Franchising in Denmark: Allocate Responsibility for Customer Complaints

When you turn your existing business into a franchise network, customers still see a single name above the door. Behind that name, however, are several independent businesses. Before your first franchise opens, you therefore need to decide who receives complaints, makes decisions and pays for the remedy. Otherwise, a routine complaint could become a dispute between you, the franchisee and the customer.

1. Make it clear who the customer is buying from

Start by mapping the customer’s purchase journey: ordering, payment, delivery and any subsequent complaint. At each stage, it should be clear which business is dealing with the customer. A shared name or website does not, in itself, establish which business the customer has a contract with.

Pay particular attention to these situations:

• The customer buys and pays directly in the franchisee’s shop.
• The customer orders through a shared website but collects locally.
• Head office sells a service that the franchisee delivers.
• The customer wants to raise a complaint at a different outlet from the one where they made the purchase.

Make sure the seller’s details are consistent across the ordering page, order confirmation, receipt and terms and conditions. For online sales, the Danish E-Commerce Act requires information including the trader’s name, physical address and CVR number (Danish business registration number).

Distinguish between customer service and legal responsibility. Head office can respond to enquiries on a franchisee’s behalf without necessarily being the seller. But customers must still have a clear route to the business responsible. Explain both who the customer has bought from and where they can get help.

2. Understand the rules behind complaint handling

Denmark has no specific franchise legislation or franchise-specific registration scheme. Nor is there a statutory, franchise-specific disclosure package that must be provided before an agreement is signed. General principles of contract law may nevertheless impose a duty to disclose material information, and misleading information can have legal consequences.

The relationship between franchisor and franchisee is governed, among other things, by the Danish Contracts Act and general principles of contract law. Section 36 of the Contracts Act allows unreasonable contractual terms to be amended or set aside. The Danish Competition Act and other generally applicable rules also apply where relevant.

The rules governing dealings with customers depend on what is sold and how the sale takes place. For consumer purchases of goods, the mandatory consumer protection provisions of the Danish Sale of Goods Act are central. Distance sales are subject, among other things, to the information requirements in the Danish Consumer Contracts Act and, as a general rule, a right of withdrawal, subject to the exceptions set out in the Act. Services may fall under different rules, so do not automatically use a complaints procedure designed for goods for every service.

The Danish Marketing Practices Act also matters: if, for example, you promise that customers can get help at every outlet, that promise must be accurate and capable of being honoured. An internal franchise agreement can allocate costs between the businesses, but it cannot deprive customers of their mandatory statutory rights.

3. Allocate decision-making powers and costs in advance

Create a simple responsibility matrix as an appendix to the franchise agreement. It should do more than state who responds to the customer. It should also establish who investigates the complaint, approves the remedy and bears the cost.

Distinguish between at least three types of case:

• Statutory claims: For example, the customer has a valid claim because an item is faulty. The claim must be handled in accordance with the relevant rules.
• Voluntary customer promises: For example, the network offers an exchange policy that goes beyond legal requirements. Define its scope, exceptions and funding.
• Goodwill gestures: An outlet offers additional help without being legally obliged to do so. Set clear decision-making limits so staff know when approval is needed.

Agree on internal reimbursement arrangements too. If one franchisee helps a customer who bought from another outlet, who covers staff time, carriage and replacement goods? What documentation is required, and when must payment be made?

A practical example is an item bought from one franchisee and brought to another. If the network promises this option, the receiving outlet should have clear authority to help. The customer should not have to wait for the businesses to finish their internal discussion about payment.

4. Test the complaints process before the first opening

Use real, anonymised complaints from your existing business to review the proposed allocation of responsibilities. Ask a prospective local manager and the central contact person to work through the same examples. Compare their decisions: do they agree on the customer’s rights, the approval process and who pays?

Set internal deadlines for acknowledging complaints, investigating them and responding. These deadlines are management tools and must not replace legal requirements for timely handling. Appoint a deputy too, so cases do not stall during holidays or sickness absence.

Record the cause of the complaint and its resolution, but limit the sharing of personal data to what is necessary. If complaints are recorded in a shared system, clarify data protection roles, access rights and deletion schedules in accordance with the GDPR and the Danish Data Protection Act.

Then follow up on recurring faults rather than focusing solely on the number of closed cases. Several similar complaints may point to a problem that the whole franchise network needs to address.

Practical takeaway: Clarify the seller’s identity, decision-making authority and internal payment arrangements before opening. Then test a single complaint across two outlets: can the customer get a clear answer without the allocation of responsibilities between the businesses getting in the way?