Building a franchise: clarify licensing requirements before launch

Your existing business is authorised to open and provide its services. That does not mean a new franchisee can automatically operate under the same authorisations. If you are building a franchise network in Germany, you should therefore establish early on which notifications, licences and supporting evidence each franchisee needs in their own right. An approvals matrix makes these tasks visible and prevents an opening from falling through because responsibilities remain unclear.

1. Distinguish franchise approval from permission to operate

Germany has no specific franchise law and no dedicated government approval or registration procedure for franchise systems. Neither the system nor the franchise agreement requires official approval simply because it involves franchising. This does not, however, exempt the business from the rules governing its particular activities.

The franchise relationship is governed in particular by the German Civil Code (BGB), where applicable the German Commercial Code (HGB), and competition, antitrust and intellectual property law. Pre-contractual disclosure duties arise from the general provisions of the BGB, particularly sections 311(2), 241(2) and 242. Standard contract terms are subject to review under sections 305 to 310 BGB.

General business requirements also apply. Starting a business operating from a fixed establishment must generally be notified under section 14 of the German Trade Regulation Act (Gewerbeordnung). Registering a business does not, however, replace any additional licence required. Depending on the activity, further requirements may include rules governing skilled trades, food business registration duties or specific trade licences.

The European Code of Ethics for Franchising is not a form of government approval either. It is a self-regulatory instrument, binding particularly through membership of relevant trade associations. Its requirements for a proven business concept do not replace business-specific approvals.

2. Develop an approvals matrix from your existing business

Start with the records for your own business: the business notification, official decisions, registrations, proof of qualifications and relevant inspection reports. Do not simply collect documents; check why each was required and what it covers.

Assign each item to one of the following categories:

• Business-specific: A duty or licence applies to the particular operator. A legally independent franchisee must have their own circumstances assessed.
• Person-specific: A particular individual must demonstrate, for example, professional competence, suitability or completion of mandatory instruction.
• Premises- or equipment-specific: An approval relates to premises, equipment or a particular use. Changes may trigger a fresh assessment.
• Activity-specific: Additional services or products may trigger further obligations, even if the core business remains unchanged.

Use this information to create a table with the following columns: requirement, activity triggering the requirement, responsible authority, applicant, documents needed, progress and supporting evidence. Also record any deadlines, expiry dates or recurring inspections that apply.

Important: An existing licence is not automatically transferable. Nor does your business's long operating history prove that all requirements have been clarified for other operators, premises or German federal states. Have uncertain entries checked by a qualified professional rather than passing them on as an assumed network-wide standard.

3. Allocate responsibilities between head office and franchisees

A franchise network needs a clear division of responsibilities. Franchisees are independent business owners, so head office should not make a blanket promise to obtain every approval. Equally, simply stating that “this is the franchisee's responsibility” is not useful preparation for an opening.

Assign three roles for each task: who checks the requirement, who submits the application and who verifies that the evidence is in place? Head office might, for example, provide a document checklist and identify relevant contacts. The franchisee obtains their personal supporting documents and submits the necessary notifications or applications. Where the legal position is unclear, seek specialist advice.

Describe any promised support clearly. Helping to compile documents is different from promising to secure an official licence. The wording of the contract and what is communicated in practice should be consistent on this point.

Also establish early on how delays or refusals will be handled. Which preparatory expenditure can wait? Which opening dates are only provisional? When must both parties decide how to proceed? The legal consequences should be addressed in a contract reviewed for the specific circumstances, not in improvised side agreements.

4. Include a documented pre-opening approvals check

Schedule a dedicated approvals check before the business starts operating. This is not a blanket confirmation that “everything is legally compliant”. Instead, record the evidence available for each applicable requirement, any conditions attached and any outstanding questions.

Make these distinctions carefully:

• A submitted notification is not the same as an application requiring approval.
• An acknowledgement of receipt is not a licence.
• An official licence may contain conditions or specific obligations.
• Internal clearance to open never replaces a decision by the relevant authority.

Document outstanding issues, naming the person responsible and the next review date. If a required licence has not yet been granted, the activity requiring that licence must not begin simply because an opening date has been agreed.

Keep the matrix up to date after launch as well. New services, a change of operator or alterations to the premises may trigger fresh checks. Lessons from franchisee openings can improve the template, but they do not replace a local, case-by-case assessment.

Practical takeaway: Do not try to transfer your existing business's approvals; replicate the process for establishing what is required. A checked matrix with clear responsibilities and reliable supporting evidence provides a sound foundation for every new franchisee opening.