Buying a franchise: secure the necessary permits before opening

Joining a franchise network gives you an established business model, but not an automatic right to start trading from any premises. Permits, notifications and the permitted use of the premises can determine when you can serve your first customer. Before buying a franchise in Finland, establish which requirements apply to your particular business and location, and how responsibilities are shared with the franchisor.

1. Distinguish the franchisor’s approval from official permission

The franchisor’s approval means that the proposed outlet meets the network’s requirements. It is not a decision by a public authority. Nor does a layout, equipment setup or range of services used elsewhere in the network prove that the same arrangement can be put in place at your chosen address.

Finland has no dedicated franchising act, statutory franchise disclosure document or special registration procedure for franchise agreements. The contractual relationship is governed by general legislation, including the Contracts Act, the Competition Act and the Unfair Business Practices Act. Franchise-sector codes of ethics are a form of self-regulation, not legislation that replaces official permits.

Your business is also subject to rules governing its particular activities. For food businesses, the key legislation is the Food Act: depending on the activity, you may need to submit a registration notification or obtain approval. Serving alcoholic drinks requires a licence under the Alcohol Act. The Building Act and local planning rules affect whether the premises can be used as intended and what alterations can be made.

Not every requirement involves a permit. There may also be notifications, registrations, in-house control requirements and staff qualification requirements. Ask the relevant authority what your proposed activities specifically require. Do not settle for a general assurance that other outlets in the network operate in the same way.

2. Map out the requirements for your premises

Start by describing the business in sufficient detail: what you will sell, what will be prepared or made on site, what customer areas you need and whether you plan to use an outdoor terrace, for example. The franchise name or your company’s registered line of business alone will not give the authority enough information to assess the proposal.

Then draw up a table covering each permit or notification, with the following details:

• Requirement and authority: what needs to be established and which authority can provide the answer.
• Applicant or notifying party: your company, the property owner or another party.
• Responsibility for preparation: who will compile the drawings, plans and other supporting documents.
• Timetable: when the documents can be submitted and what must be done before trading begins.
• Costs: application fees, professional services and any alterations to the premises.
• Evidence: the decision, acknowledgement of a notification or other appropriate document.

Ask the authority about processing times, but treat any estimate as a planning guide, not a guarantee of your opening date. Missing supporting documents or changes to the plans can affect the timetable. Also establish which preparations can run in parallel and which depend on another matter being resolved first.

If you are buying an existing franchise business, ask to see the current official decisions, the latest inspection reports and any orders requiring corrective action. Check that the actual operations match those described in the documents. A service added later or an altered space, for example, may need to be investigated separately.

Do not assume that permits transfer automatically with the sale. In a share purchase, the company operating the business generally remains the same, whereas in a business asset purchase, the operator changes. Either situation may trigger obligations to notify the authorities or provide further information. Confirm the procedure for each permit before valuing the business on the assumption that it can start trading immediately.

3. Put the division of responsibilities in writing

The phrase ‘the franchisor helps with permits’ does not tell you what you will actually receive. Help might mean a general checklist, preparation of an application or liaison with a designer. These are different services and leave the franchisee with different amounts of work.

Agree in writing who will establish whether the premises are suitable, who will commission the necessary plans and who will check the supporting documents for applications. Also name the person responsible for monitoring progress and forwarding requests for further information from the authority to the right party. If the franchisor uses an external consultant, establish who is commissioning their services and who will pay the bill.

The division of work agreed in the contract does not, in itself, change statutory responsibility towards the authorities. If your company is the business operator, you cannot assume that you are relieved of your obligations because the franchisor promised to handle the paperwork. Make sure your own company also has access to the applications, decisions and correspondence with the authorities.

Agree who will correct any shortcomings identified in plans supplied by the franchisor, and how the cost of those corrections will be dealt with. Distinguish between correcting plans and guaranteeing an authority’s decision: a franchisor cannot promise a favourable decision on the authority’s behalf.

4. Agree in advance what happens if opening is delayed

The financial risk of the permit process extends beyond the application fee. Your business may incur staffing, storage and equipment costs before sales begin. Establish which fees the franchisor charges during the preparation stage and whether their start date changes if opening is delayed by a permit issue.

Negotiate a contractual procedure for situations where a necessary permit is refused or its conditions substantially change the proposed operation. Issues to resolve include deadlines for providing further information, finding alternative premises and the option to end the arrangement. Record how fees already paid and work already commissioned will be dealt with. Do not assume that you are entitled to a refund without a proper basis for that entitlement.

Before opening, carry out a document-based check: the necessary decisions have been obtained, notifications have been submitted within the required time limits and all other conditions for starting operations have been met. The franchisor’s launch campaign or the delivery of equipment is no substitute for this check. Review any conditions attached to the permits, not just whether permission has been granted.

Practical checklist: do not base your purchase decision on a promise of premises that are ready to open. For each permit, confirm the responsible person, cost, timetable and document that demonstrates the requirements for starting operations have been met.