Franchise licences: clarify responsibilities before opening

When you turn an established business into a franchise network, familiar routines can obscure an important question: what conditions must another business meet to carry out the same activities? Your existing licences, notifications and arrangements for designated responsible persons do not automatically transfer to a new franchisee. Before you start recruiting, you need a framework that distinguishes the right to use your business concept from the regulatory right to operate.

1. Establish the basis on which your business currently operates

Start with your own business records. Gather the licences, registrations, regulatory notifications, inspection reports and decisions concerning designated responsible persons that relate to your operations. The aim is not to copy the file for a future franchisee, but to establish which conditions each new business or premises must meet separately.

Classify each requirement according to whether it relates to the business, a particular individual, the premises or the nature of the activities. The same concept may require different preparations if, for example, a new outlet makes products on site rather than simply selling ready-made products.

Create a short record for each requirement:

• Which activity does the requirement apply to?
• Who is the licence holder, the party submitting the notification or the responsible business operator?
• Which authority handles the matter?
• What supporting information is needed before an application or notification can be submitted?
• What must be in place before operations begin?
• Which changes require further contact with the authority?

Do not assume that a new franchisee will follow the same procedure simply because your business has been operating for many years. An earlier decision, a previous premises arrangement or the founder’s personal qualifications may explain why your current operations are permitted. Check the position for the new outlet with the relevant authority.

2. Separate the franchise agreement from regulatory requirements

Finland has no specific franchise legislation, mandatory system for registering franchise agreements or statutory requirement for a franchise disclosure document in a prescribed form. This does not remove obligations under other legislation. The contractual relationship is governed, among other things, by the Finnish Contracts Act and general principles of contract law. Section 36 of the Contracts Act allows an unreasonable contract term to be adjusted or disregarded.

When recruiting franchisees, you must also take account of Finland’s Unfair Business Practices Act: false or misleading statements about business activities are prohibited. Do not promise that joining the network will, in itself, provide every authorisation needed to operate.

The actual licensing and notification requirements depend on the activities involved. For example, food businesses are subject to the Finnish Food Act, while the serving of alcoholic drinks is governed by the Alcohol Act. The suitability and safety of the premises may also require separate assessments. Not all business activities require a licence, and licences and notifications should not be treated as interchangeable.

Franchising codes of ethics are a form of self-regulation, not legislation or regulatory authorisation. Following them does not replace the need to check the statutory conditions for operating. Nor does the franchisor’s own approval to open replace a decision from an authority where one is required.

3. Agree on the preparatory work, not just the outcome

The franchising guidance on Finland’s Suomi.fi public services portal emphasises the need to clarify the division of responsibilities: franchisees operate through their own businesses and bear their own obligations and business risks. The founder of the network must therefore explain precisely what support is included in preparing licence applications and what franchisees must do themselves.

A contract clause stating that “the franchisee is responsible for all licences” can easily leave the practical work undefined. Set out separately who will identify the requirements, compile technical information about the concept, submit the application, pay the processing fees and respond to requests for further information from the authority. Also appoint someone within the franchise network to monitor progress.

For example, the network might supply equipment specifications and a description of operating processes, while the franchisee adds the business and premises details. If the network deals with an authority on the franchisee’s behalf, make sure the necessary authorisation is in place. However, a contractual allocation of tasks does not change who bears responsibility under the law.

Also document the procedure for delays. Who must report missing supporting information, how will the opening date be postponed, and what happens to launch services already ordered? Avoid firm promises about processing times that are outside the network’s control. Distinguish between the network’s own delivery times, the franchisee’s preparation time and the authority’s processing time.

Give prospective franchisees this breakdown of responsibilities before they commit. The need for a licence or a suitably qualified responsible person may significantly affect whether a candidate can achieve the planned opening.

4. Make the decision to open evidence-based

Create an opening-readiness checklist for every new outlet. For each requirement, record the person responsible, the deadline, the document showing its status and the person who will verify it. Knowing that an application has been submitted does not establish that operations may begin. Check the conditions for starting under each applicable procedure.

Review the checklist at a joint pre-opening meeting. If a condition has not been met, record whether this prevents the entire outlet from opening or only a particular service from being offered. Do not rely on assumptions: where necessary, ask the authority whether a limited range of activities can begin as planned.

Keep up-to-date records of decisions and notifications so that franchisees retain control of their own documents and the network has agreed access to information about essential operating conditions. Collect only the information needed. Also define how a change of responsible person, an expansion of activities or a change to the premises will trigger a fresh review.

Update the shared checklist using lessons from the first openings. If the same additional information is requested repeatedly, include it in the preparations from the outset. This allows the franchise network to learn together without blurring the franchisee’s statutory responsibilities.

Practical checklist: identify the requirements, assign the tasks and verify the conditions for starting through documentary evidence. Promise franchisees clearly defined preparation support, not an automatic right to open.