Franchise licences and permits: what to check before opening your first outlet

Do you run a successful business and want to build a franchise network around it? Before offering your first licence, check whether an independent business operator can legally run your concept too. Your company’s authorisations do not automatically extend to a franchisee. A practical solution is a checklist of requirements, responsible parties and supporting documents that must be in place before a new outlet serves customers.

1. Separate the concept licence from the authorisation to trade

The Czech Republic has no specific franchising act or compulsory state registration of franchise concepts. A franchise agreement is generally concluded as an agreement not specifically defined by statute under Section 1746(2) of Act No. 89/2012 Coll., the Civil Code. Depending on its content, it also includes licensing and other obligations. However, it does not itself grant the regulatory authorisation needed to carry out a particular activity.

Activities classified as trades are governed by Act No. 455/1991 Coll., on Trade Licensing. It distinguishes between trades subject to notification — unqualified, craft and regulated trades — and trades requiring a concession. For some activities, meeting the general conditions is not enough: professional competence or a concession is required. Other activities fall outside the trade licensing regime altogether and are governed by separate legislation.

Brand rights, authorisation to operate a business and the suitability of the premises are three separate matters. The right to use your branding does not establish the franchisee’s qualifications or determine the permitted use of a particular property.

The European Code of Ethics for Franchising is a self-regulatory document, not Czech law or a permit to trade. It may be binding, for example, through association membership or a contractual commitment. It therefore does not replace checks on statutory requirements.

2. Break the concept down into the activities actually carried out

Do not start with the brand name or a broad description such as ‘a shop offering services’. List what the franchisee will actually do. Selling a packaged product, preparing it and providing an associated service may each involve different requirements.

For a café concept, for example, check separately the preparation of drinks and food, sales of packaged goods, any production for supply to other businesses, and the sale of alcohol. Do not assume that a single entry in the Czech Trade Register covers all these activities. Your assessment must reflect the actual scope of the offering.

Create a row in your working checklist for each activity:

• Activity: exactly what will be done at the premises.
• Requirement: authorisation, qualification, notification or another obligation.
• Responsible party: the franchisee, head office or another specified entity.
• Evidence: how compliance will be verified.
• Deadline: when the requirement must be met.
• Change: which event will trigger a fresh check.

Use documents from your existing business as a starting point, but do not copy them without checking. Your current operation may rely on the founder’s qualifications, a specific permit or an organisational arrangement that will not exist for an independent franchisee. These are precisely the dependencies you need to identify before offering the concept.

3. Check qualifications and the requirements for each premises

If an activity requires professional competence, establish in advance how the franchisee will meet that requirement. Where the Trade Licensing Act requires or permits it, appointing a responsible representative may be an option. This is not simply a name on the paperwork: the person must meet the statutory conditions and be involved in running the trade to the extent required.

Do not therefore promise prospective franchisees that head office will automatically provide the necessary qualifications. Check the specific legal relationship, the person’s actual involvement and any statutory restrictions. Internal brand training does not, in itself, replace legally required professional competence.

The premises also need checking. Alongside the Trade Licensing Act, relevant legislation may include the Building Act, No. 283/2021 Coll., Act No. 258/2000 Coll., on the Protection of Public Health, and fire safety regulations. Food-related activities are also subject to Czech and directly applicable EU legislation, including hygiene rules.

Do not create a catch-all box labelled ‘approved by the public health authority’. Depending on the activity, the requirement may involve notification, registration, approval or ongoing compliance with obligations. The competent authority and procedure may also vary. Have the checklist reviewed by a specialist familiar with the particular concept, and clarify any uncertain requirements with the relevant authority.

4. Introduce a documented decision before opening

Set out in the franchise agreement who obtains the authorisations, who bears the associated costs and which documents must be submitted to head office. Also specify the consequences of failing to obtain them. Your operating procedures should then define a specific pre-opening check, rather than relying solely on a general declaration that the franchisee complies with the law.

In particular, check that the business operator, address and scope of activities match the documents submitted. The record should include the verification date, the name of the reviewer and any unresolved issues. Internal approval from head office is not an official permit and does not relieve the franchisee of their statutory responsibilities.

Include contractual requirements to report changes, such as the departure of a responsible representative, suspension of a trade authorisation or an expanded offering. Decide in advance which shortcomings prevent opening and who will determine the next steps. This will help you avoid pressure to open simply because advertising is already running.

Practical takeaway: Before launching your first franchise, prepare a single shared checklist covering the activity, requirement, responsible person, supporting evidence and deadline. Every item must have a named owner and a verifiable outcome. A successful company-owned outlet is a sound starting point, not proof that another business operator is legally ready to open.