Software in franchising: check licences before opening your first franchise outlet

Your till, booking system or ordering app may work perfectly well in your own business. But that does not mean you can make it available to an independent franchisee on the same terms. Before expanding into a franchise network, check not only how the technology works, but also who is entitled to use it. Otherwise, you could promise digital infrastructure that your supplier agreement does not actually allow you to provide.

1. List your systems and identify their users

Start with a list of the tools an outlet needs for day-to-day operations. Alongside point-of-sale and stock management systems, include bookings, orders, shift planning, accounting integrations and access to training platforms. Do not overlook smaller add-ons: paid extensions and integrations may have their own licence terms.

For each tool, record:

• who signed the agreement with the supplier;
• which individuals and business entities are allowed to use it;
• whether the licence covers a user, device, outlet or company;
• who orders additional access and whom the supplier invoices;
• whether access for independent franchisees is permitted.

From a licensing perspective, another company-owned outlet is not automatically the same as an outlet run by a separate business. Being able to create a new account in the admin panel does not prove that the agreement permits that use. What matters is the scope of the rights agreed.

The result should be a simple overview showing the confirmed terms and outstanding questions for each system. Resolve any uncertainty before offering the franchise, not when the till is being installed.

2. Check whether you can make the software available to others

The Czech Republic has no specific franchising act or special registration process that approves the technology used by a franchise concept. 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. Software is governed in particular by the Code’s licensing provisions and Act No. 121/2000 Coll., the Copyright Act.

The practical implication is clear: a promise in your franchise agreement does not extend the rights granted by your software supplier. If a franchisee is to receive a sublicence, your own licence agreement must permit this. In other cases, a direct agreement between the supplier and the franchisee, or a central agreement expressly covering independent operators, may be more appropriate.

Explain the actual arrangement to the supplier. Tell them that the new outlets will be run by separate business entities, who will create accounts and who will provide support. Ask for written confirmation of the terms or, where necessary, an amendment to the agreement. A salesperson’s general assurance that the solution “supports multiple outlets” is not enough.

Take particular care with bespoke software. Paying for development is not, in itself, reliable evidence that you can freely distribute, modify or make the application available to other businesses. Have the scope of your rights assessed against the specific agreement and the circumstances in which the software was created.

3. Allocate responsibility for access, support and costs

Choose a clear model for each key system. Either the franchisee buys it directly in line with the franchise’s technical requirements, or head office contractually provides access within the scope of its own rights. A combination is possible, but there must be no gap in responsibility for activating or renewing the service.

Your franchise documentation should specify who handles initial setup, routine administration and the closure of accounts belonging to departing staff. Distinguish technical support from operational guidance: the supplier may fix an application fault, but may not explain how to process an order correctly under your franchise’s procedures.

Set out costs according to what triggers them. Distinguish between basic access, additional users, devices, transactions, installation and chargeable support work. If you pass on the supplier’s charges, specify how those costs will be evidenced and how any changes will be handled. Before signing, the franchisee should understand what they pay to head office and what they pay to a third party.

Do not promise uninterrupted availability in your offer simply because the system has never gone down. Any guarantees of support and availability must reflect the services actually agreed. Requiring franchisees to use a particular system must not be a way of circumventing other rules, such as the prohibition on fixing resale prices or setting minimum resale prices.

4. Test outages and the withdrawal of access

Before bringing your first partner on board, run a technical test using an account configured for an independent franchisee. Check that they can see only the intended functions, work with the necessary devices and contact the right support team. Do not use head office’s unrestricted administrator account for the test.

Then work through scenarios such as an internet outage, an unavailable application, a locked account or an employee leaving. For each, identify a contact person, a fallback procedure and a way to restore normal operations. The fallback procedure must comply with the legal obligations of the particular business; it is not blanket permission to carry on without the required records.

Plan in advance for the end of the service or franchise relationship too. Specify who deactivates accounts, whether the necessary records can be exported and how legally required documentation will be retained. Assess rights relating to customer data and its processing separately: a software licence alone does not address them.

Practical takeaway: Before including software in your franchise offer, make sure you have confirmed rights to provide it to independent partners, a clearly identified payer and a responsible person for each system. Only then test whether the whole process works outside your own company’s accounts.