Multi-unit franchising: how to plan new openings

The owner of an established Czech business looking to expand through franchising may receive an attractive proposal: a prospective partner wants not just one outlet, but several. This arrangement can support growth, but it also places a substantial share of the network’s development in one partner’s hands. Before promising additional outlets, draw up a detailed opening plan. Its purpose is not to force the fastest possible expansion, but to align commitments with the actual ability to open and manage the outlets.

1. Distinguish between the partner’s own outlets and other franchisees

First, clarify exactly what you are offering the prospective partner. A partner operating several outlets through their own company has a different role from one authorised to enter into franchise agreements with other independent business owners. The latter involves granting sub-franchises, typically under a master franchise arrangement, and requires a different contractual structure.

For an established business taking its first steps into franchising, it is generally simpler to assess a plan for several outlets operated by a single partner. State explicitly in the agreement whether the rights belong solely to the named company or whether its subsidiaries may also be involved. Common ownership does not automatically mean that companies are the same contracting party or have the same right to use the brand.

Your planning brief should specify, in particular:

• who will operate each outlet;
• how many outlets the plan covers and in what order they will open;
• whether there is an obligation to open or merely an option to apply for another outlet;
• who decides whether to proceed to the next stage;
• whether granting franchises to other business owners is prohibited.

The right to open another outlet and the obligation to do so are not the same thing. Ambiguity on this point creates conflicting expectations from the moment the agreement is signed.

2. Build the schedule around verifiable milestones

An opening date alone is not enough. For each planned outlet, set out a sequence of steps whose completion can be verified. Alongside each deadline, identify the responsible party, the required deliverable and any dependencies on earlier tasks. Distinguish between provisional estimates and contractually binding deadlines.

Milestones may include providing evidence of funding, securing premises, completing the relevant approval procedures, ensuring the outlet manager is ready and verifying that the conditions for opening have been met. This is not another operations manual: the plan should show whether the prerequisites for a particular opening are in place.

Set out head office’s obligations in the same detail. If the partner submits the required information on time, they need to know when to expect a response and when support will be available. A schedule that binds only the franchisee, without accounting for head office’s capacity, may be impossible to meet even for a well-prepared business owner.

For example, preparations for a second outlet could begin before the first opens, while the final decision to launch it could depend on a review of the first outlet’s performance. Agree in advance which results will be assessed, over what period and by whom. Do not rely solely on a vague condition such as ‘head office’s satisfaction’.

3. Reflect the plan in the Czech contractual framework

The Czech Republic has no dedicated franchising legislation or compulsory state registration of franchise offerings. A franchise agreement is generally concluded as an innominate contract under Section 1746(2) of Act No. 89/2012 Coll., the Civil Code. This makes it particularly important to define development commitments precisely: the law will not fill in the schedule for the parties.

General rules on contract formation, good faith, pre-contractual dealings and liability for breaches of obligations apply. There is no specific, legally prescribed franchise disclosure document, but this does not remove the general duties to provide information during negotiations. Explain to prospective partners in good time whether signing means committing to fund several openings or merely acquiring a conditional opportunity for further development.

If the plan involves territorial restrictions or other terms with implications for competition, it must comply with Czech and EU competition law, including, where relevant, assessment under Commission Regulation (EU) 2022/720. This regulation does not automatically approve every franchise arrangement.

The European Code of Ethics for Franchising is a self-regulatory industry standard, not Czech law. It may become binding, for example, through membership of an association or contractual adoption of its rules. It is no substitute for a legal review of the specific development plan.

4. Agree in advance when further openings will be put on hold

Set conditions for proceeding at each stage. In addition to available funding, assess staffing and the partner’s ability to manage outlets that are already open. Another outlet should not open simply because the date specified in the agreement has arrived.

Distinguish between the causes of delays: a partner’s failure to supply information, late support from head office or a hurdle in the approval process. Each situation may require a different response. Agree how obstacles must be reported, what evidence is required and how subsequent deadlines will be adjusted.

Clearly separate the consequences for outlets that have yet to open from the operation of existing ones. Missing a development milestone need not automatically end the entire relationship. Depending on the agreed terms, the contract may allow a postponement, restrictions on further development or the loss of the right to open additional outlets, without automatically bringing existing operations to an end.

Practical takeaway: Before committing to multiple outlets, draw up a table of stages, responsibilities, evidence of completion and consequences of delay. Only once the plan is workable for both the partner and head office should you work with a lawyer to make it legally binding.