Buying a franchise: checking the substance behind the know-how

An attractive brand alone is not enough to justify buying a franchise. You are joining a network that should pass on practical methods, not just a visual identity. Before committing, find out what you will learn, how that knowledge has been tested and in what form it will be made available to you.

1. Distinguish genuine know-how from a sales pitch

Know-how is more than a good reputation or a collection of general tips. It may cover how work is organised, how a service is delivered, product selection, stock management or sales techniques specific to the concept.

The EU Vertical Block Exemption Regulation, Regulation (EU) 2022/720, defines know-how as a package of non-patented practical information resulting from the supplier’s experience and testing. This information must be secret, substantial and identified. That definition provides a useful benchmark for assessing the substance of the methods on offer.

In practice, ask three questions:

• Secret: do these methods go beyond practices that are generally known or easily accessible?
• Substantial: are they significantly useful for running the business and selling its products or services?
• Identified: are they described precisely enough for their content to be checked?

Ask the franchisor to illustrate each answer with an operational example. “Our customer welcome is excellent” is merely a claim. A detailed customer service procedure, tested and then improved through experience, provides a more credible basis for assessment.

2. Check where and how the methods have been tested

Ask which outlets were used to test the concept, over what period and under whose supervision. The aim is not simply to establish that a pilot outlet exists: you need to understand what it has helped to validate.

A visit can reveal whether the stated procedures are actually used. Observe routine operations: taking delivery of goods, opening up, handling a complaint, organising a team or closing for the day. Ask which mistakes led to changes in the methods.

French law does not impose a general statutory requirement to operate a pilot outlet for twelve months before offering a franchise. The European Code of Ethics for Franchising calls for successful testing over a reasonable period and in at least one pilot unit. This is a professional code, not a law that automatically applies to every franchise network.

Also check whether the experience can be replicated elsewhere. An outlet run personally by the founder may depend on their talent, contacts or an exceptional location. Ask how a newly trained business owner can reproduce the essential tasks and decisions without those particular advantages.

3. Examine the evidence without demanding every secret

A franchisor can legitimately protect its methods before the agreement is signed. You should not necessarily expect to receive the entire operations manual straight away. However, confidentiality should not prevent meaningful checks.

Suggest a supervised review, potentially subject to a confidentiality agreement. The following can help you assess the offer without requesting unrestricted copies of every document:

• the manual’s detailed table of contents and its latest revision date;
• a representative extract from a key procedure;
• a demonstration of a tool specific to the franchise network;
• a record of selected changes to the methods;
• an outline of the skills a prospective franchisee will need to master.

Also speak to several franchisees, with their agreement, without asking them to disclose confidential information. Which methods do they use daily? What have they learnt that they did not already know how to do? Do the documents reflect the situations they actually encounter?

Distinguish factual answers from general opinions. A lengthy manual is not, on its own, proof of know-how: its usefulness, precision and relevance to day-to-day operations matter more.

4. Ensure the agreement specifies how know-how will be transferred

In France, pre-contractual disclosure is governed in particular by Article L. 330-3 of the French Commercial Code, introduced by the Doubin Law of 31 December 1989, and by Article R. 330-1. Where the statutory conditions are met, notably where a trade mark or trading name is made available alongside an exclusivity or near-exclusivity commitment, the pre-contractual disclosure document (known in France as the DIP) and draft agreement must be provided at least twenty days before signing or any required advance payment.

Receiving these documents does not certify the quality of the know-how. Use this period to ask a lawyer to check that the written commitments match what you have been shown.

The agreement should specify which materials will be provided, when they will be made available, how they can be accessed and what confidentiality rules apply. Also ensure it identifies the skills required before opening and how their acquisition will be assessed. A vague promise to provide “all useful methods” leaves too much room for disagreement.

Key takeaway: before signing, gather three pieces of evidence: a practical method, documented experience and a written commitment to transfer the know-how. If any one is missing, ask for clarification before committing.