Franchising in Denmark: Create an Information Pack for Prospective Franchisees

When turning your existing business into a franchise network, prospective franchisees need to assess more than your name and sales material. A thorough pre-contract information pack makes expectations clear and reduces the risk of misunderstandings. Here is a practical approach to gathering, checking and sharing the information candidates need to make an informed decision.

1. Understand the difference between legal requirements and good practice

Denmark has no specific franchise law. Nor is there a mandatory franchise disclosure document, a dedicated franchise registration scheme or a requirement to register franchise agreements with the authorities. General requirements for business registration, tax and VAT still apply where relevant.

This does not mean you can simply withhold material information. The Danish Contracts Act and general principles of contract law apply, including duties to disclose information in good faith. You may therefore need to disclose circumstances that you know, or ought to know, are material to a candidate’s decision. Depending on the circumstances, inaccurate information or misleading presentations may give rise to liability and affect the legal position under the agreement.

The Danish Marketing Practices Act is relevant to your recruitment activities and claims about the concept. The Danish Competition Act and EU competition rules may restrict practices such as resale price maintenance and certain sales restrictions. The Danish Trade Marks Act and Business Lease Act may also be relevant, depending on the agreement’s terms.

A voluntary information pack is therefore a practical tool, not official approval. Ethical codes arising from membership of a franchise association must also be distinguished from legislation. Have an adviser check both the information and any membership obligations before you start recruiting.

2. Build an honest picture of the business others will run

Start with a brief description of the concept: what do customers buy, how is the service delivered, and which tasks will franchisees need to handle themselves? Explain what is still being developed, too. A new franchise network should not be presented as though every process has already been tested across multiple locations.

Then structure the pack around five core topics:

• The business behind the franchise: Its identity, ownership, relevant experience, and who is responsible for training and ongoing support.
• Documented operations: Which company-owned outlets or pilot operations the experience comes from, and which periods the material covers.
• Division of responsibilities: The franchisee’s day-to-day tasks, the owner’s expected personal involvement, and the specific services the franchisor will provide.
• Rights: Who owns or controls the trade mark, what protection it has, and what rights the candidate will have to use it.
• Key dependencies: For example, specific premises, key suppliers, necessary permits or IT systems.

Clearly describe the limitations of the pilot operation. A well-run owner-operated outlet does not automatically demonstrate that the concept will work with a new owner, a different rent and less access to the founder’s help. If the founder still personally handles purchasing, sales or staffing problems, that involvement must be made clear.

You do not need to disclose every trade secret at the first meeting. Consider using a confidentiality agreement and providing access to the material in stages. However, candidates must have enough information to make an informed decision before committing.

3. Present the finances with assumptions, not sales promises

The financial section should make it possible to distinguish between historical results, budgets and illustrative calculations. Never mix these categories. State the data source, the period covered and the outlets to which the figures relate.

Adjust historical operating results to reflect the franchisee’s circumstances. An existing business may pay no franchise fee, share administrative costs with other activities, or make no allowance for paying the owner a market-rate salary. Make these differences clear rather than simply showing the business’s original profit.

Provide a comprehensive breakdown of:

• The initial fee, fit-out, equipment, deposit and required stock.
• Ongoing franchise fees, marketing contributions, system charges and other mandatory expenses.
• How charges are calculated, payment deadlines and any minimum payments.
• Working capital requirements during the start-up period.

If a fee is calculated on turnover, explain how turnover is defined and ensure this matches the agreement. For example, describe how VAT, returns and sales through shared digital channels are treated.

Also show how lower sales, higher wage costs or a delayed opening would affect the finances. Explain why you have chosen the assumptions. A budget is not an earnings guarantee, but a general disclaimer does not make unsupported promises acceptable either. Candidates should be able to review the calculations with their own accountant.

4. Establish a consistent process for sharing and updating the pack

Appoint one person to take responsibility for the information pack. Give it a version number and date, and maintain a simple change log. This allows you to record which information each candidate has received and avoid old budgets circulating alongside new contract terms.

Check the pack against the franchise agreement and operations manual. If the sales material promises extensive local support while the agreement describes only initial training, resolve the discrepancy. The same applies to territorial protection, mandatory purchasing, the agreement’s duration and the terms that apply when it ends.

Provide the material well before signing or any binding payment. Denmark has no franchise-specific statutory disclosure deadline, so establish an internal process that allows meaningful time for review and independent advice. Answer questions in writing and share material changes before the agreement is entered into.

An acknowledgement of receipt records that the material was received, not that the information is accurate or sufficient.

Practical takeaway: Create a single dated information pack bringing together documented operating experience, a complete breakdown of payments and the key risks. Check it against the agreement and give candidates time to examine the supporting evidence. This is a concrete first step towards a transparent franchise network.