims separate from voluntary benefits, such as exchanges of non-faulty goods bought in a physical shop or a promise that customers can submit a complaint at any franchise outlet. If the brand publicly offers these benefits, it must have the terms and operational arrangements in place to deliver them. Marketing must not promise a broader service than franchise partners can provide.

3. Set rules for passing on complaints and covering costs

A single point of contact can make life much easier for customers. However, it must be clear whether head office accepts complaints on behalf of a particular seller or merely provides information and puts customers in touch with them. Customers must not be given the false impression that they have formally submitted a claim if their message has simply been left in a general inbox without further action.

For each complaint, we recommend recording the seller, the date received, a description of the fault, the remedy requested, the person responsible and the deadline for the next step. Arrange cover for holidays and sickness. Internal handovers must not cause statutory deadlines to be missed.

Pay particular attention to complaints handled across outlets run by different businesses. The obligation to accept complaints at other suitable outlets belonging to the same seller does not automatically apply to all independent franchisees operating under a shared brand. If you want to offer a broader service, put contractual arrangements in place authorising partners to act and defining how goods and supporting documents will be transferred.

Also decide in advance who pays for transport, diagnostic checks, replacement goods or services, and any goodwill compensation. Keep the customer’s entitlement separate from the subsequent allocation of costs between the franchise partner, head office and the supplier. A dispute over who ultimately bears the cost must not prevent a complaint from being dealt with properly.

4. Test the procedure with realistic scenarios

Before opening your first franchise, work through several specific cases: a customer visits another franchise partner’s shop, the receipt names head office, the order was placed online, or the person responsible is absent. Ask staff to complete an actual complaint record, identify who should receive it and prepare a response to the customer.

Pay particular attention to any point at which staff have to guess. If they cannot identify the seller or do not know where to send the supporting documents, the procedure is not ready. Use the findings to update staff instructions, shared customer support arrangements and agreements on costs.

Regularly review recurring causes of complaints, rather than simply counting them. A faulty delivery, an unclear product description and a service error each call for a different remedy. Sharing these findings helps the whole franchise network avoid the same problems.

Practical takeaway: Before opening your first franchise, identify the specific seller for every sales channel, test the complaint-handling process and agree who covers the costs. Customers should receive a clear answer, not be left to untangle the relationships behind the brand.