Franchising in Denmark: Choosing Your First Franchisee

Your first franchisee needs to do more than open another outlet. They must be able to run an independent business while contributing to a franchise network with shared standards. When expanding your existing business through franchising, a systematic selection process matters more than securing a quick signature. Here is a practical approach to finding the right first partner.

1. Define the role before looking for candidates

Start with the tasks the franchisee will actually need to carry out. Your own success as an owner does not automatically tell you what kind of person can replicate it. Your current business may rely on personal customer relationships, specialist knowledge or a level of personal effort that cannot easily be transferred to someone else.

Write a short role description covering responsibility for day-to-day operations, staff, local sales, finances and working with the network. Specify whether the franchisee must be present in the business or whether the model can work with an employed manager.

Then divide your requirements into three groups:

• Non-negotiable requirements: For example, essential professional qualifications, time to run the business and verifiable funding.
• Skills that can be learnt: For example, using your systems, product knowledge and specific working procedures.
• Collaborative behaviours: The ability to accept feedback, follow shared standards and share experience with others in the network.

Avoid looking for a copy of yourself. Nor is a capable employee necessarily a suitable independent business partner. The candidate must be able to take responsibility while accepting that some decisions are governed by the shared franchise model.

2. Use the same selection process for everyone

Set out the process before the first application arrives. This makes comparisons more objective and reduces the risk of personal chemistry becoming the deciding factor.

A manageable process might consist of an initial conversation, a structured interview, a practical exercise and a final assessment. Tell candidates from the outset what each stage is intended to establish and who will make the decision.

Ask questions that call for specific examples:

• When did you last have responsibility for a budget, and how did you monitor performance against it?
• How have you dealt with an employee who failed to meet agreed standards?
• What did you do when you disagreed with a collective decision?
• How would you attract local customers without changing the franchise model’s core promise?

Follow up the interview with a realistic exercise. For example, ask the candidate to prioritise between staff sickness, a customer complaint and a delayed delivery. Ask for their reasoning, not just an answer. Use fictional or anonymised information so that the exercise does not disclose customers’ or employees’ personal data.

Assess all candidates against the same criteria. Record observations rather than labels: ‘checked the cash position before making the decision’ is more useful than ‘seems business-minded’. A visit to your existing business can complement the assessment, but it should have a clear learning purpose and must not serve as a source of unpaid labour.

3. Review finances and expectations together

The ability to finance the opening is necessary, but not sufficient. The candidate must also understand ongoing costs, fluctuations in revenue and the need to cover their personal living expenses during the start-up period.

Ask for relevant evidence of their own funds and available financing options. Distinguish between money that is actually available and loans or investments that have not yet been approved. Collect only the information needed for the assessment.

Review the candidate’s budget together, ideally with their own accountant. Ask what would happen if sales were lower, the opening were delayed or staffing costs were higher. The aim is not to promise a particular outcome, but to establish whether the candidate can manage uncertainty and respond in good time.

Clarify their expectations of you as well. What training, start-up assistance and ongoing support do they expect? What will you actually provide? Record any unresolved points and make sure the final commitments match the franchise agreement. Disagreements over support rarely diminish after opening.

4. Understand the rules and document the decision

Denmark has no dedicated franchise law, no general statutory franchise registration requirement and no specific statutory disclosure package for prospective franchisees. This does not mean that recruitment takes place outside a legal framework.

The Danish Contracts Act and general principles of contract law apply. False or misleading information provided during negotiations can affect the validity of the agreement and give rise to liability. The Danish Marketing Practices Act is relevant to your recruitment messages: avoid unsupported earnings promises and claims of risk-free operation. The Danish Competition Act and applicable EU competition rules also place limits on the terms of the relationship.

When processing candidate information, the General Data Protection Regulation (GDPR) and the Danish Data Protection Act apply. Establish a lawful basis for processing, inform candidates about how their data will be used, restrict access and set a justified retention period. Agree the arrangements for taking up references with the candidate before contacting former business associates.

Ethical franchise rules based on the European Code of Ethics for Franchising are not Danish law. They may, however, become binding through membership or an agreement. Check which obligations your network has undertaken.

Conclude with a written assessment: which requirements have been met, what is missing and why do you recommend accepting or rejecting the candidate? Allow the candidate time to obtain independent advice before signing.

Practical takeaway: Prepare the role description, assessment form and decision criteria before you advertise. Choose the candidate who can demonstrate responsible business management and constructive collaboration — not simply the one who is quickest to sign.