Buying a franchise: check the order of precedence of contract schedules

When you join a franchise network, you often commit not only to the main agreement but also to a manual, price lists and separate service terms. A crucial obligation may be hidden in a document you have not yet seen. Before buying a franchise, gather the complete set of contract documents and establish which document prevails if there is a conflict. This helps ensure that what was agreed during sales discussions matches the commitment you ultimately make.

1. Identify every document you are committing to

Start with the references in the main agreement. Look for phrases such as “the manual in force from time to time”, “in accordance with a separate price list” and “subject to the network’s general terms and conditions”. Each of these references may incorporate provisions from another document into the agreement. Checking the signature page alone is therefore not enough.

Ask the franchisor for a list of all documents forming part of the agreement. These might include the operations manual, a fee schedule, IT system terms of use, a training programme and brand requirements for the premises. Also establish whether third-party service terms form part of the franchise agreement or constitute a separate agreement that you must accept independently.

Create a simple document checklist for your review:

• the document’s name and author;
• its date or version number;
• the clause in the main agreement that refers to it;
• whether it forms part of the contractual terms or is background material;
• when you received it and where it is stored.

Do not acknowledge receipt of schedules you have not received. If access to the manual requires a confidentiality undertaking, arrange to review it before committing to the franchise itself. You must also have a genuine opportunity to read extensive material, rather than merely being given access to a file at the signing meeting.

2. Distinguish binding terms from guidance and sales material

Not everything the franchisor provides necessarily forms part of the agreement. A presentation slide, an email response and a requirement in the manual may have different legal standing. A document’s title alone does not determine its significance: how it is referred to and what the parties have agreed also matter.

Finland has no specific franchising legislation or mandatory registration system for franchise agreements. Nor does it require a statutory pre-contractual disclosure document in a prescribed format. However, general contract law, including the Finnish Contracts Act, governs the contractual relationship. Finland’s Unfair Business Practices Act prohibits false or misleading statements in business, subject to the conditions set out in the Act. The Competition Act and the Trademarks Act may also be relevant to the agreement’s content.

The duty of good faith in contract negotiations and the prohibition on misleading statements do not mean that every statement in a brochure automatically becomes a precise contractual obligation. Equally, a clause stating that the agreement supersedes previous discussions does not give anyone permission to provide misleading information. As a buyer, the safest approach is to turn the promises central to your decision into clear contractual terms.

The Finnish Franchising Association’s Code of Ethics is a form of industry self-regulation, not legislation. If the franchisor says it follows the code, check its membership status and how that commitment is reflected in the agreement. The code does not make up for a missing schedule or an unclear order-of-precedence clause.

3. Agree which wording prevails if there is a conflict

The order of precedence determines which contract documents take priority if their provisions conflict. Its purpose is not to render schedules inapplicable, but to help resolve situations where two provisions cannot both be followed.

Suppose the main agreement states that a particular service is included in the monthly fee, but the service schedule specifies a separate charge. Or a signed special condition permits a site-specific practice that the general manual prohibits. Without a clear hierarchy, the parties may interpret the same set of documents differently.

One starting point for negotiations is a hierarchy in which specific, mutually agreed special conditions take precedence over general terms. You can then establish the relative priority of the main agreement, the named schedules and the operations manual. This is not a default hierarchy laid down by law, but an arrangement for the parties to agree.

Also check whether any schedule contains its own clause claiming priority. An order-of-precedence clause in the main agreement and a contradictory clause in a schedule create another conflict. Ask for these provisions to be corrected rather than accepting verbal assurances that they do not matter.

An order of precedence does not resolve everything, either. If the main agreement says nothing about a particular obligation, a schedule may supplement it without creating an actual conflict. You must therefore read every binding document, even if the main agreement is stated to take priority.

4. Finalise and retain the complete signing pack

Once negotiations are complete, ask for a consolidated final set of contract documents. The list of schedules should match the files supplied, and each schedule should be clearly identifiable. A reference to a manual hosted online can easily leave uncertainty about which version was available when the agreement was entered into.

Compare the final version with the last draft you reviewed. In particular, check that negotiated exceptions have been included and that their relationship with the general terms is clear. If a schedule is missing or replaced at the last minute, allow time to assess it before signing.

Save the signed main agreement, its schedules and the electronic signature records together in one archive. Also retain any important written responses on which you based your purchase decision. Keeping records does not settle questions of interpretation, but it helps establish what material was available and what was agreed.

Give a lawyer experienced in franchise agreements the whole pack, not just the main agreement. Ask them to focus particularly on which documents are binding, any inconsistencies and whether the order-of-precedence clause works as intended.

Practical checklist: do not sign until you know which documents are binding, which versions apply and which provision prevails in the event of a conflict. A clear list of schedules and a carefully considered order of precedence make it easier to understand exactly what you are committing to.