Buying a franchise: check permits before opening

A proven concept and a signed franchise agreement are not, on their own, enough to open a business. Before buying a franchise in Denmark, you need to establish which registrations and permits your particular operation requires. This also applies when taking over an existing outlet within a franchise network. The aim is to avoid paying for a business that is not yet legally allowed to operate as planned.

1. Distinguish between the network’s approval and regulatory requirements

The franchisor may approve you as a franchisee, accept the premises and declare the outlet ready to open. These are internal decisions within the franchise network. They do not replace registration, a permit or approval from the relevant authority.

Denmark has no dedicated franchise law, no mandatory franchise-specific registration scheme and no statutory standard disclosure package that must be provided before signing. However, general business registration requirements and activity-specific permits still apply.

Franchise agreements are assessed primarily under the Danish Contracts Act and general principles of contract law. The Danish Competition Act and Marketing Practices Act may also be relevant. Depending on the circumstances, general duties of good faith and disclosure may require material information to be disclosed. But you should not treat the franchisor’s silence as evidence that all regulatory matters have been resolved.

The specific requirements depend on the activity you intend to carry out. For example, a food business may require registration or authorisation from the food authority, while serving alcohol may require an alcohol licence. A change of use or alterations to the premises may require consideration by the local authority. These examples are not exhaustive: have the requirements confirmed for your particular business.

2. Map out the planned operation

Start with a precise description of what the outlet will actually do. The name of the concept is not enough. The authorities’ assessment may depend on the activities, layout, products and the business responsible for running the operation.

For example, describe whether you will prepare food, serve alcohol, provide treatments, import products or change the use of the premises. Include activities that will only begin after opening. A later expansion may require a fresh assessment.

Then prepare an overview with the following fields:

• Activity: Which part of the operation needs to be checked?
• Requirement: Is registration, a permit, authorisation or something else required?
• Authority: Who can confirm the requirement and process the application?
• Applicant: Which legal entity must be named as responsible?
• Documentation: What information and supporting documents must be submitted?
• Status: Has the requirement been clarified, has an application been submitted, or has approval been granted?

Ask the franchisor for documentation from comparable openings. Use it to help frame your questions, not as proof that the same approach applies to your business. Local circumstances and operational differences may change the requirements.

Contact the relevant authority if anything is unclear, and keep its written clarification with the other purchase documents.

3. Check existing permits when taking over a business

The fact that a shop or clinic is already trading does not prove that you can simply continue on the same basis. A registration or permit may be tied to a particular business, person, activity or address. A change of ownership may therefore trigger a requirement to notify the authority, amend an existing registration or permit, or submit a new application.

Ask the seller for copies of relevant registrations, permits and official decisions. Also investigate any conditions, deadlines or enforcement orders that could affect future operations.

In particular, check:

• Whether the holder’s name and CVR number (Danish business registration number) match the business actually operating the outlet.
• Whether the documents cover all the activities you intend to continue.
• Whether there are restrictions or outstanding requirements that call for action or investment.
• Whether your takeover requires a fresh review by the authority.

Ask the authority or an appropriate adviser to clarify the consequences of the specific takeover structure. Do not assume either that all permits lapse or that they transfer automatically.

If documentation is missing, mark the matter as unresolved in your purchase checklist. A verbal assurance that the outlet has always operated this way does not settle the issue.

4. Allocate responsibilities and agree the consequences before signing

Once the requirements have been identified, it must be clear who will do what. The franchisor may provide drawings or descriptions of the concept, while you submit the application. A landlord or seller may hold necessary documentation. None of this should be left to informal assumptions.

Agree who is responsible, what they must deliver and by when. Include the costs of advice, applications and necessary modifications in your purchase budget. Also check which ongoing payments will start even if opening is delayed.

Have a lawyer draft appropriate conditions if key regulatory matters remain unresolved at signing. These should specify which permits are required, when they must be in place, and what happens if an application is refused or onerous conditions are imposed. Explicitly clarify your right to withdraw and how any sums already paid will be treated.

Practical rule of thumb: Only make a final commitment once you know which regulatory requirements the operation triggers, who will meet them and who bears the risk if the opening cannot go ahead.