Franchise network systems: check your usage rights

A reliable point-of-sale, booking or work management system can be almost invisible in your company’s day-to-day operations. When you develop your business into a franchise network, those same systems become shared tools for independent businesses. However, your company’s software agreement may not allow you to make them available to other businesses. Before your first franchisee commits, you need to establish who may use the systems, under which agreement and who is responsible for keeping them running.

1. Establish what your current software agreement allows

Start by listing the systems needed to deliver your business concept as agreed. These might cover sales, bookings, stock management, invoicing, work management and a shared learning platform. Distinguish essential systems from tools your own company uses simply out of habit. Not every tool you currently use needs to become compulsory for future franchisees.

For each essential system, check the agreement, service description and terms of use. Establish whether usage rights are restricted to your own company, its employees, a particular location or a set number of users. A new franchisee is an independent contracting party, not automatically a user covered by your software agreement.

Ask the supplier to confirm in writing that your planned use is permitted. Explain that users will include separate businesses and that the franchisor may manage shared settings. Also ask whether you may pass usage rights on to franchisees and recharge them for the service. Do not assume you have permission simply because the system technically allows you to add user accounts.

For each system, record at least:

• the contracting party and the holder of the usage rights
• the businesses, locations and users permitted to use it
• the equipment and connectivity the franchisee needs
• the conditions for extending usage rights
• the expiry and termination provisions.

If the supplier’s contract term is shorter than the period of system support promised to the franchisee, identify this continuity risk during planning. Do not promise that a particular software product will remain available for longer than you can reasonably ensure.

2. Choose a contractual model and make costs transparent

Systems can be procured in different ways. The franchisee can contract directly with the supplier, the franchisor can obtain agreed usage rights centrally, or the arrangement can combine both models. Your choice affects billing, support requests and who can require the supplier to remedy a fault.

With a direct supplier agreement, the franchisee has a contractual relationship with the service provider. Centralised procurement, on the other hand, may make shared settings easier to manage, but the franchisor must then agree precisely what it will provide to the franchisee. Simply referring to a shared system does not explain whether implementation, maintenance or user support is included in the price.

Prepare a cost breakdown for the franchisee, separating one-off set-up costs, recurring licence fees, per-transaction charges, equipment and additional work. State which costs are included in franchise fees and which are charged separately. Also explain the basis for any price changes and how these will be communicated.

Finland has no specific franchising act, compulsory registration of franchise agreements or statutory requirement for a franchise disclosure document in a prescribed format. However, general principles of contract law and the Finnish Contracts Act apply to system arrangements. Section 36 of that Act allows an unreasonable contractual term to be adjusted or set aside.

The Finnish Unfair Business Practices Act prohibits false or misleading statements concerning business activities. Do not therefore describe software as free if franchisees must pay separate mandatory charges to use it. The Finnish Competition Act and applicable EU competition rules must also be taken into account when assessing compulsory purchasing arrangements. Franchising codes of ethics are a form of self-regulation, not a substitute for these laws.

3. Agree responsibilities for service disruptions in advance

The franchising guidance on Finland’s Suomi.fi public service portal describes technical support as part of the franchisor’s ongoing guidance and support. However, the practical arrangements still need to be defined: the network’s contact person may not be able to resolve an outage affecting the software supplier’s service.

Document where franchisees should seek help with user errors, equipment failures, connection problems and service-wide disruptions. Specify the first point of contact and an alternative channel for situations where the usual support service is unavailable. Distinguish between acknowledging a support request and actually resolving the problem.

Also agree who will monitor progress during a disruption and keep franchisees informed. Where procurement is centralised, specify how any service credit granted by the supplier for an outage will be reflected in franchisee billing. Do not promise compensation for all lost sales unless that liability has been expressly agreed and its financial implications assessed.

Prepare a fallback procedure for critical tasks. How will customers be served if the booking system will not open? Can sales continue through an approved alternative method? How will temporarily recorded transactions be entered into the system later without creating duplicates? The fallback procedure must comply with the legal requirements governing the business, not bypass them.

4. Test the full set-up process for a new business

Before committing to a system arrangement for franchisees, test implementation from the perspective of a separate business. A solution that works at your own premises does not yet prove that billing, usage rights and maintenance will work across company boundaries. Use test data wherever possible.

Check that the new business’s user accounts, settings and billing details can be set up in a controlled way. Test the permissions of an ordinary user, the franchisee and the network’s support staff separately. Do not take shortcuts by sharing personal user accounts: this can blur responsibilities and make activity harder to trace.

Also practise removing a user and withdrawing an individual business’s access. Establish how franchisees can retrieve the records they need and meet statutory retention requirements when they stop using the system. Responsibilities for processing personal data must be assessed separately under data protection rules; software usage rights do not determine them.

Compile an acceptance checklist from the test and assign someone to resolve each issue. The practical takeaway: first confirm your right to provide the system to an independent franchisee, then agree the costs, support and fallback procedures. This ensures that the franchise network’s day-to-day operations rest on more than a working login.