Buying a franchise: what information should the franchisor provide?

Joining a franchise network often starts with an exciting conversation with the franchisor. Before deciding to buy, however, you need more than promotional material: you need written information about what you will receive, what you are committing to and what the franchisor can change later. In Finland, there is no statutory standard form governing pre-contractual disclosure. Buyers should therefore establish a clear information-gathering process before signing an agreement or making any payments.

1. Understand Finland’s disclosure framework

Finland has no separate franchise law, statutory franchise disclosure document or specific registration system for franchise agreements. Nor is there a legally prescribed disclosure period that applies to all franchisors. This does not mean that a franchisor is free to provide misleading information or withhold material facts.

The Finnish Contracts Act is among the laws governing the formation and terms of agreements. General principles of contract law, such as the duty of loyalty between contracting parties, also affect disclosure obligations. The Unfair Business Practices Act prohibits, among other things, false or misleading statements that may affect demand for or the supply of goods or services, or harm another business. The Trademarks Act is relevant to rights to use brand identifiers, while the Competition Act and applicable EU competition rules restrict anti-competitive contract terms.

The precise scope of the disclosure obligation is assessed case by case. The buyer’s experience and their own enquiries also matter. A franchise agreement is, in principle, a business agreement: do not assume that you will have the cancellation rights available to consumers.

If the franchisor belongs to the Finnish Franchising Association, it must comply with the association’s code of ethics, which includes pre-contractual disclosure requirements. These are self-regulatory rules, not specific legislation. Check its membership and ask to see the current rules it follows. Membership is no substitute for your own due diligence.

2. Request a complete information pack before committing

Send the franchisor a written request for information. Explain that you need the material both for your own assessment and for review by an independent adviser. Ask for dated versions of the documents so that you know exactly what your decision is based on.

Your minimum information pack should include:

• The contracting party: the company’s name, Finnish Business ID and clarification of which company is responsible for providing the agreed services.
• The full agreement: the draft agreement, schedules and any guidance it refers to, or at least an opportunity to review the relevant provisions of the operating manual.
• Rights of use: evidence of the franchisor’s right to license the trade mark and business concept in Finland.
• Fees and purchasing: initial franchise fees, ongoing franchise fees, marketing and system fees, how they are calculated, and any mandatory suppliers or purchasing obligations.
• Franchisor support: the content of training, help with opening, ongoing advice and any separate charges for services.
• Changes and termination: the franchisor’s rights to make changes, the agreement’s duration, termination provisions and post-termination obligations.

Also ask about the concept’s operating history, outlets in Finland, recent closures and any known material changes. An outlet closing does not, on its own, indicate a problem, but the reason may be important to your decision.

A non-disclosure agreement may be reasonable before confidential material is released. However, check that it allows you to share the information with advisers who are bound by confidentiality obligations and, where necessary, with a finance provider on agreed terms.

3. Turn sales claims into verifiable answers

The phrase “comprehensive support” does not tell you who will help during your first month of trading. Ask who your contact will be, how to request assistance and what the franchisor actually commits to doing. Distinguish between examples of past practice, forecasts and actual contractual obligations.

Create a simple checklist with four entries for each claim: the franchisor’s promise, the supporting document, the corresponding contract clause and any outstanding question. If the sales presentation promises exclusivity in a particular territory, find the territory’s boundaries and any exceptions in the agreement. Ask specifically about online sales, national accounts and company-owned outlets.

Where possible, speak to several current franchisees and to a former franchisee too. Ask everyone the same questions: did the start-up experience match the information provided beforehand, was the training delivered, and were there any unexpected compulsory purchases? Bear in mind that different franchisees may have different agreements.

Check the company’s basic details and available financial statements using independent registry sources. If your contracting party is not the company that owns the well-known brand, establish the relationship between them. A familiar name does not, in itself, guarantee that your contracting party can fulfil its obligations.

4. Resolve gaps before signing

Compile a single list of outstanding questions and request written answers. Note what information is missing, why it affects your decision and when you need a response. Allow enough time to review the full set of documents, including when the draft agreement changes towards the end of negotiations.

Do not leave a decisive promise solely in an email or meeting note. Ask for it to be included in the agreement or a schedule to be signed. The agreement may contain a clause stating that the written contract documents supersede earlier discussions. In that case, a difference between the sales pitch and the contract wording could lead to a difficult dispute over evidence and interpretation.

Before paying a reservation or initial franchise fee, establish what you are paying for, whether payment creates a binding obligation and under what conditions it is refundable. If crucial information is still missing, negotiate a written clause setting out what happens next and how payments will be treated if that information is not provided.

Keep brochures, correspondence, versions of the agreement and your own notes. If you later suspect that misleading information was provided, these will help establish what happened. Any legal consequences depend on the circumstances: incorrect information does not automatically entitle you to terminate the agreement or recover all payments. Seek a case-specific assessment from a lawyer.

Practical checklist: request the information, verify it independently and put decisive promises into the agreement. If a material question remains unanswered, delay committing.