Buying a franchise: setting limits on mandatory refurbishment

Joining a franchise network means maintaining an image consistent with the brand. But that consistency can require work long after opening: a new frontage, replacement furniture or a complete refit. Before buying a franchise in France, examine the franchisor’s powers to require refurbishment. The key is to distinguish known investments from future commitments that are still difficult to cost.

1. Identify every obligation to make changes

Do not stop at the initial fit-out quotation. Obligations may be spread across the agreement, its appendices, the design guidelines and the operations manual. A clause requiring ongoing compliance with the “latest concept” deserves particular attention: it could expose your business to expenditure not included in your opening budget.

Ask for dated versions of the applicable documents, then identify three categories:

• Initial fit-out, required to open under the brand.
• Routine maintenance, intended to keep the premises clean and functional.
• Concept updates, which may require replacements even when existing fittings remain usable.

Ask for the boundaries between these categories to be clarified. Replacing a broken chair is not the same as replacing all the furniture to adopt a new visual identity.

If you are taking over an existing franchise, request a written assessment of any gaps between the outlet’s current condition and the required standards. An operating business is not necessarily exempt from refurbishment. In particular, check whether refurbishment will be required immediately after the acquisition, and have it costed before finalising your offer.

2. Understand the French legal framework

France regulates pre-contractual disclosure under the framework established by the Doubin Law, notably Articles L. 330-3 and R. 330-1 of the French Commercial Code. Where the relevant conditions are met — a trade mark, trade name or trading identity is made available in return for an exclusive or near-exclusive commitment in carrying on the business — the pre-contractual disclosure document and draft agreement must be provided at least twenty days before signing or, where applicable, before any advance payment.

Article R. 330-1 requires, among other things, disclosure of the nature and amount of brand-specific expenditure and investment to be incurred before trading begins. This information does not, however, guarantee a cap on future refurbishment costs.

For future refurbishment, the wording of the agreement is crucial. General contract law requires, in particular, that contracts be performed in good faith, under Article 1104 of the French Civil Code. Article 1193 establishes the principle that a contract may be amended only by mutual consent or on grounds authorised by law. This does not prevent an agreement from including a mechanism for updating standards from the outset.

Have the precise scope of that mechanism reviewed. Do not assume either that every new requirement is automatically valid or that it can always be refused. Nor does the pre-contractual disclosure period provide a general right to withdraw after signing.

3. Calculate the full cost of refurbishment

Ask the franchisor what concept changes have been introduced recently and whether another update is already planned. Obtain examples of budgets, checking their dates, the floor areas concerned and what work and services were included. These are benchmarks, not promises for your own premises.

Also speak to several franchisees who have been through these changes. Ask factual questions: how much notice did they receive? How long was the business closed? What costs were missing from the initial quotation?

With your accountant, add up:

• surveys, design work, building work, equipment and installation costs;
• removal, disposal and any temporary equipment;
• ongoing overheads during closure and lost margin;
• financing costs and associated cash-flow requirements.

Distinguish work legally required to meet regulatory standards from purely commercial changes. For each scenario, compare the expenditure with the remaining term of the agreement. Spreading finance over several years does not, by itself, make an investment required shortly before the agreement expires reasonable.

4. Negotiate a procedure before signing

Aim for a predictable process rather than a vague promise of “reasonable refurbishment”. You could propose a minimum notice period, an agreed timetable, a limit on how frequently work can be required or a spending cap over a defined period. These are protections to negotiate, not rights automatically granted by law.

Also request a written procedure covering the proposed changes, the reasons for them, a budget estimate, the completion deadline and how technical difficulties will be handled. Set out how any necessary official permissions will be managed, along with delays for which you are not responsible.

If major refurbishment is required towards the end of the agreement, negotiate a specific solution: postponement, a financial contribution or another arrangement recorded in writing. Finally, examine the penalties for delay and whether there is a period in which you can remedy a breach.

Key takeaway: before signing, obtain the applicable standards, a full cost estimate and a contractual procedure for future changes. Consistency across the franchise network must remain compatible with an investment you can assess and finance.